CIO and CFO Hunger Games: The Risks and Rewards of Rapid ERP Implementations

ERP implementations are a lot like the “Hunger Games” for CIOs, CFOs and other executives tasked with making their ERP projects successful. For those that aren’t familiar with the novel or movie, Hunger Games is predicated on a story where two children from each “district” of a futuristic United States are expected literally to fight to death. The children are selected at random, coached, mentored and dressed for the Hunger Games, but only one remains in the end. The home district of the surviving child is then bathed in riches and attention from the central government, making them the envy of the other districts.

It’s no exaggeration to say the Hunger Games are a lot like ERP implementations. The odds of “survival” – one in 24 – look interestingly similar to the success rates of ERP projects. And while CIOs aren’t battling to a brutal death, most are fighting not to bring their organizations to their knees during or after the implementation. They’re also fighting for their jobs. And anyone who’s ever sorted through a stack of client references can tell you that ERP vendors – like the fictional government of Panem – make no bones about trumpeting their own “winners” as some sort proof that the odds are indeed in each contestant’s favor. In fact, one of the lines repeated throughout the story is “May the odds be ever in your favor” – quite ironic and disturbing given the fact that the odds are completely stacked against them.

CIOs and CFOs are in the same boat. As we’ve outlined in our 2012 ERP Report, most ERP implementations take longer than expected, cost more than expected, and fail to deliver at least half of the expected business benefits. Despite this fact, purchasing organizations always are dazzled with the “may the odds be ever in your favor” marketing messaging around rapid implementations, low risk and easy user adoption. SAP frequently talks about industry best practices, pre-configurations, and “templates” that result in easy ECC, All-in-One, or Business One implementations. Oracle often refers to their Business Accelerators and User Productivity Kit as part of a low-cost, low-risk E-Business Suite (EBS), JD Edwards, or PeopleSoft implementation. SaaS ERP (software as a service) also provides promises of fast, cheap and easy implementations. Finally, Microsoft Dynamics, Epicor, Infor, and other Tier II solutions similarly focus on the ways that they each stack the odds of success for a rapid implementation.

However, despite the fact that most executives want rapid implementations for their organizations and ERP vendors promise as much, the data proves that most implementations are not done quickly. So where is the disconnect? The brutal Hunger Games-style reality is that these promises of implementation acceleration – while noble in their intentions – fail to deliver. At the end of the day, organizational challenges, business process breakdowns, standardization, poor project management, lack of business and technical implementation expertise, and a host of other challenges that have nothing to do with the software all combine to create implementation initiatives that take longer than expected.

Should CIOs, CFOs and ERP project managers simply throw in the towel and run for cover? Absolutely not. Instead, they should educate themselves, be realistic and ask their team some key questions. Here are three things to keep in mind when considering a rapid implementation:

1. Define what “rapid implementation” means. According to our ERP research, the average ERP implementation for an average-size company is 14 months. However, most ERP vendor proposals we review on behalf on our clients range from three to six months for small- to mid-size clients, six to nine months for mid-size clients and 12 to 18 months for larger, multi-national clients, suggesting that these proposals are clearly misaligned with reality. While most system integrators and VARs would suggest that these ranges are typical, we would suggest, based on our experience and independent research, that these numbers actually are the definition of a rapid implementation. So when reviewing an ERP vendor’s proposal, a good rule of thumb is that their proposed timeline is indeed rapid, and therefore aggressive, risky and probably unrealistic.

2. Understand the tradeoff between speed, cost and quality. It is simply impossible to drive speed while at the same time minimizing cost and maximizing quality. For that very reason, a rapid implementation suggests that you will pay for that speed with increased costs and/or lower quality. The key to ask your organization during an implementation is which of the three variables is most important to you and how much you are willing to bend on the other two. Some organizations are willing to compromise cost and quality to achieve speed, but most are not.

3. Recognize the difference between speed to implement and the speed to adopt. Implementing ERP software is relatively easy, but defining and getting the entire organization to adopt the related business processes is very difficult and the primary driver of duration, cost and risk of ERP implementations. When developing your ERP implementation plan, it is important that you not only consider the time it takes to implement the software – which could actually be done over a three-day weekend if you really needed it done fast – but also the time it takes to define new and improved business processes, make important operational decisions, change the organization and realize the business benefits that you expected from the implementation.

These three considerations will help drive your organization toward realistic expectations and a clear understanding of what you’re getting yourself into as you prepare to play the ERP implementation Hunger Games. The key is to understand what you’re about to get yourself into, plan accordingly, and hire the right experts to help you through the difficult process.

May the odds be ever in your favor. (But, if and when you realize they’re not, call Panorama.)