Five ways to avoid ERP project failure

21 October 2016

Julien Delvat

Julien Delvat

SAP S/4HANA Consultant

To err is human, but to really foul things up you need a computer”, said Paul R. Ehrlich [1]. Gartner adapted the saying to the enterprise in its “Predicts 2016” report: “through 2018, 90 percent of organizations will lack a postmodern application integration strategy and execution ability, resulting in integration disorder, greater complexity and cost.” [2] To put it bluntly, many ERP projects are doomed to fail!

The research and advisory group still offers hope for companies that adopt postmodern ERPs: "This new environment promises more business agility, but only if the increased complexity is recognized and addressed.”

At Bluefin, our experts have seen their fair share of complex and challenging projects which have ‘gone South’. Turning them around and putting them back on the right track is frequently the reason why we’re called in. I’d like to share with you some of the lessons we’ve learned, to assist you in avoiding the predicted IT Armageddon. 

First off, we’ll look at what postmodern ERPs are. Then, we’ll see what can be done during implementation to mitigate the risk of an upcoming catastrophe. Lastly, I’ll show how the right partner can help your organization avoid a doomsday disaster.

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Postmodern ERPs

Gartner defines the postmodern ERP as: “a technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.” [3]

What strikes me as interesting in this definition is what they’ve missed from it: the deployment options - on-premise or cloud? These considerations are detailed in Gartner’s HOOF Model:

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Postmodern ERPs HOOF Model. Source: Gartner

Take a moment to look through this and evaluate where your organization currently sits and where it is heading. With that in mind, let’s look at how to increase the chances for your journey to be successful.

Siloed applications

As described above, one of the keys to postmodern ERPs is the integration of applications provided by diverse vendors, moving away from “monolith mega-suites”. By contrast, best-of-breed applications have a tendency to only support integration with their own tools. For instance, some cloud applications deliver a long list of interfaces (APIs) to interact with their solution, but are limited to read-only interactions. This means that the application will most likely not be able to be integrated into new automated business processes. 

In order to help break your corporate silos, you need to avoid recreating them with software. This requires a shift in the mindset from “module” software (CRM, Finance, Procurement), to a process platform focusing on end-to-end business scenarios. 

For instance:

  • Replace “CRM” with “Order to Cash” or “Quote to Cash” processing
  • Replace “Procurement” with “Procure to Pay”
  • Replace “Asset Management” with “Acquire to Retire”
  • Replace “CAD” with “Idea to Offering”
  • Replace “Analytics” with “Record-to-Report”

This will ensure a seamless experience for the end users and simplify your application landscape.

Incomplete scope

The cloud ERP landscape is still heterogeneous. A large number of solutions grew from a specialized scope and expanded into the ERP domain, or from small target customers to larger ones. However, unless a large scope is covered, including Gartner’s main topics: “finance, HR, purchasing, and distribution”, then integration is increasingly complex and hard to maintain. 

As an example, if a professional services company uses an accounting software as its main system of record and combines it with a time and expenses package, as well as a payroll solution, some key architecture decisions need to be considered:

  • Where should employee master data be maintained?
  • How to handle errors and corrections of time entries?
  • How should workflows and approvals be handled?

Without an out-of-the-box integration, these simple questions could easily give nightmares to the most seasoned IT teams.

Cloud Washing

Software vendors are now expected to have a cloud option. However, some took shortcuts by simply hosting their solutions, providing remote access, and changing their licenses to a subscription model. 

This ‘cloud washing’ is far from the postmodern ERP definition we saw earlier. Robust solutions should offer:

  • Browser-based solutions (no download)
  • Similar user experience across different devices (with responsive design for smaller screens)
  • Multi-tenant or elastic options for improved Total Cost of Ownership (TCO)

Postmodern ERPs should have a cloud-first principle with a consistent strategy for back-end and user experience. Ensure you identify such key differentiators when selecting your solution.

Mis-alignment to your corporate strategy

Good ERP is more than just good software. It involves an institutional commitment to connecting people, processes, and resources”, said James Young. We’ve seen countless software purchase decisions that made sense at the level of cost center manager of for a small business unit, but were counter-productive to the overall company-wide strategy.

On a recent project, the CIO of a large company told us: “for security and legal reasons, we have a zero-cloud policy”. However, during the subsequent roadmap analysis, we uncovered a slew of critical web applications for CRM, human resources, and reporting, unbeknown to him.

Another mistake is to align your IT strategy with a vendor roadmap. On our last roadmap exercise for a multinational consumer products manufacturing company, our analysis concluded that there wasn’t enough value in the current release of their main software provider, and that a better strategy would be to leapfrog this release in 2016 and implement the next major release in 2017, thus reducing the impact of change and improving the chances of value realization.

Go at it alone

As the Gartner report concludes: "It really is time that the significant investments enterprises make in ERP solutions reap real benefits. ERP vendors and SIs must raise their game on implementation approaches, renovating and revisiting their own implementation methodologies for speed and with greater emphasis on the benefits realization activities."

But let's face it: simple just ain't easy! Despite efforts from ERP vendors to facilitate the on-boarding of new teams and the standardization of the connectivity of their applications, the integration piece still needs expertise on both applications. Such skills are usually few and far in-between but are critical to the success of your project. 

So, if your future postmodern ERP implementation project becomes scary; “If there's something weird, And it don't look good, Who you gonna call?

 

 

 

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About the author

Julien Delvat

SAP S/4HANA Consultant

With over 15 years’ experience of developing cost management applications at SAP Labs France, coupled with significant experience of architecting, designing and implementing these systems for clients across the globe and industries, Julien is perfectly placed to offer Bluefin’s customers unrivalled expertise in the colliding worlds of finance and technology. It’s not with good reason he’s known as a ‘Costing Geek’!

When it comes to collaborating with clients, Julien likes to get under an organisation’s skin. He wants to know what makes a company tick, what their priorities are and what the reality is on the ground. Doing this assists him to build information systems that reflect their true business needs.

Julien’s contributions to the SAP Financials community have been recognized through publications in professional blogs and journals like SCN.com and SAP Expert, as well as multiple speaking and panel opportunities at conferences like SAP Financials, SAP Controlling, Sapphire / ASUG, and SAP TechEd. He is most passionate about his roles as an ASUG volunteer for the Financials community and as an SAP Mentor, working as a trusted advisor to build new communication channels between SAP and its customers.