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The Cliff of iffy ERP Projects

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The Cliff of iffy ERP Projects

Whether it is the tussle between Oracle and a Pennsylvania-based mechanical contractor over a failed ERP project or the likes of SAP with past strings of time- and scope-creeps; ERP projects can’t seem to avoid this precarious spot – the unfinished circle

Who doesn’t love the smooth stroke of a Zeigarnik effect? Relishing GoT or binge-watching a thriller series, we all seem to fall prey to the tempting blank space of a line interrupted and a circle left incomplete.

No wonder even silly TV shows still make money by showing a half open refrigerator in the kitchen. That explains the ready pile of tickets that franchise movies rake up for the next movie by showing a quick peek in the credit rolls itself.

Half done, half said, half revealed – the seduction of things left purposefully incomplete is simply incredible.

Except for – well, yeah – enterprises who are waiting for the finishing line of that Enterprise Resource Planning (ERP) project.

Failed, delayed, spilled-over and botched ERP projects have been chronicled for long now. Crummy implementations or data goof-ups or timelines blurred into a never ending horizon – it is not hard to guess why legal battles and media squabbles are as normal to be seen between an ERP vendor and a user as they are between two arch-rival ERP vendors.

Be it the case of Vodafone – Siebel (4.6 million pounds of fine slapped after litigation), the tiff between SAP- Woolies (profit and loss reports that were away for as long as 18 months), the courtroom drama between Waste Management and SAP, the Hershey-SAP scramble or the mess faced by Nike or University of Massachusetts

The latest to join this hall of brawls is Oracle – thanks to the recent lawsuit that Worth & Company, a Pennsylvania-based mechanical contractor, brought upon it for a failed ERP software deal. The company is basically asking the worth of $4.5 million spent to purchase and implement on what-it-calls a ‘non-functioning Oracle ERP product’ that missed its go-live date by a big mark (pushed over from 2015 to initial parts of 2018).

Breaking the Mold

A recent report from Panorama Consulting Solutions that studied 263 respondents throws up interesting patterns about this problem. These users who have selected or implemented SAP, Oracle, Microsoft Dynamics or Infor ERP solutions reveal that SAP clients are typically global and complex organizations. And implementation time on average is around 14.7 months, which for Oracle is 12 months, for Microsoft Dynamics is 12 months and for Infor it is 11.2 months. Also global implementations tend to need a longer time commitment due to the number of locations. Infor came up as a contender with the shortest implementations. We will see an interesting explanation to that in a while.

But what also jumped out here is that SAP has the longest operational disruptions (of course, it works with large organisations that have complex, global operations) and Infor showed the shortest operational disruptions. SAP implementations have a tendency to get longer, spurring some organisations to forgo secondary functionality for catching up on implementation time. So a less complex ERP system outside of the SAP solution set is also opted for that layer of functionality later.

The scenario is daunting on all dimensions. When the Cloud Security Alliance (CSA) asked 200 businesses about ERP migration plans to cloud, concerns about moving sensitive data (65 per cent), security (59 per cent) and regulatory compliance (54 per cent) were spotted as some front-burner issues. Here, disruption to business operations caused by the migration process (47 percent) and the time taken to migrate data (46 percent) were also key issues that were cited by these organisations. Looks like 90 per cent of CIOs are among the worried lot, having not-so-good experiences with data migration projects that were not going as planned. There were only a quarter that met their deadlines for such data migrations and an average data migration took almost 12 months. The number of unexpected problems they may encounter along the way were on top of these CIOs minds.

So what is missing or going wrong when it does go wrong? What makes these well-entrenched and well-seasoned suites attract legal suits? Are they arrogant, lazy, complacent or reckless? Or are the users to be blamed? A classic case of Chinese Whispers?
Who is to be blamed for the unfinished story here?

