Reversing the trend
VOICES | In the Trenches
By Raed M. Skaf, PMP
MANY ORGANIZATIONS TRY to implement enterprise resource planning (ERP) to improve their business workflow. Unfortunately, 54 percent of ERP implementation projects took longer than expected and 56 percent exceeded budget, according to research from Panorama Consulting Group. What's more, 50 percent of ERP implementation projects realize less than half of the expected benefits.
The causes of failure aren't just technical—they're managerial slip-ups. For example, one of the root causes of failure is not considering changes to existing business processes, the cost of subject-matter experts (SMEs) or the cost of infrastructure in estimates. Resistance to change is another obstacle often not considered.
As organizations become increasingly mature in project management, the failure percentage should decrease. Project professionals and the executive suite must improve communication of organizational strategy.
To start, project managers should paint the full picture of ERP project execution to executive stakeholders in order to prevent unwanted surprises and risks, and avoid execution failure. This includes analyzing the current information system's capability, business processes and future business needs—as well as considering the possible benefits or business strategies that can be achieved.
In addition, these factors support a successful ERP project:
- Business case—to justify project existence and requirements
- Top management commitment—to support the project from initiation to full implementation of the ERP software
- Project management—to govern the project, deliver quality products, monitor progress and feedback, and anticipate and mitigate risks
- Change management—to involve people from the field to avoid resistance to change
- Training—to guide all levels in the project group and provide special courses for some users when necessary
- SMEs—to facilitate successful implementation when a new generation of technology is involved (includes vendor support)
This three-step process can support the alignment between strategy and project execution:
Step 1: Strategic environment and assumptions assessment. Top management must assess the current and future situation in which the organization will operate. This information will impact the company's choice of business strategies and objectives. Achieve this by leveraging a group setting to ask open-ended questions about current issues affecting the organization, such as: What are our highest-priority problems that need to be tackled first? Who should be the project sponsor? Where are the as-is processes, and how we can capture the point of failures and convert to to-be processes? Agree on actions to be taken to overcome these issues.
Step 2: Strategic planning. Understanding the strategic environment and assumptions helps senior leaders establish organizational objectives. This includes the set of ideas that, when fully developed, will contribute to the realization of the objectives.
Step 3: Portfolio planning. ERP implementation projects should be grouped with business process reengineering projects, training projects for end-users and administrators, and communication management projects in an overall portfolio. This ensures ERP projects take high priority, as well as helps show their ROI. It ensures sponsorship by top management, which helps choose a change-agent leader who can push the message and vision to management and the team to support a successful implementation. PM
Raed M. Skaf, PMP, PgMP, is director, project management office and budgeting, at Mobily, a telecom operator in Riyadh, Saudi Arabia.
PM NETWORK DECEMBER 2012 WWW.PMI.ORG