Five Signs of Executive Misalignment on Your ERP Implementation

MisalignmentExecutive buy-in and support is one of the key success factors for any ERP implementation. Without it, your ERP project has very little chance of success. With it, your initiative has the ability to completely transform your business.

When you look at the ERP implementation best practices laid out in our video, 20 Must-know Tips Before an ERP Implementation, it is clear that executive buy-in and support enables most – if not all – of these best practices to become reality. While our research and experience shows that organizational change management, strong project governance, effective business process reengineering and a host of other activities are required for ERP success, executive buy-in and support are the foundational elements of these activities.

In a somewhat surprising way, many executives underestimate the impact their action (or inaction) can have on a project. For optimal results, the executive team needs to understand that it will be much more effective if it is marching in the same direction. Similarly, the organization needs to know that the executive steering committee is unified in its commitment. Unfortunately, that’s not always the case. Following are five warning signs that your executive team may not be on the same page:

1.    Differing definitions of what’s important and what’s not. Whether it is a different opinion on the most important business process areas or on the primary measures of implementation success, conflicting definitions will inevitably confuse the organization and the project team. In order for an implementation to work well, the executive team needs to be unified in the definition of priorities for everyone involved. When this key component is in place, other ERP critical success factors have a tendency to fall into place as well.

2.    Inability to roll up their sleeves and make tough decisions. Executive buy-in entails more than simply approving the project and signing the checks. Executive team members need to be engaged in key decisions that will inevitably impact the operations of the business going forward. Telling certain workgroups that they can’t get exactly what they want from an ERP system or standardizing business processes across multiple workgroups are just two common instances where executive buy-in and alignment becomes very important.

3.    Discomfort communicating changes to the organization. Executives need to be aligned not only behind the scenes, but also in how they communicate to the organization as a whole. They should be comfortable providing project status updates and other pertinent “What’s in it for me?” information to employees, as well as specific changes that will be affecting various practice areas. Many executives prefer to delegate this type of communication to project managers or core team members, but employees typically receive the information better if it is delivered from an executive team member.

4.    Poor connection between the ERP implementation and the business vision. Any ERP implementation that doesn’t have the benefit of a clearly defined and communicated business vision is doomed to fail. Without these clear strategic parameters, project team members will struggle to make decisions that best support the strategic direction of the company going forward. This lack of clarity is one of the primary reasons why so many organizations are tempted to make bad decisions regarding customization, business process reengineering and optimization, and a host of other common failure points.

5.    Lack of clearly defined business benefits. Implementing a new ERP system “just because we have to” isn’t a good enough business justification. Executive team members need to clearly articulate the business benefits they expect from the system, who they expect to be responsible for achieving benefits, how they expect them to achieve benefits, and what will happen if they do or don’t achieve them. According to our 2013 ERP Report, only 40% of organizations realize at least half of the business benefits they expect. A majority of this 40% has measured performance (and likely continues to measure performance) against the business benefits defined by their executive teams.

Executive alignment won’t guarantee success, but it will at least provide the structure and support necessary to focus the organization on the achievement of ERP success. To learn more, download An Expert’s Guide to ERP Success and read chapter six on organizational change management.

Written by Eric Kimberling

After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP selections and implementations, including Kodak, Samsonite, Coors, Duke Energy and Lucent Technologies. In addition to his extensive ERP experience, Eric has also helped clients with business process reengineering, merger and acquisition integration, strategic planning and Six Sigma initiatives. Eric holds an MBA from Daniels College of Business at the University of Denver.

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One Comment

  1. Executive misalignment is by far the issue that has the most impact on ERP success or failure and this has not changed since the introduction of MRPII in the 70s.
    Executives who sign-on to ERP, set in stone a go-live date, limit the project budget assume the resources are available, without investigating or understanding the quantum of work that has to be completed has already saddled the project with the seeds of failure. Shortcuts and attempts to stop spending on work that should have been identified up-front only exacerbate the post-live running issues that the company will face. Executive involvement is a key factor but unless they change the way they investigate the full impact of the ERP strategy the outcome they will simply join the ranks of failed ERP.
    It is staggering to think that after 35+ years humans haven’t solved the ERP implementation problems. Maybe because there is so much money in the ERP industry the players don’t want it to change!

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