From the Horse Whisperer’s Mouth

If we ask someone with over three decades of experience in Project Management and SAP Implementation, the answer is quite unexpected. A lot of the responsibility falls upon no one else but the customer and its IT team. Virendra Bansal, group CIO, SAR group squeezes his hands-on and visceral experience into these candid words and explains why. As someone who has won accolades like the best SAP implementation award and completed projects in a record time of six months, it makes sense to hang on to his next set of words.

“Timelines are not met because of vendor’s irresponsibility but because of lack of a dedicated core team and attention from top leadership of a customer. ERP projects need to be driven from the top. We used a steering committee and a core committee to timely corral people on pending decisions. That is important to ensure that the project stays on track.”

He also contends that scope is a big issue to be addressed with these projects. “During implementation phases, the scope keeps changing and soon enough the project can become boundary-less. So one has to have the rigour and stringency to ensure that anything new, unless very critical, is bracketed for the next project instead of dragging the current one. Else, you will never reach an end-point.”
Requirements are, indeed, the bug-bear and invisible termite of many well-planned ERP projects. Bansal avers, “People can keep on coming with new requirements that look small but the CIO and the project manager have to ensure that the 80:20 formula is applied. Work on, and accommodate, only those requirements that are critical.”

Let us turn to another CIO veteran who has on his hat several feathers of successful SAP projects and a big roster of change-management stories. Former Executive Director and CIO of Indian Oil Corporation, Swaranjit S Soni has planned, directed and led major projects for SAP (ERP) implementations (India and abroad) in three Sri Lankan Oil companies and four group companies.
But there is only one thing he pins down as the biggest problem to ERP projects. And it is not technology or SLAs (Service Level Agreements) or licenses. It is ‘culture’.
Yes, he looks back at how IOC itself was comprised of several divisions that worked as diverse companies. “We had to bring them under a common platform and that was a major challenge. We started out in 2000 and our organisation designed separate team in the corporate office that entailed people from all areas – finance, marketing, operations, besides the usual IT ones. This small attempt at galvanizing different areas helped a lot.”

Soni does not dismiss the role of a competent vendor. “Choosing someone with expertise and experience is important. Credentials and credibility have to be in place here. You cannot cut costs or corners in this area. Picking the right implementation partner is crucial.
So let’s say even if all that is taken care of, how about the good old dilemma – to customise or not to?

Twisters and Tweezers

Comb through the Panorama Consulting ERP report for 2018 and you won’t miss out on this revelation. About 45 per cent of the implementations had significant level of customisations (note that most of the customers surveyed were using SAP and Oracle). It is not hard to wonder what happens when small twitches help in user adjustment and satisfaction, but ultimately delay the project with endless iterations.

Slicing this issue of customisation with his sharp scalpel of experience in the trenches, Bansal advises the use of best practices in the system instead of too much tweaking around. “I would recommend minimum customisation.”
Soni differs a bit and cites the area of stock-keeping accounting that was dealt with during introduction of a new ERP. It was a solution that challenged the habits of not having structured entries in the accounting earlier. People wanted to go with the same format they were used to. A small customisation there helped and soon people were happy to adjust to the new system.” Balance, he observes, is important. One can always go for customisation but it helps to limit it to the minimal-required level.

Turns out that Infor encourages organisations for minimal software customisation and use of more out-of-the-box pre-configurations. The idea is to spend less time on customisation and configuration, so as to shrink implementation timeline. Also customisation can have unforeseen effects on software functionality thanks to interdependencies. What the Panorama study also sussed out was that Oracle is surfacing as a flexible solution with simple customisation and configuration requirements that are possible in-house. Complex customisation makes users depend on external resources. Also Microsoft uses channel partners to provide preconfigured industry functionality. Incidentally, those who implement Oracle use the most internal resources (50.9 per cent). In the case of SAP the number was 49.2 per cent internal resources, Microsoft Dynamics it was 45.4 per cent and Infor had 47.4 per cent.

