Great Lessons Comes from Great Failures…
People around me knows and feels that I am a successful lady in my profession, but only I know I have not achieved even 25% of what I wish to achieve in the last 18 years. It will be too difficult for me to write from the beginning as there are some sweet memories and there are some hard feelings and it will take ages for me to complete by that time, I will forget the important milestones of my life. I will write about my couple of job profiles but this one is going to be the more sensational and sensitive subject.
I started blogging very lately, of course after couple of successful steps. Now it is time for me to write something on ERP.
Why does most of the ERP implementation considered as failure?
Being in the industry for more than 8 years, I feel that it is the right time to write on this and the most important reason for me to write this is based on my last project in which I was working for last 2 years. Does it really take this much time? You will get the answer by end of this article.
Most of the organizations top management people like CFOs and CIOs start their ERP implementations with the expectations that their businesses will be transformed along the way. An ERP system has got its own advantages and their own limitations. These Top people are not aware either the limitations or the advantages of the ERP system selected by them.
These ERP systems are not meant for drastic improvements in the reporting structures, it paves way for the change to go with the globally accepted processes.
Most of them don’t even understand the functionalities or the modules how does it work in the ERP system and they try to implement the system with great expectations. 50-percent of organizations fail to realize even half of their expected business benefits. Most of their expectations are unrealistic especially in the initial phase of the implementation.
Almost all the expectations from the ERP system which is not implemented are like I want to touch the sky from the top floor of the Burj Dubai. Can we construct a building on air to touch the sky, if yes, and then we can touch the sky. There are some things which is not in the control of the ERP systems.
Up to me, the basic reasons for the ERP implementations to fail are
Why do we go for ERP Systems?
Why does your organization choose to go with an ERP system, when you have a very sound system which is user-friendly, amicable, easy to use. Does anyone who is working under the Information technology or the core department which uses the product understand it? It is not for the sake of using an ERP system or to give honor to that ERP system.
Building a custom ERP system has never been this easy and affordable. Whatever system you are using is not said to be as a standard product or universally accepted processes.
The systems what you are using are process driven software which leads to a legacy or the in house developed product.
ERP is said to be the software driven process and these are accepted universally and accepted by the international markets with standard process. ERP products are not developed in just one or two years of time. Even a small change in these systems takes 5-10 years of time to deliver it as it requires that much effort and involves lot of coding, patience, testing, etc.,
Each of these ERP systems is common system which is designed in such a way to be utilized by all the industries. Most of the big companies those who want to follow the standard process prefer to go with ERP, as it provides the standard reports and ERP helps the team in preparing the reports in the required structure and all the financial reports which requires to be followed as per IFRS.
ERP systems are like gold and it is in the hands of the people who want to use it as gold or copper. It is the ignorance of the people who think it as copper and not the products mistake. It is better to follow the expertise than to be stubborn with your whims and fancies.
There is an option to customize the ERP products, but not in a way that it should look like a legacy system or to change the entire standard functionalities of ERP systems.
Choosing the Wrong Solution (ERP Software Selection) – being a positive person, I have to say choose the right product, but most of the cases I have seen the wrong choice.
Most of them don’t know why they are going for the ERP systems. It is not just like changing the mode of travel and it requires all the requirements and issues in the current mode of travel.
ERP systems are being used worldwide, and it can’t be a wrong product. But it might not be the right product to implement where there are no global standard processes and an in-house software made as per the requirement of the processes of the organization and which can be fine-tuned as per the daily changes of the processes – ERP is not applicable for you.
Those who go for the ERP should have the mindset that they are not going to change the software that is used for their process; they are going to change their business process to suit to ERP applications.
Changing the system from Legacy to ERP is like moving from a bullock cart to a Mercedes Benz. You should know your entire requirement and how does the Mercedes Benz work. A person who is using the bullock cart can’t cater the need for the Mercedes Benz.
The road to my house can be reached in a bullock cart by 3 hours and by a bus in 2 hours and by car in 45 minutes. I have to choose the right vehicle for my convenience and in my budget. I have to consider my requirements what am I going to do by reaching earlier to home? How is it going to help me? If I come by bus what are the merits and demerits? Also I have to consider whether I know driving, what is my cost that I have to spend to get a car, maintenance of the car and at last what is the Return on investment. What matters most is whether reaching home by a car or by bicycle.
