Spend less than 10 minutes with Ken Cowman, CEO of Emercomm, to find out the most common reasons for an ERP project to fail. Hint…it’s seldom during the implementation phase.
In this world of constant change, the CEO must also be able to determine product, market and sales strategy and tactics as rapidly as the change is occurring. If the organization is in growth or decline, the CEO must also be able to determine effective resource strategies to ensure continued success or survival. Therefore, a CEO could be faced with rapid changes to the competitive environment and changes in the rate of growth simultaneously…and the two may not necessarily be related.
The problem is determining whether the CEO can effectively work in the current environment as well as in the future environments that the organization may find itself.
Often, the pointing finger for software issue will be at the functionality of the software. It isn’t working in the manner that was expected. That will lead to accusations of the vendor overselling the abilities of the solution (it’s been known to happen) or the consultants teaching the functionality weren’t good enough at helping the organization set the systems up properly (yes, that’s been known to happen too). However, there’s a very likely third situation…the users don’t have the proper knowledge capital to be able to apply the business situations to the selection and / or setup of the chosen solution.
There have been many articles written about the huge failure rate of enterprise system implementations to deliver on time, on budget or to return the savings expected. The failure rate is currently 73%. Regardless of the type of system being deployed the results are similar. So, assuming that you purchased the correct software in the first place and have followed previous advice about ensuring the accuracy of the quotation in terms of services, how do we best ensure that your implementation ends up on the plus side of the ledger? We focus on the largest intangible of the project: the human side.
There are two things that humans need in order to carry their part of the project off successfully: Knowledge and Time.
The ultimate responsibility for the success or failure of any CI initiative rests with the CEO. Who else in the organization has the absolute power to force decision-making processes to fall in line with the goals of the organization? Who else has the absolute power to hold all levels of the organization to achieving performance improvement goals?
It is widely held that an ERP project is one of the most critical projects that an organization will undertake. The impact to an organization’s ability to service customers, meet regulatory requirements, reduce costs and reduce time to market is huge. In fact, the ability to compete and survive may be at stake. However, more than 70% of all ERP solution purchases fail to meet the criteria of “doing it right”. The minimum criteria of “doing it right” would be that the project:
(1) is completed on time;
(2) is completed within budget;
(3) meets the expected return-oninvestment;
(4) has not caused unexpected personnel turnover.
74% failure on projects that are supposed to support the tactical and strategic management of an organization is unacceptable. Some are doomed from the start.
You’ll hear people say that the implementation failed. That’s much like the people that say they have an inventory problem. Wrong! When you have too much inventory or not enough to meet commitments, it’s a symptom of another issue in the supply chain. When an enterprise solution fails to implement on time or on budget, it’s also a symptom of issues that occurred much earlier in the project: The Selection Process.
While Distribution Resource Planning brings great functionality to bear on planning distribution inventory, sometimes it is overkill for organizations that simply need to move product from one place to another. In fact, the common reason given for purchasing the DRP module is the inventory management capabilities of the module. However, the physical movement of inventory can be facilitated without the additional cost of software, implementation and administrative effort that DRP brings.