ERP Implementation 101: Vendors Cannot Own Your ERP Project
Not much has changed with managing enterprise resource planning projects over the past 15 years. While better software and new technology exist, the industry continues to utilize the same old implementation approaches with the same old disappointing outcomes.
Who hasn’t heard the ERP horror stories? Cite the grim statistics from any independent ERP think tank you want and the numbers are shockingly similar. It is well-documented that up to 70 percent of organizations that attempt ERP do not realize expected benefits, go way over their budget, take much longer than planned or simply never go live.
ERP Today: The Consultant’s Role
Meanwhile, ERP history has shown that leaving the fate of your ERP project in the hands of software consultants or vendors may only create a false sense of security. Regardless of all the right intentions, software consultants are not all-knowing; consultants have a limited ability to control the keys to project success and are the beneficiaries of cost overruns. For example, in many cases consulting costs can represent up to 60 percent or more of total project expenditures. Considering these significant cost overruns and the dismal ERP success rate, one may ask what is wrong with this picture?
When it comes to ERP software vendors, I can only say one thing: the salespeople will be long gone when it comes time to implement the system. While software is a necessity and consultants are usually required, no vendor will guarantee your success (in writing).
Regardless of what many want you to believe, vendors cannot own your ERP project, even if you desperately want them to. That is, the organization always assumes 95 percent of the project risk. Company ownership is true regardless of the software package selected, the experience of your consultants or the structure of the contract language (companies cannot dump the project risks on their consultants). At the end of the day, there is no substitute for organizations taking charge of their ERP destiny.
ERP Project Success: Working with Software Vendors & Consultants
While a company should take control of its ERP destiny, an ERP consultant can mitigate some key risks, as long as you pick the right consultant. Consulting firm management must be frank and honest with client management regarding what the organization must do for the project to be successful. This will require some consultants to take off their sales hats and start to act like project directors (which is what client management truly wanted them to do in the first place). Consulting firms must move beyond the of-the-moment “billable hours” mentality, and look out for their clients’ best interests in the long run. This new mentality requires a major culture shift, and will be very difficult (or impossible) for many firms to achieve. At that point, it might be time to look for a different consulting firm.
Also, if clients and consulting firms want to be successful, keep in mind that the old saying “the customer is always right” does not apply to ERP implementations. Moreover, consultants must stop talking about putting project ownership in the right place (with their clients) and start making it happen.
Consultants must educate and coach their clients on how to be more engaged and self-reliant. This not only applies to increased client ownership of project responsibilities and tasks (and how to free up the right internal resources), but also a much better understanding of the software (knowledge transfer).
In the end, vendors and clients who embrace this ERP implementation approach will be more successful, enabling the firm and organization even greater success in the future. For this reason, it’s imperative that your business choose its consultants and vendors carefully; though they can’t own your ERP project, they can contribute to its success (or failure).
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