ERP System Implementation:
It's Not a Computer Project

by Milton C. Habeck of Unbeaten Path International
January, 1998

 

Just because the enterprise resource planning (ERP) system your company purchased runs on a computer doesn't mean that the IS Department should be given the responsibility for implementing it.

Quite candidly, the "kiss-of-death" for many ERP system implementations is appointing an IS manager to lead the project. Why? Because an IS manager appointment telegraphs the wrong signal to the rest of the enterprise. The signal received by the people in the company is usually interpreted this way: "If the systems people are running the implementation, then this is going to be a computer project."

Implementing new ERP software isn't supposed to be a computer project. It's supposed to be the catalyst for re-evaluating nearly every business practice and procedure. It's supposed to ignite passions for using human resources better. It's supposed to be a total company drive for world-class performance and competitive advantage. It's supposed to be a revolution in the way business is conducted.

The issue is credibility. Will employees believe that a total company business revolution will succeed if the initiative is managed by the computer department? With IS people managing the project, software implementation will more likely be viewed as the objective rather than as just one strategy to facilitate a revolution in business practice.

If employees don't believe the revolution will work, the revolution won't happen and the enterprise will forfeit a precious opportunity. A great deal of money will be spent on the new system and the post-mortem ROI will fall somewhere between small and invisible ... despite the diligent efforts of creative financial analysts.

An enterprise which successfully implements ERP software within the context of a total company business revolution won't have to assign an analyst to invent an ROI. Why not? Because the benefits to the company will be enormous and in plain view. World-class business practices translate into happy employees, discernible competitive advantage, and three-digit ROIs.

Achievements of that genre require the visible leadership of an enterprise's Chief Executive Officer. The CEO must be the champion/torch-bearer for the revolution to work.

Unfortunately, many CEOs have an uninformed view of the leadership role they should assume in ERP software implementations. More often than not they focus too narrowly on project launch authorization reviews, fixed asset spending constraints, headcount, and profitability exposure. Finance becomes the focus of CEO attention because they know how to do that stuff. The idea is to postpone project spending as long as possible, get the budget numbers under control, and then delegate the implementation work to the firm's computer department and the seasoned software consultant they search for and retain.

 

If the CEO adopts the financial/control role instead of the more-informed champion/torch-bearer role, here's a sample of the kinds of concerns which will typically greet your company's newly retained software consultant:

P Apart from one or two technical analysts, no employee has been assigned full-time to the project. System users on the project team are expected to work on the implementation in addition to their "normal" job.

P Most departments in your enterprise have little or no idea what is going on with the new ERP system. People have heard enough about it to be suspicious and skeptical. Some are cynical. Commitment is invisible.

P The whole implementation effort is viewed as a computer project. Users find fault with the current system and think it would take a miracle for IS to deliver what users really need with a new system.

P Key users believe that the new system should be modified so that they don't have to change the way they do their jobs. Your company's budget for software modification is too small to accomplish this.

P The budget for software modification exceeds the budget for business process re-engineering by a comfortable margin.

P Employees don't understand the MRP II / closed-loop principles upon which the software is based and there is no education budget to address this issue.

P Accountability for performance targets is not well defined. Different departments in your enterprise are operating with different game plans. Financial plans are not integrated with operational plans.

P Marketing, sales, sales forecasting, planning, and manufacturing engage in occasional finger-pointing sessions about missed targets.

P Data integrity is too low to support an ERP system and the implementation schedule approved by the CEO has insufficient time to address the problem.

P If a mission statement for your project even exists, there isn't a hint of revolution or passion for world-class performance in it.

The seasoned consultant you've retained will know that this kind of situation has "failure" written all over it. He or she has a choice to make and "doing the right thing" requires courage and integrity.

Your consultant has two fundamental choices.

The path most often traveled is to not ruffle any feathers. Consultants on this path won't put their neck on the line by challenging the wisdom of running the implementation like a computer project. After all, important people at your company may become insulted if fundamental flaws in the planned approach are criticized. Their idea is to just get the engagement agreement signed and start billing hours.

The path less traveled is not for the risk-averse. It involves telling the truth about how the status-quo argues against a truly successful ERP implementation. Unless the consultant is invited to leave, this approach generally evolves into a face-to-face audience with the CEO. The consultant's goal with the CEO is to cast a credible vision for world-class performance and competitive advantage.

 

By the way, not all CEOs want to become revolution leaders or torch-bearers. Those roles are frequently not extensions of their prior experience. So, the CEO may ask the courageous consultant to leave immediately after one of these meetings.

The payoff for all this risk-taking arrives when a CEO seizes the vision and takes passionate ownership of it. When that happens, your consultant has found a project worth pouring heart and soul into. It will be a project that will really help people, a project which is going to make a big difference for your business, a project with personal rewards for the consultant which eclipse the cumulative billings.

It's no secret that many ERP software implementation projects are a disappointment. Typical complaints are at the "computer project" level: users don't understand the software, crucial functionality is not employed, custom mods aren't adequate, information access is too limited, etc., etc. Frankly, the level of disappointment would be far, far higher if the enterprise understood what was "left on the table" by managing ERP software implementation like a computer project.

If you are searching for an implementation consultant to support your company, you could do worse than selecting someone with the courage to ruffle some feathers and cast a vision for world-class performance and competitive advantage.