Executive Den
Your Company: Welcome to It!
As a senior executive your eye is on the delivery of business results. The initiatives you sponsor are your means to growth. What are you doing to execute faster time to market, corporate agility, improved customer experience and increased margins? This is your spot for growth focused ideas. Enjoy!
ERP Projects Lead to Revenue Loss
If you are considering ERP, take your time.
Way too many ERP projects not only end up exceeding their allocated budgets, just as often, they lead to significant revenue loss due to a decline in core business productivity. In case you think I am being a Chicken Little please consider the data. A recent IDC survey shows that the negative impact of business disruptions attached to ERP modifications is simply too high: a 20.9% decline in stock price, a 14.3% revenue loss due to delayed product launches, and a 16.6% decline in customer satisfaction. Reported losses from survey respondents making ERP changes range from $10 million to over $500 million. If you would like to better understand what’s behind these numbers, you can read about the survey results in the IDC article: Business Cost of ERP Failure_IDS Survey_12-2009. Manufacturing businesses, especially those with a high degree of complexity are at greater than average risk of such an outcome. Of the myriad ways that ERP projects run into trouble, they all boil down to two categories of mistakes.
Mistake #1. Selecting the Wrong ERP System:
All too often the company’s core business processes are inadequately represented on the selection team. If you are a manufacturing-centric organization having deep and consistent core business input is a make-or-break critical component your ERP project. Many ERP teams include core business representatives at either too high or too low a level. You need people who really understand what it takes to design, build and deliver your products. You need senior core business leaders to balance the Finance bias that is always behind an ERP purchase. Don’t let finance over-rule the business needs when it comes to ERP selection and configuration. Without essential core business input, your ERP requirements will be full of gaps leaving you at high risk of selecting the wrong system.
Mistake #2. Inadequate/Unskilled Project Team with Weak Change Management Capability
Inadequately resourcing such a critical investment is pure foolishness and a prescription for failure. Yet many ERP projects are poorly staffed both internally and externally and the change management effort is often weak to non-existent. Getting the right outside help for technical support, project management and change management is non-negotiable. Without these three pillars, your project will be crippled from the start. Do not assume that by hiring brand names you have solved your problem. Every ERP project is as unique as the business it is intended to support. While there are many instances where the big names (SAP/Oracle/Deloitte/Accenture) are exactly what is needed, there are also many cases where other options are a better fit. Too often companies try to CYA by using a big name (expensive) system integrator consultant and choosing a big name (expensive) ERP tool.
Bottom Line
Don’t make mistakes #1 or #2. Find the right tool for the unique needs of your business and commit the time, people and dollars to the best possible implementation effort. Otherwise the somewhat anticipated high cost of your ERP consultant and the somewhat anticipated high cost of the ERP system will be eclipsed by the completely unplanned cost of your business loss.
How to Know When Your Project is at Risk and What To Do About It
You are the project sponsor. Your role may distance you from essential project details. If this is the case you may only be aware of the project’s “high level” status. Effective risk management requires a more detailed understanding. How will you know if your understanding is too high level? How can you quickly assess project risk? Here is what you need to do to assess and manage project risk.
Have you been experiencing any of these symptoms?:
- Feeling uneasy about project progress and don’t know what to do about it
- Don’t fully understand project activities, deliverables and time lines
- Don’t know who is leading what
- Can’t recite the project milestones
- Feel like the Far Side dog when listening to your project leader, “blah, blah, blah, blah…”
- Don’t understand the project acronyms
If you see yourself in this quick self analysis, it is time to follow these simple steps and avoid potential project melt downs.
1. Tell your project leader that you would like an in-depth project review led by him/her with each of the functional and content leads presenting status on their area of expertise. Ask them to summarize with good graphics, diagrams and data. Explain that you will be asking a lot of questions so that you, and they, will be able to explain the project to anyone who asks going forward.
2. Have someone assigned to write down your questions and answers and use this to start your FAQs….that would be “Frequently Asked Questions”.
3. In the privacy of your home or office, read the FAQs and remember the answers. Jot down clarifying questions and get them answered within 48 hours.
4. Use your FAQs to drive your next presentation to senior staff or key stakeholders.
If you don’t know what’s going on, you can be sure that no-one else does.