Legacy is comfortable system and ERP is convenience only when you know how to handle it. Legacy is maintained by the users for so many years and ERP has to be implemented in short time to reap the Return on Investment.
The more you look for improvement, the more it gets delayed. The more you delay, the more it becomes failure.
In my opinion, companies treat an ERP selection, evaluation and implementation comparable to buying a doll for their kids and which lead doom to failure.
Even to buy a mobile for our personal use, we will evaluate the entire model, whether it will suffice my requirement, whether it will give me the required result, whether it will be handy, whether it will make me feel good when I hold the mobile. This mobile can get lost in a day or people like me can drop in water and make it useless in few seconds. But the time spent on it before buying is worth using it.
Are you happy about the time you spent to buy an ERP product for your organization? Have you analyzed all the required features out of the ERP selected by you? Do you have the list of all the issues that need to be eradicated from the legacy system? Have you taken personal care to estimate the product and its life for the organization? Have you understood, how the ERP selected by you is going to work?
Is this product going to be used for a life of 1 year or 10 years or 20 years? Have you spent the real time to decide and finalize the product which will enable the organization to move on without changing or going for new software?
One of the worst situation what I felt with my most of projects whether it is the right product for them? Have they applied their expertise to take the time to get to know what is their requirement and what do they need from the ERP for their business, will this ERP work for their operational model, is there anyone who is expertise in knowing the ERP what they have selected for their organization? Have they engaged anyone to know what the requirement from their people is and find the right fit for their organization?
I really doubt but as an implementation consultant, I have to say that the product selected by them can do miracles but when I know their business and their way of handling their requirements, they don’t need ERP system at all, because no one wants to change their processes to suit to ERP.
When you are with your parents, you don’t need to change your attitude or behavior and you are always a prince and princess to your parents, but when you move on in your life, and get on to your toes and in the working environment, you can expect you to be a prince or princess to your boss and you have to change your attitude and you are supposed to follow him even if you feel that he is fool of an ass.
None of them were interested to go for a change in the business process. All these years we have been doing this and our existing system can do this. To all the top management people on their face I want to say this but due to diligence respect, I have not expressed it to them but now I have to vent it out “If your existing system can do miracles, why do you want to change it to the ERP system?”
Business Re-Engineering Process
I really doubt on this topic, because neither the vendor nor the customer has an approach for the business re-engineering process. This will guide the company to strive better than the earlier way of approach. It need not be a right approach followed in the legacy system and the users have to understand that they have to change it for the betterment of the company. Legacy system is your own system and you can fine tune it as per your whims and fancies, and this is not the case with the ERP system.
Before implementing any ERP system, the Organizations has to hire some consultants from the same ERP applications experience and they need to identify the current process and the future process. For the betterment of the time and cost effectiveness, an in-house consultant is very much required and who should guide the stake holders and the entire team.
ERP’s are not said to be for the business re-engineering process, but it gives more chances to improve the business process and it is a continuous process improvement. We can’t get in to the 15th floor without a basement. Business Re-engineering process is like a basement process and it allows you to improve continuously. ERP is the base product and you have to fit in your business processes under the wings of it.
Resistance to Change
Most of the time the employees who are involved in the legacy system gets panic to entertain the new system. They have an insecurity feeling and they are under panic situation and are possibly cause the most difficult hurdle in an ERP rollout.
Employees are resistant to change for a countless reasons, most of the times rooted in some type of fear. They may be worried about their jobs are in jeopardy or that they will be unable to learn the new system. For few the jobs are in jeopardy, if you are not ready to learn the new system. Try to get expertise in the new system, even before it is implemented. Some may just be afraid of new technology as they are well versed and conversant with their existing system. Whatever the reasons; education is the answer. You can learn good and new things, if you have the wish.
We don’t start walking as a new born, it takes to time to crawl, stand, walk and run. Try to educate the employees and help them to see how the new system will benefit them personally. So as they will be less stressed because the new system is going to benefit them in all their day-to-day routines by providing all the information they need is readily available.
Again they will get panic, if everything is readily available, what will I do? It is their responsibility to verify and to compare the results, and to concentrate more on their improvement activities. I have seen with the people in the same project how it was easier for them to use once they are out of the fear and they were actually excited about the new system.