Circle or Spiral – how to get it right

A quick look at the annual ‘Clash of the Titans’ analysis by Panorama Consulting Solutions also unravels that software functionality, deployment options and vendor and product viability should be top-of-the-list items while going for any ERP. The importance of business process mapping and requirements definition also surfaced as issues worth noting well ahead in time.
To reduce the risk of operational disruption, organisations should take a phased implementation approach. It’s also wise to conduct multiple conference room pilots before go-live and pay attention to resource allocation. More so, as many organisations lean heavily towards external resources from the vendor and systems integrator. Unfortunately, this increases implementation costs.

There is more to this iceberg.

The indirect access and licensing-spill issues cannot be sidelined when one is evaluating one’s ERP roadmap. As per Duncan Jones, analyst at Forrester, CIOs should also be aware and agile about SAP’s new ERP licensing for the digital age. Jones cautions CIOs against delegating licensing to someone with insufficient authority. If one does nothing, SAP’s restrictions may inhibit a CIO’s ability to follow an open and eclectic Software as a Service (SaaS) strategy. “CIOs who want SAP to remain one of the most important software providers should take advantage of SAP’s need to update their contracts. Early adopters may be able to mold the new model to their needs while renegotiating the whole relationship to secure vital long-term protection and flexibility.”

Mike Guay, analyst Gartner has advised CIOs to work with both application leaders and business leaders to formulate a flexible and adaptable ERP strategy so that business outcomes can be improved.
Having a functional lens works wonders in the reckoning of Soni too who has handled a lot of IT transformations now. He came with both a Finance hat and a CIO hat and having support from another CTO hat helped him to handle change-management and strategic undercurrents of these projects with confidence. Now working as an IT Advisor at BizFirst Consulting, Soni reflects how a well laid out plan can make all the difference between a paper monster and a slick-oiled project. “When we started with SAP it was aimed for 800 locations but we begun with 20 locations and slowly moved to 200-300 locations. Of course, initial phases of any implementation have some issues to be ironed out (like traditional vs. new data formats) but overall the SAP project turned out successful.”

As Bansal prefers to label them, ERP projects are no big deal, they are small endeavours, provided you know how to do them right. “ERP is a cakewalk and not that huge a deal as we, often, make it out to be – or what it was ten to 15 years back.”

Guay echoes that thought. “ERP is not what it was 15 or ten years ago and organisations are replacing large, inflexible ERP systems with more open and adaptable suites deployed in the cloud. “ That explains why ERP vendors are deploying new technologies like Artificial Intelligence (AI), cloud delivery models and Machine Learning (ML) to enhance their systems, changing some fundamental capabilities of ERP and how users interact with it, he dissects. It is also worth noting here that traditional ERP platforms and strategies are inadequate foundations for digital businesses. This tide is elbowing out the ‘one size fits all’ approach of yesteryears. Bloated, expensive, heavy-maintenance and inexpensive ERP deployments will not make the cut anymore.

In this milieu of post-modern ERP, as Guay spells it out, one needs a business application strategy that embraces a loosely connected portfolio of heterogeneous solutions – an approach that is modern and flexible than ever.

In Guay’s assessment, one thing is sure: ERP is rapidly changing. “Most enterprises have significant investments in ERP applications. Rearchitecting of traditional ERP solutions by mature ERP vendors and a surge in cloud vendors are forcing CIOs and their business stakeholders to redefine what ERP means to them.”

In this rapidly-changing scenario, CIOs can definitely not afford to have any more cliff-hangers.
It is time to make sure:
1. Do not stretch requirements
2. Avoid unnecessary tailoring
3. Pick the right vendor and partner
4. Include all functions and top management
5. Keep a stern eye on calendars and scope
6. Look at the culture and user side while looking at technology
7. Flow with the time. Get agile and flexible.

There is no other way. It is one thing to watch a suspense story and an altogether different thing to be the hand that is hanging from a cliff. Not everyone can pull of a Tom Cruise move, right? Not when there is too much suspended in the air – data, users, transition, customers, uptime and competitive speed.

So what’s certainly better than a blurry circle? A clear and straight line. Go for it.

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