The big 5 ERP selection errors a CEO should avoidJune 30, 2014
After 30 years in the ERP industry, one starts to get a good grasp of what goes into a successful ERP implementation and the pitfalls to avoid. I’ve pulled together some tips that CEOs should consider before embarking on an ERP project. If you can avoid these top five common mistakes, you’d know that your project is off to a good start.
1. Insufficient executive involvement in the process.
The selection and implementation of an enterprise solution is a business decision not an IT decision, so the first issue is the misnomer that the IT department should be running the project. Technology will not solve a business process problem and getting it wrong will risk the whole business. As I have said in other forums, this is the closest thing there is to performing a heart lung transplant on your business. Is this really something you want to delegate too far down the line? You need to treat this like any other capital investment.
This flows on to the next trap;
2. Not having a clear understanding of what you want to achieve and why.
- What is the business issue that you are aiming to address?
- Can you clearly articulate it?
- How does this project fit into your overall business strategy?
- What are the scope, costs and benefits?
- Where will the ROI come from?
3. Next the scope.
A clear definition of what you need, want, and would like to have before you engage with vendors is essential. Your primary enemy is scope creep, this is where the project just keeps expanding and if left unchecked, will never finish.
There are three variables in any project:
Limit the scope to what is essential; start a phase 2 list with everything else and be ruthless in managing your priorities. If one of the 3 variables is fixed, the other two have to be flexible. If you need extra people during the project, do not use contractors in the project, use your own people and back fill them with temporary workers.
4. Trusting the wrong people.
There is no such thing as an independent consultant. They all have allegiances, preferred products, preferred vendors and mates in the game. Who do you think finds them their next gig?
Even your own people have an agenda. You need to understand what those agendas are and what incentives are at work within your own team. It may be as simple as prior experience with a particular product, which may be beneficial for the company and the project. Just be aware of all the factors that are influencing a decision so, you can weigh the advice you are getting appropriately.
5. Expecting it to be someone else’s problem.
Finally, you can’t make it someone else’s problem. Delegation is good until it becomes abrogation of responsibility:
- Don’t expect your vendor to make business decisions for you.
- Don’t expect your IT manager to make business decisions for you.
- Don’t expect a junior manager or project leader to make business decisions for you.
You need to make sure you know enough about what is happening to make informed and timely decisions; it is, in the end your business that will be impacted by the outcome.
6 things you need to know
To avoid these traps you really need to know:
- What you need, want and would like to have; expressed as measurable outcomes. Avoid the 3,000 questions RFP documents, they are useless and reduce you remedies at law by negating the provisions of the both Common Law and most Consumer Law.
- What motivates your principle advisor? If you engage a consultant to assist in the selection process, make sure you know what his/her bias is and that you are comfortable with that bias.
- Where you can expect to either increase revenue or reduce costs. These are the only ways to improve the bottom-line.
- That the company you deal with is more important than the software. Spend as much time getting to know the people as you do looking at the software.
- Which vendors seek engagement to do detailed discovery of what your business is about and what issues you are seeking to address.
- Which vendors are developing a solution for your needs and which ones are selling you a product.
Treat this like any other capital project, look for a partner not just a supplier, look for a long-term relationship with a proven performer. In the end, the people are more important than the software and they are the ones who will make it work for you.
This is not a single transaction; you are going to be working with these people for a long time so make sure they are your kind of people.
Terry Leister, Business Development Manager for ERP vendor Pronto Software. @THL_OZ