The new system will have certain limitations like the users need to input more data or devote more of their time in terms of their legacy system, because the new system was much more explicit, structured, richer and standard in functionality.
Individuals Aren’t Held Responsible and Management have to get in to the project.
Management has to understand that whatever the concerns raised by the team as issues has to be resolved when they go for a new ERP system and it has to be the best system for the company. It is the management that goes for the new system and they have to be part of it all through the implementation process, and support the plan throughout the organization. It has to be done either through standard functionalities of the ERP system or by changing the process of the organization to fit into the ERP.
Management in smaller companies tends to be reluctant in holding people accountable for their performance and it is inevitable because the number of resources are limited, still there will be few members who are held responsible.
In most of the projects, Individuals are not held responsible or accountable for the development or the hindrance of the project. A team has to be set and each individual has to be given a responsibility and they are to be the sole responsible person. This gives the courage for the team to work with the vendors in getting what they want from the new system by providing the exact requirement. As a manager, a person can give a requirement on a top level and a solution will be provided instantly based on the managers concern, but the one who works will give the details as they are the one working in it and facing the problems, which might require some more fine tunings or a change in the requirement.
It is mere lack of involvement by those responsible for working with changed processes causes a huge change or the difference in adjusting the new system. Always communications should be clear and inadequate communication within the team is very much required.
Everyone throughout the organization must believe that management is completely behind the project and will take any necessary action to ensure success. Best employees or the managers of the organization can lose their edge when they know they will never be held accountable. Sometimes, management must be prepared to make some tough decisions if an employee remains a roadblock to the project’s success.
If there is lack of visibility from top management and there is no support and commitment from the steering committee and sheer arrogance from the project team will lead to the failures. A lack of buy-in often results from not getting end-users involved in the project from the very start, thereby negating their authorship and ownership of the new system and processes.
One Individual should not be held responsible for the entire project and this will cause major setback as the decisions taken by him need not be right always. He will walk with a mindset to cause troubles in the implementation and we can’t walk with a negative person in a project implementation.
An ego clash to be avoided in taking decisions and it has to be in favor of the organization not to prove who is superior or who has done the best. Project is not for the individual and process is not for the individual, a process introduced by an individual can remain in the organization even after he leaves the organization, which shows how sincere the person is.
Management is responsible for nominating the right people to drive the project successfully and to make their lives as well as their vendor’s life easier.
Inadequate Requirements Definition
This helps in the implementation of the project as the organizations are not ready to accept any business process changes with the new system, it leads to customizations and to drag the implementation time from 3 months to 3 years as the requirement from the customer never ends.
I can say that inadequate definition of functional requirements as part of the requirement study leads to failures for nearly 60% of ERP implementation. When there is a change, the changes have to be documented to great extent and identified the time to be spent on it from the documentation to delivery stage. This is not only a matter of serious concern, and it is because we are not comprehensively and systematically developing a quality set of functional requirements definitions. Even after the systematic requirements, even a small change comes to a developed program causes a disaster as it requires lot of changes, testing, re-testing etc and this leads to the greatest cause of ERP implementation failures poor package selection.
A requirement for the customization never ends as it keeps on growing because organizations are being charged for the additional work. It requires to be documented by the person who needs it and not by the person who is going to develop it. The developer can work on the requirement document and can identify the feasibilities of achieving the requirement.
Resources and Information Technology Department
The core project team needs to be established, consisting of the project manager and teams for IT, finance and control, project management and after implementation support team. Few key resources are selected from In house and few needs to be hired to cater for the internal preparation and project management activities due to the lack of such project manager or IT specialist or the specialist who can help them in convincing the vendor and users.
IT department is a servicing department and they should not drive the project from the front end. IT can lead a project in terms of monitoring and supporting, but they will never be able to take any decisions on the implementation process.
They are facilitating members not the users. They are in the organization to service the other department. In my last project IT was the driving factor for near about 1 year and later we got hold of the users, which is a major setback for this project. There have been too many projects. We cannot run them all at once is what the slogan that has to be with the IT team, but they have taken over burden and screwed up to this project by showing their anger to the project manager as he will speak on faces of his colleagues. As part of IT team I had a fight with my boss in my previous employment, why we have to drive this project and we are not the owners. Let the department expertise come and sit with me and provide the requirements, then I will work on it.