If you do this, your team will see you as involved and committed to understanding the project details. Your executive peers will hear about it and know you are on top of it – because you are.
Barriers to IT Strategic Relevance
Henry Peyret, in his 2007 Forrester article, Assess Your Enterprise Agility well describes the CIO dilemma:
- IT objectives still include only cost reduction and quality
- IT objectives rarely reflect enterprise agility objectives
- Many firms still measure IT on its contribution to cost reductions
“While there are a number of current IT trends that, in theory, should improve enterprise agility — such as service-oriented architecture (SOA), on-demand services, pervasive technologies, outsourcing, Dynamic Business Applications, agile development, and off-shoring, these technologies require cross-department investment in enterprises where each business unit manages budgets separately.
A reliance on shared services inhibits change flexibility. Typical shared services like IT, HR, and procurement are often seen as inhibitors to change. While their main objective is to decrease global costs, they often do not deliver the right level of adaptability to the different business units that are facing change. These units complain that shared services provide either the same “lowest common denominator” service at the lowest price for every business unit or a higher level of service but at a higher service/price ratio that is too expensive for the “poorest” units.”
Think about this as you design and scope your ERP, outsourcing or shared service initiatives.
If IT wants to be strategically relevant, it must provide business value beyond cost reduction. As you plan your initiative, are you including business functionality, process redesign, and change management that will enable strategic business value?
Who’s On First?
While you are running the bases of project management, your stakeholders are wondering “When are we going to see the benefits of this project?”
Deployment Planning is the process of figuring out which business units will receive which new system functionality, business processes and tools and when they will receive them.
Why invest in deployment planning?
To ensure that you optimize costs and benefits over time.
Some changes to roles, processes, technology must take place right away – NOW!
Some are better planned as your short term follow-on activities – Next
Some may occur in a second phase of the project or initiative – Later
Here’s a little Deployment Planning Algorithm for really geeky project managers:
Optimized Deployment = (Now+Next+Later)/Time
This probably seems really obvious and simple. It is if your project is small. It gets exponentially more complicated with scale. Given the multitude of dependencies you are balancing such as business requirements, customer requirements, budgets, process hand-offs, training development and executive schedules, a step-by-step approach to your Now-Next-Later Deployment Plan is a critical success factor for most large projects.
Herding the Executive Cats
How do you solve a problem called Executive Alignment?
They said they were on board. So why don’t they show up? And most importantly, why are their direct reports fighting you on the assignment of needed resources ? You’ve written a clear project strategy with clear objectives and a business case that demonstrates your project’s value proposition. So, why does everyone still seem so confused?
What’s Going On?
Imagine that each of your stakeholders is a magnet capable of uniting or splintering their extended network for or against your project’s objectives. The power of the magnets may differ, some are positively charged and some are negative but the ability to control their combined effect on your project is the single greatest lever in your change management toolkit. Are your stakeholders pulling towards a common objective or is your company’s management team its own worst enemy? Once the negative energy starts it will spread invisibly and swiftly and it will create havoc in the white spaces of your project.
Are your stakeholders impotent or worse?
- The VP who practices public support but behind the scenes bets against your success
- The Director who believes in the project but can’t commit any of her people to its implementation
- Your peer in a lateral department who led a similar project last year, knows you are underfunded but hasn’t told you he can help you find more money because he doesn’t want to insult your intelligence.
With these kinds of friends, who needs enemies?
What’s a Project Leader to do?
Executive Alignment uses project management, soft skills, hard data, simple logic, coaching and business acumen to help you get the support you need to succeed.
Sound easy? You’re right. It’s not. It’s really hard. That’s why most projects come in late and over budget, with all kinds of bugs and failures.
The Good News is if you take it step by step, it may not be easy but it is doable.
Shannon Solutions Launches a New Website
Shannon Solutions is pleased to announce the launch of this website on March 19, 2010. The new ShannonSolutions.com site features a clean, modern look and streamlined navigation.
The new format provides exceptional flexibility and enables me to use videos and podcasts as well as down-loadable content for registered users. I have also included a blog and with comments providing a forum for sharing best practices and war stories front.
This is my new global communication tool aimed at establishing a closer relationship with you.
I look forward to your feedback and to using this site to help you manage your projects and transform your business.
~Barbara Shannon