Over the years, countless papers and articles have been written on enterprise resource planning (ERP) implementation project success rates and why ERP projects fail. Interestingly enough, the reasons that projects fail are the same today as they were 10 years ago: lack of top management commitment, unrealistic expectations, poor requirements definition, improper package selection, gaps between software and business requirements, inadequate resources, underestimating time and cost, poor project management, lack of methodology, underestimating impact of change, lack of training and education, and last, but not least, poor communication.
In short, ERP projects will continue to fail due to human factors. This is especially true today where ERP system implementations cross many internal and external organizational boundaries. However, the fact is that most organizations do not anticipate project failure. Instead, they plan for success, governed by budget, next step deliverables, executive expectations, and go-live deadlines. Heads-down to the task at hand, the project manager and team have little visibility and less control over potential risks within the project - until it's too late.
Preempting project failure begins with understanding that there is a preventative approach that can provide planned project assurance at critical points in the project's evolution. It begins with clear understanding of expectations - from the executives, to the business and IT management, to the software vendors and end users.
Why? Because clarity in expectations translates to clarity in both system requirements and business analysis. Consider these key findings from the report, The Impact of Business Requirements on the Success of Technology Projects from IAG Consulting:
- Companies with poor business analysis capability will have three times as many project failures as successes
- 68% of companies are more likely to have a marginal project or outright failure than a success due to the way they approach business analysis
- Companies pay a premium of as much as 60% on time and budget when they use poor requirements practices on their projects
- Over 41% of the IT development budget for software, staff and external professional services will be consumed by poor requirements at the average company using average analysts versus the optimal organization
As indicated by the findings above, project failure can happen early in the project lifecycle, causing a ripple effect on your project. In planning your project, you have calculated your project budget, resource / staffing needs and your projected ROI. However, if there is a gap in your requirements that causes delay during the acquisition phase of your project, or worse yet, you leave out key requirements from the strategy phase because of a rushed assessment, the resulting impact will be seen downstream - causing the extension of subsequent project phases. The ripple effect of missing project gaps early during the project will not only create vulnerability and weakness in the project plan integrity, it affects the time line, the overall project cost, realized benefits / ROI calculations and the project team's credibility.
The need for project assurance
Project assurance is about making sure that projects are delivered on time, on-budget, with client acceptance. Having project assurance as part of a large-scale business system implementation helps you: control/reduce project costs; ensure milestones are met; minimize surprises; provide objective analysis; and provide peace of mind and trust among executives and project team members
Project Assurance methodologies are based on the following best practices:
1. Having an on-going executive dialog to manage expectations
At the leadership level, objective project assessments establish an executive dialog that allows business and organizational issues to be identified and analyzed with clarity and without emotion. By continuing this dialog throughout the implementation process, you will eventually remove organizational barriers both within the organization and with third party vendor and align all the parties with the common goal of project success. This process will also help set realistic expectations upfront and keep expectations current in the mind of project team members so that they don't lose sight of the forest while maneuvering around a tree.
2. Proactive monitoring of work-streams interdependencies.
Many organizations will set overly optimistic go-live dates in spite of the realities and limitations of the actual project. For example, the design phase extends ... but the time line doesn't. By monitoring project progress throughout the implementation, you can start discussions regarding key project dates early in the project's lifecycle to avoid downstream impacts.
This can be achieved by identifying, aligning and continuously monitoring work streams to ensure smooth progress throughout the organization. Understanding the dependencies between work streams during project plan development can help ensure proper resource allocations and project time frames.
3. Looking beyond the project dashboard
Realistic monitoring and analysis of progress of the implementation can show that even though all project management indicators are green, warning signs indicate endangered components. If indicators are only addressing past phases, but not addressing readiness for upcoming project tasks and activities, they are definitely trailing indicators and not trustworthy predictions of the future.
To assist in the process, seek objective project assessments from someone outside the project team. This person can be either internal to the organization or an independent expert. In either case, the assessments should be conducted by an executive project manager who has managed enough projects successfully to know how to recognize subtle indicators, intervene to accommodate the situation, and adjust expectations accordingly. These assessments will add value to the project implementation and protect against project failure by delivering the know-how and objective oversight through a fresh set of eyes.
Incorporating a project assurance methodology into your ERP implementation helps you to identify and resolve the strategic, tactical and intangible issues - and manage the human factors - before project gaps become chasms. The incremental costs you will incur by having an additional resource periodically conduct project assessments will be far less than the cost of project delays caused by unrealized project gaps and will provide the peace of mind that the project is on the right track.