Project Managers are not responsible for the project failure if they come from the IT department but they are responsible if they are handling everyone as their near peers. They were not handling the position of project managers as project managers and were literally begging all their peers to help them in completing the project.
I will not blame them because we ITians are bonded slaves to do the services to the other departments. It is a curse for the IT people that they have to undergo this slavery and get beaten up.
Neither the CIO was involved nor was the CFO involved to great extent till the step down of the Project Manager. These things will result in changing the project sponsor from CIO to CFO and after few years of run time, there will be nobody among the top management actively supporting and sponsoring the project because it becomes like never ending project.
Out of frustration, there are many people who leave the project half the way and we can’t demand the consultants to stick on to a company or a project for two years as it is going to impact the consultant’s career in long run. If I show two years in one project implementation in my CV, will it have some value?
IT is in charge of the IT infrastructure of the company and as a member of the core team, the role either will be in facilitating the infrastructure or in serving them with the development of the new requirement. How can IT team member can guide a consultant in providing the business flow or the process?
What I have done with IT? I tried to learn and understand their current process only. What is the new process, neither IT knows or the users who are about to use knows it. Do I need to know the entire business to implement Oracle Financials? I need to know only their financial processes and how to handle it in Oracle Financials. Whatever time I have spent with the company, is it going to be useful for me after the implementation? I have to spend my time in learning how to accommodate their financial processes with the standards of ERP not learning their industry and having the industry knowledge is not going to take me anywhere.
To begin with, IT doesn’t have any proper documents to guide the consultants in understanding the business process. A system developed by the IT and it is being used for ages and if they don’t have any documents is quite predictable to understand how the IT department works. Basic flow diagram is not available and we have spent more time in learning it and creating the current process for them. They are there to facilitate only not to improve or give any suggestions to those users.
IT department is like providing the railway tickets to the passengers, I want to go to Chennai, I will get Chennai ticket, somebody wants to go to Delhi, and they will get the Delhi ticket. There is no documentation whether I traveled to Delhi or some other person traveled to Chennai. Why I traveled to Chennai is also unknown?
Estimating the Implementation time
Another cause of ERP implementation failure is the miscalculation of effort and time it will take to accomplish the project. ERP are very expensive and time consuming product which will provide the required results over a period of time.
One of the funniest implementation which I can say in my career will be this project. Because I was told in the beginning that it is a vanilla implementation by customer as well. I am not sure whether anyone in the organization knows what is the meaning of Vanilla implementation? A vanilla implementation requires only 2-3 months in a service industry where in we need to configure the existing ERP process without modifying anything and to fit in the business requirement to it.
What all we have not changed as per the standard functionalities R12? I can publish a book on the customizations what I have worked for this project. I don’t have much to write for a project wherein we customized an application on top of Oracle financials and not within oracle financials. I have to think a lot, only couple of modules doesn’t have major changes. General ledger and Fixed Assets are the modules which are being used without much changes and I am happy that at least there are no changes in that.
When I had a chat for the first time with a senior manager in IT, I told him clearly that this project can be implemented as vanilla implementation in 3 months and if we have to go with the data migration and integration it might require another 6 months. But in reality, it dragged to two years, who is the reason- god only knows it.
Choice of the Vendor
It is very easy for the organizations to cover up their mistakes by saying that we have done the wrong choice by selecting this vendor. How cheap mindset these people have? How can you select a wrong vendor? Are you not in bidding process? Aren’t you ashamed to say this, how does the evaluation process happens for the product and vendor?
Choice of Vendor doesn’t make any difference as this is not a product to be developed for your organization. It is a ready-made product which requires to be fit into your requirement. We are not creating a product for you. ERP is a readymade, tailor made software which requires only fine tuning to suit to your requirements.
Without knowing what costume I have to wear, I bought clothes and after buying it, I wanted it to be stitched as suit whereas that material is for Salwar. It is my decision whether I have to compromise to go for a Salwar or to change the material to a suit. Tailor will stitch a Suit in that material warning me that don’t say it was stitched by me. Whole world will laugh at you if you go with this.
Choice is not with the tailor and it is only with the organization. I should have the confidence in the tailor and I have to take his words either to change the material or to stitch it as a salwar.
The reason why I say as the Choice of the vendor does not matter much if you know the requirement perfectly. We are not going to change the legacy to ERP. We are going to change the business requirements to ERP.
