Experiencing the sales cycle of a large, multi-million dollar ERP software solution can be stressful and overwhelming for most CIOs and CFOs. With large capital investments and careers at stake – along with a well-publicized slew of ERP failures in recent years – these purchases can be difficult to navigate.
Once the determination of the best ERP system for your organization has been made, the challenge swiftly evolves into difficulty delivering results in line with the expectations set during the sales cycle. Unfortunately for most implementing organizations, ERP vendors and sales reps don’t have a strong incentive to set realistic expectations while trying to close a deal, which is a key contributor to this misalignment. In fact, our ERP expert witness work has shown that improperly set expectations during the software sales cycle is one of the common triggers for ERP lawsuits.
So what’s a CIO, CFO or ERP project manager to do? The key is to educate yourself and keep your eyes wide open to what to expect during your ERP implementation. Here are three ways to better align sales promises with actual results:
1. Define a realistic ERP implementation plan and budget. According to our 2012 ERP Report, as well as our 2013 ERP Report being published next month, the majority of ERP projects take more time and money than expected. The most common and most simple reason for this variance is because ERP vendors and sales reps too often sell overly optimistic and unrealistic implementation scenarios. Most sales reps don’t understand what it takes to do an implementation right – and they’re typically nowhere to be found on the battlefield of their customers’ implementations – so it’s no wonder that they paint rosy scenarios to sell more software. The best way to set realistic expectations is to engage independent ERP consultants armed with quantitative data to better estimate implementation needs.
2. Don’t overlook the business case. Under no circumstances should you gloss over or downplay the importance of a business case. No matter how certain you are that a new ERP system is the right investment, no matter how sure you are that your organization has no choice but to purchase new software, and no matter how unreliable you think benefit projections may be, never skimp on the business case. The reason is simple: you won’t achieve what you don’t measure and you can’t make informed project investment decisions without a business case framework. I can’t tell you how many of our clients have regretted not creating a business case before or during their ERP implementations (despite our recommendations). Their regret stems largely from the millions of dollars of savings they couldn’t measure and the customization requests they couldn’t rationalize via an ROI estimate during implementation. If anything, every CIO and ERP project manager should create and manage to a business case for the self-serving purpose of demonstrating the impact the project had on the organization, not to mention the long-term business benefits that it will allow he or she to optimize.
3. Invest heavily in organizational change management and business process reengineering. Whichever software you’ve purchased – whether it’s SAP, Oracle, Microsoft Dynamics or any Tier II or Tier III ERP system – is going to work from a technical and functional perspective. Much less certain, however, are the people and process issues that derail most implementation teams. The success or failure of your implementation will likely come down to how well you address organizational change management and business process reengineering, so be sure to invest your time, resources, and budget accordingly. Finally, don’t fall into the “we’re just going to adopt the system’s best practices” trap. This approach sounds good in theory and is a brilliant sales message among ERP vendors, but it is fraught with risk and rarely works.
Of course, realistic expectations alone won’t make an ERP implementation succeed. Instead, it’s more like an ante required to play the game and have a shot at winning. These three tips will help you avoid the pitfalls that have led to too many failures in the past.
Learn more by registering for our upcoming webinar on February 21, Review of Panorama’s 2013 ERP Report.
Bridging the Delta Between ERP Software Sales Promises and Actual Results,