ERP Governance Structures that Work: Executive Steering Committees

All Articles From Eric Kimberling July 17, 2013 2

Steering CommitteeWhen it comes to ERP implementations, the term “project governance” is fairly ambiguous. Certified PMPs and experienced project managers all have different interpretations of what the term means, and they all have their favorite governance mechanisms, including issues logs, project charters, and other common governance tools.

The lack of consensus on project governance is a large reason why ERP implementations often fail. Data points as diverse as our 2013 ERP Report, our ERP expert witness experience, and lessons learned managing our clients’ implementations all suggest that project governance is a critical success factor. But not all commonly accepted project governance tools are as effective as others.

One aspect of project governance that absolutely works and delivers a significant bang for the proverbial buck is an Executive Steering Committee. This concept is one of the few areas of project governance that we can say with absolute certainty will have a big impact on project success. Here are just a few ways that steering committees can help ensure success for your ERP implementation:

Executive Steering Committees enable executive buy-in and support. According to our experience and research, lack of executive buy-in and support is one of the most common root causes of ERP failure. Establishing an Executive Steering Committee with formalized governance processes helps mitigate this challenge. Project team members should clearly understand the issues that do (and don’t) need to be escalated to the Executive Steering Committee. To address these issues, the Committee should meet a minimum of once per month (and more during more critical times of the project, such as the weeks and months leading up to go-live). This sort of engagement helps ensure that the executive involvement is real in fact as well as in perception among employees.

They ensure alignment between overall corporate strategy and ERP implementation results. ERP implementations often get off track because they are not aligned with the organization’s strategic goals and objectives. For example, if a manufacturing company’s goal is to provide better response times to customers, then the Executive Steering Committee will want to make sure that the implementation team is doing everything in their power to ensure that the new ERP system streamlines related processes. For this reason, executives may need or want to take a more active role in ensuring key deliverables, such as the business process documentation and blueprints, reflect the overall strategic priorities of the company.

Executive Steering Committees ensure project controls. We’ve all heard the horror stories of companies that over-customized or made other critical errors that led project timelines and budgets astray. Executive Steering Committee oversight is a great way to ensure that this doesn’t happen. For example, we often advise our clients that each and every customization request should require Committee approval so that it can ensure there is an adequate cost-benefit relative to risk. Otherwise, you run the risk of the project team constantly succumbing to employee pressures to change the software rather than changing the business to fit the software. Implementation project teams are typically under immense pressure and won’t always make the best long-term decisions under these circumstances, so it is important for the Executive Steering Committee to provide this support.

Finally, Executive Steering Committees help keep executives accountable. ERP implementations cannot be completely delegated, so executives need to be ultimately responsible and accountable for the outcome. A robust Executive Steering Committee process ensures that management doesn’t take a hands-off approach and instead owns the project. The more involved they are, the more likely they are to identify and mitigate potential risks and blindsides that the project team may not see. Most executives aren’t going to be involved in all of the day-to-day details, but they should at least be involved in key decisions surrounding business processes, organizational changes and other critical components of how the new ERP system will affect the business.

Learn more by watching our free, on-demand webinar, ERP Project Planning.

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2 Comments »

  1. Doug Hadden July 17, 2013 at 11:16 am -

    We’re seeing what appears to be a disconnect in many ERP projects between customer expectations and what was delivered. Part of this problem can be resolved with more effective organizational/IT governance that includes executive support.

    One of the governance holes in ERP implementation is vendor governance. Steering Committees should also include vendor commitment. At least 1 senior executive from the provider should be part of the steering committee. Large ERP projects (Fortune 2000, large government) should include the software manufacturer on the steering committee as well.

    Interestingly, a recent analysis by Professor Matt Andrews of the Harvard Kennedy School found that “leaders” in public financial management reform, as perceived by users, were the middle management responsible for implementation and change management. There seems to be some merit in considering 2 layers of governance: executives and managers.

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  2. John Belden July 18, 2013 at 8:21 am -

    Eric,

    Excellent post. Closely alinged with your first point, well structured sessions with executives will significantly reduce risks associated with execution and value extraction. From my experience mitigating risks is often times a balancing act. Facilitating the participation of the senior group will lead to improved insights on risks and a more active participation in treatment.

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