To fulfill this, at times a process change is required and for some reasons, some customizations are required. Without having a basement, we can’t complain that vendor is bad.
I too agree that the consultants are not master of all, once the confidence and commitment is shown from the client side, automatically all the requirements will be fulfilled. All consultants in a project cant have the same degree of understanding, communication or even the subject matters.
One will be good in accounting, one will be good in process, one will be good in communication, one will be good in project management etc., All together only can form a group and it is common in both the vendor as well as from the customer/clients side. Only difference is consultants will give the respect to one and all in the same level and we consultants never get any respect from the entire organization which is also a curse.
Any relationship is based on the trust and you have to trust in the vendor, that they will do the best for you. When your own people are not co-operating the only team was ready to spend their day and nights to complete this project was from the vendor side. How could you feel that it doesn’t impact the vendor?
This project success may be a little thing for these organizations, but for the growing company this success means more and the individuals commitment is very high with regards to the commitment from the client side. As an individual I have given a word in front of all the stake holders that I will not continue to work in this profession if this project fails.
With the above discrepancies in any organization, even the Infosys Narayanamurthy or Azim Premji of Wipro can’t do miracles for you. Only small companies like my company can allocate resources and be with patient to say that we have implemented this product for this company. Neither these organizations will be thankful nor do they know to gain their respect from others.
Finally to conclude, changes are required on the organizational level, Project Level and Individual Level.
On the organizational level, all the political problems needs to be sorted out before going for a new implementation and this will truly save 80% of time for everyone. Distribution of powers to the individuals is highly required and it has to be given to the person who can do welfare for the organization or justice to the project implementation.
On the project level, monitoring and controlling activities to be with the project sponsor from the beginning of the project and the change management has to be followed strictly whether it is a time factor or cost factor.
On the individual level, changes in work roles and tasks would have been little more effective in the implementation process.
How Often Do Projects fail and how can this is measured?
Only those who have worked on many projects and failed can answer to this question. Most of the projects are successful only when it meets the client’s requirements. Or in other way, when you don’t have much complication in your business process and all your requirements fit in to the standard functionalities of the ERP system, then we can say that the implementation is successful.
For a Consultant, when the implementation can be successful is when it is being used by the users.
For a Client, when the implementation can be successful is when it is being used for the reporting purpose.
For the top management, when they get the reports instantly without any delays. But all these can’t happen in 3 months or 6 months’ time.
Success of the ERP can be felt only after few years not during the initial stage or immediately after the implementation. Up to me, all the ERP implementations are successful, only the time and the cost matters.
After analyzing the factors in the last few projects, I conclude the below given factors as the successful or challenged or failed projects.
The top 5 factors found in successful projects are:
1. User Involvement
2. Minimized Scope
3. Requirements Specifications (Clear Defined Goals)
4. Proper Planning
5. Realistic Expectations
6. Responsibility & Accountability of Team Members
7. Competent project team members & Competent project manager
8. Top Management Involvement
The top 5 indicators found in “Disabled/Challenged” projects are:
1. Lack of User Input
2. Incomplete Requirements & Specifications
3. Changing Requirements & Specifications
4. Technical Incompetence
5. Lack of Executive Support
And finally a list of all the top factors found in “Failed” or Dragging projects
1. Incomplete Requirements
2. Lack of user involvement
3. Lack of Resources
4. Unrealistic Expectations
5. Lack of Executive Support
6. Changing Requirements & Specifications
7. Poor Planning
8. Lack of Support for IT management
10. Technical Illiteracy (Prior Knowledge about the product is very much essential)
With the above details, it is very clear that all the mentioned points clearly identifies that there is huge responsibility lies with the customer not with the vendor. None of the above has the vendor as a plus or weak point. Vendor has a role to play to limit the scope of the project but it doesn’t mean that they can say no to everything. When we say ‘Yes’ to everything the scope gets wider and the scope is neither redefined nor approved by the steering committee or by any stake holders, but it just drags the project and the lack of user involvement plays a vital role in all the projects.
Was the project successful one? In simple words “justice delayed is justice denied. I consider this success as “Success delayed should not be considered as Success.”
Am I going to leave this profession? Why should I when the project is successful ? If someone feels that it is a failure, they have to leave their profession, because up to me it is very well defined and successful project….