Six ways to ensure an ERP implementation delivers value

Any moderately experienced IT or manufacturing manager has likely been involved in one or more enterprise software implementation projects, complete with all the standard tips for project success: secure a strong executive-level sponsor, create a detailed project plan in advance, and make sure enough people are dedicated to the project.


Any moderately experienced IT or manufacturing manager has likely been involved in one or more enterprise software implementation projects, complete with all the standard tips for project success: secure a strong executive-level sponsor, create a detailed project plan in advance, and make sure enough people are dedicated to the project.

While these are sound tips, they haven't brought an end to system implementation failures.

Performing this analysis can be thought of as part of project risk assessment. Done well, the analysis provides tremendous insight to what needs to be done to mitigate implementation risks, and sets the stage for project activities. It also helps executives set realistic expectations about the pace of change the organization can manage, and the timing of project benefits.

Robbins-Gioia, an Alexandria, Va.-based program management consulting firm, recently reported that 51 percent of ERP projects are considered failures, while a full 30 percent far exceed budget and miss their completion dates by a wide margin. These numbers can be attributed to inherent problems in what are generally considered best practices for enterprise systems implementations.

Consider the idea of executive sponsorship: What are the chances of an executive admitting to being less than fully committed to an ongoing ERP project, even if the implementation team doesn't feel completely supported?

Six suggestions

If seemingly tried-and-true best practices can't guarantee project success, what can a company do to improve the chances that its next implementation effort won't flop? Here are some suggestions:

1. Focus on reaping measurable business benefits.

Projects are much more likely to succeed when a company views the adoption of a new enterprise system as an opportunity to improve the way it does business, rather than an interruption of the status quo. This means tackling change-management issues head-on by giving people all the information they need about the new system, and how it will impact their jobs.

One manufacturer with a track record for successful implementations rarely green lights a project that isn't expected to boost productivity or cut costs by at least 25 percent—and 50 percent or more is the actual goal. To ensure these levels of performance, the projects are formally managed, monitored, and controlled.

To achieve breakthrough improvements, both users and IT staff members must have the same definition of project success.

During initial phases, IT is in the driver’s seat, using input from line-of-business managers to budget and schedule projects. IT also plays a key role during the system adoption phase, but the business managers take on an increasing level of influence. Ability to affect performance improvements shifts to the business managers after adoption. Actual financial returns are in the realm of factors—such as a deep understanding of effective use by the organization—that may have less to do with daily business operations, and stretch well beyond the limits of IT control.

Great projects target the achievement of specific business performance, and assess potential, define business metrics that matter, report progress, and continue to do so until targeted benchmarks are reached. Key metrics include cycle times, employee productivity, and margins.

2. Establish a Program Management Office (PMO).

Every growing company has a distinctive competitive advantage. It's the primary thing that attracts customers—and their dollars. Companies that make the most of this advantage learn to embed the processes that make them stand above the competition into their IT infrastructures. This requires making a leap beyond basic project management, which focuses on tasks and completion dates. Basic project management does not concern itself with strategic alignment, or achieving tangible business improvement.

A disciplined PMO is the evolution of project work into business value creation within IT. The PMO seeks delivery of business benefits that can be gained through IT investment. This group becomes the soul of IT. Tuned into the business and the company's future strategies, it routinely performs IT needs assessment and portfolio management, and assists line- of-business executives with business case development.

PMO gives projects context within the overarching goals of business value, but its role also subsumes projects—and many of the silos of IT. A strong PMO can handle a range of tasks often covered by different organizations:

  • Project management, facilitation, and administration;

  • Risk assessment and change management;

  • Development and delivery of system/process training;

  • Vendor and third-party management–especially if a consulting firm is involved; and

  • Executive liaison for formally communicating project progress and business results on a regular basis.

The PMO also should communicate how the project is changing operational performance, ensuring that employees, customers, and suppliers associated with performance change have access to the measurements relevant to them.

3. Assess the organization's technical maturity level before project launch.

Companies design manufacturing and supply chain processes that optimize their own businesses. That's why no two enterprise software implementations are exactly alike.

From an IT standpoint, companies begin implementations with different levels of skills and experience. This actually becomes one of the chief responsibilities of the project team: Design a meaningful plan that takes the organization's maturity and capabilities into account.

When you consider the nature of application software—which ultimately embodies a company's business processes—implementation efforts must drive the cultural change required to fully tap the potential of the software's tools and processes. The magnitude of this change is characterized by the amount of process and technology change the new systems will require, and the degree of difficulty in getting users to modify behavior. Likewise, a savvy CEO is going to consider the incentive structures that exist, and whether they may actually inhibit the desire to alter the status quo.

4. Appoint strong project managers.

Projects as significant as an ERP system deployment need strong leaders, tough principles, and a fully involved staff that will ensure system benefits are delivered to predefined performance levels. These project managers need the skills to assess operational capability—especially process and data quality maturity. They must develop performance-management metrics and the environment that project teams will operate within as part of project delivery.

Some implementations may require a trained project professional—not just a key manager. Beyond thorough execution of project tasks, these professionals also must read and understand the changing environment—i.e., manage multiple constituencies across the project life cycle.

5. Pay close attention to data quality early in the project.

Missing or inaccurate data can be a true project killer. It's simple: Users will not trust a new system if they question the veracity of the information it generates.

Both ends of this spectrum are fraught with problems. Opt for doing too much on your own and you may work too hard and too long at getting things done because of lack of knowledge and experience. Likewise, you may miss opportunities for quantum leaps in process innovation or performance achievement.

Unfortunately, the issue of data quality isn't a small one. Of companies responding to a recent PricewaterhouseCoopers survey, 75 percent reported significant problems as a result of defective data, and 33 percent had to delay or scrap new systems.

Other industry studies reveal that even smoothly run projects require teams that devote 20 percent to 30 percent of their time dealing with data consistency.

Clean, reliable data is essential to the success of an enterprise software project, but it's a checklist item that often receives only cursory mention in project plans. Great project managers set data cleanup as a “must-do,” early-stage activity.

These steps should be included in the work plan:

  • An assessment of the company's data accuracy. Consider factors like frequency of use, redundancy, and whether data is still at all relevant to the business processes.

  • A remediation plan concerning scope and time. This could include generation of data, cleansing, consolidation, and transformation.

  • Workflows and accountability for data-quality processes for ongoing accuracy.

  • A validation process to ensure a clean start-up.

The data accuracy issue can become especially tricky when a project calls for a large amount of critical data to be moved from PC spreadsheets to a corporate database. A single user can be comfortable with the missing data or sloppy facts, but a corporation cannot.

6. Use vendor resources wisely .

Manufacturers embarking on enterprise system projects almost never have enough resources, so companies usually need to work with the software providers to get projects done. The challenge is: Just how much is right? The answer shows up in advantages in time, cost, and success of implementations.

Behind the question of how much of which resources—i.e., consulting, education, project management—a vendor can bring to a project, the real question is what in-house processes are in place to make the most of all the vendor can do. How will the manufacturer interact with the vendor to access capability, and what can be done to effectively leverage the services and tools that the vendor brings to the project?

On the other hand, relying too heavily on the vendor may result in projects that meet all of the implementation milestones, but don't do much to improve the way the manufacturer does business.

Similarly, a company may not be privy to early warning signals that things need attention, or to key decisions that may have critical consequences for the business.


While not perfect, conventional wisdom about enterprise software implementations is based on real experience. But it goes only so far. There's more to know and to do, and companies enjoying the rewards of success have pearls of wisdom to share. Neglecting such pragmatic insight can be risky to the health of your business.

Author Information

David Caruso can be reached at

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