July 6, 2012 by Jonathan Gross
It doesn’t matter how fancy your ERP system is. It doesn’t matter how closely the system’s capabilities match your company’s needs. It doesn’t matter that the ERP system is SaaS, comes with the latest flavours of business intelligence, or can be used by mobile workforces on their smartphones. No, none of this matters if the system isn’t implemented correctly.
Do you think that Marin County’s SAP implementation project failed because the software didn’t have the sophistication to manage a single county’s relatively modest informational needs? Heck, SAP powers Johnson and Johnson and its 117,000 employees spread across 250 operating companies in 60 countries.
Do you think that Oracle’s PeopleSoft software was incapable of handling Montclair State University’s needs? Dozens of universities and colleges use PeopleSoft to manage their institutional needs.
In these cases, failure had little or nothing to do with system capabilities. Implementation efforts were the difference-makers. And, in reading the back-and-forth finger-pointing that’s publicly aired in court filings, it’s apparent that these projects suffered from a lack of leadership.
Whether you’ve already selected your software or are in the throes of an ERP selection project, it’s time to stop and reflect. You need to understand what leadership skills your team needs to drive it to a successful implementation outcome. Here are a couple of key characteristics of effective ERP implementation leaders.
Your ERP project leader is a trusted advisor
In my previous life as a commercial litigation lawyer, I was bound by a fiduciary duty to always act in my client’s best interests. I not only had to avoid real conflicts of interest, I also had to avoid anything that could be perceived as a conflict of interest.
ERP project leaders should be bound by similar obligations. Why? Because conflicts can cause project leaders to make recommendations or take actions that may harm the company. Business leaders aren’t ERP experts and they don’t pretend to be. They hire ERP project leaders because they’re the experts. They rightfully expect that these people will act in their best interests. When so-called “leaders” fail to do so, they’ve breached a trust.
Here’s one common example: many vendors and resellers (VARs) have formal or informal referral arrangements with other firms. Under these arrangements, firms typically pay each other (up to 30 per cent of billable fees) to assign staff to each other’s clients’ projects. Oftentimes, firms staff their clients’ projects with less-than-the-best personnel to earn referral commissions. In my view, ERP project leaders should never have an excuse to use less-than-the-best.
Here’s what business leaders can do to ensure that their ERP advisors don’t bring baggage into a project. They should expressly ask whether the leader is subject to any formal or informal referral arrangements, and the extent to which such arrangements could impact staffing decisions. They should also ask whether the project leader profits from the sale of software, and whether his firm is profiting from software sales to the company. To the extent that it does, and to the extent that your company hasn’t yet received an independent opinion about the value of the software, it might want to get one.
Your project leader – extensive industry, business and ERP project expertise
Your project leader is charged with the responsibility to drive all stakeholder groups to deliver an on-time, on-budget implementation in accordance with defined performance expectations. You are charged with the responsibility of finding that qualified candidate.
Your project leader should boast an impressive track record – one that proves his ability to successfully lead ERP projects. When assessing candidates, it is very important not to confuse functional or technical experience with ERP project management experience. These roles are important, but are no substitute for project leadership expertise. A project leader is akin to an orchestra conductor, while the functional and technical resources are more akin to individual musicians. Who would you want leading your project?
Preconceptions and stigmas aside, hiring advisors or consultants to manage ERP implementation projects is effectively an outsourcing arrangement. However, it is fundamentally different from most other types of outsourcing arrangements because companies tend to outsource non-core functions. Although managing ERP projects is not a core competence of most businesses, ERP does cut straight through the core of your business. A poor implementation is capable of crippling – even killing – a business. So, if you’re trusting your ERP advisor with the core of your business, you should make sure that the advisor is competent and looking out for your business’ best interests.
Jonathan Gross is vice-president of Pemeco, Inc., a consulting firm specializing in ERP selection and implementation. He can be reached at firstname.lastname@example.org. This article originally appeared on Pemeco’s website at www.pemeco.com.