An Enterprise Resource Planning (ERP) solution is the nervous system of a business. ERP systems enable companies to improve efficiency and make smarter operational decisions. ERP projects can be transformational, long, and impact many functional areas of the business. These projects can be wildly successful, but too often they miss deadlines, go over budget, and cause many sleepless and stressful nights. Here are a few scenarios you may find all too familiar.
Scenario 1: An ERP vendor sells your company on the need for a better software that will improve efficiency and better run your business. Next, you hire a consulting firm to kick off the implementation. You have your heart set on a January 1st “go-live”, which happens to fit perfectly within the agreed-upon 12 months to execute. Late into the project, as the statistics below will show is common, things are starting to fall behind. To help adhere to the desired go-live date, the consulting firm decides to bring on a new team member. The consulting firm opts not to submit a change request for fear of hurting the relationship with you. Each passing day that this new resource works eats away at the firm’s margin, increasing the likelihood that the firm takes a loss on the project.
Scenario 2: Mid-way through the ERP implementation, your consulting team determines that their 12 month estimate is far too short given the scope and current project team. After some discussion, you mutually agree to push the go-live date. Both parties agree to the extension but fail to consider all the downstream and cross-stream impacts this decision will have across the company. For example, inefficiencies the integration was originally supposed to alleviate remain in place and additional projects that had contingencies related to this integration are put on hold.
The scenarios above are undesirable for either party, but are all too common with ERP projects. By nature, their complexity and transformational impact make ERP projects difficult to manage. Sometimes, it may seem like the only thing you can truly plan for on these engagements is that they will not go according to plan. For a medium company, large IT developments costs an average of $1.3M and research shows 52.7% of projects will cost 189% of their original estimates.¹
However, these troublesome situations are avoidable with the utilization of proper resources and planning. ERP strategy and management is a core offering within West Monroe’s Operations Excellence practice. We have deep experience in planning ERP implementations, and we can draw from that experience to help you avoid these and other scenarios.
Client-Led vs. Consultant-Led Implementations –The difference between consultants operating in a support role vs. a leadership role can greatly impact the execution and achievement of key milestones. While client-led projects may operate with more autonomy, they may often not have the breadth of experience in project management that West Monroe can bring to an engagement. The clear benefit to having a project be consultant-led is that a group that specializes in project management as well as task execution can manage the daily efforts and meeting milestone deadlines. The client will always have the final say on key decisions, and steering committees allow for strong collaborative discussions. But, overall, teams specializing in project management offer tangible value when leading the daily activities of an engagement.
Interactions with Other Consulting Firms – Given the size and scope of ERP projects, clients may hire multiple consulting firms with varying expertise to help drive the project to completion. When vetting which vendors are right for your business, ensure they are not scoping their role in a vacuum. Different firms have their own unique methodology and the interdependencies in ERP projects call for a strong program management office. West Monroe has a core competency in the PMO space and thoroughly considers how one work stream affects another while driving the project towards go-live.
Work Life Balance –On ERP projects, clients and consulting firms ask their teams to work long hours and late nights. That is the nature of these engagements. At times, these “demands” may become too frequent and can negatively affect the project team’s productivity. Our solution is to continuously plan, anticipate, and communicate when these long days are likely to occur. Even the most strenuous days are more tolerable with advance warning. Through a proven strategy involving strong planning and transparency, West Monroe’s “trusted advisor” approach to client engagements provides an appropriate work life balance for the team and ultimately a more satisfactory result.
All in all, no ERP project is a simple endeavor. But, ERP initiatives can, if planned and managed appropriately, completely transform a business. Projects of this scale can completely change a company’s operating model and will impact every branch of a business. However, they do not need to be as painful as the statistics might show. Take time at the beginning and give special consideration to the management style, the interconnectedness of differing roles, and the team’s stamina to execute. Be stern and diligent, and you might go-live…on time.
¹Standish Group Report, 2014 Chaos Report