THE METIER OF ERP PROJECT MANAGEMENT Successful Projects above all require Business-IT Leadership

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1 THE METIER OF ERP PROJECT MANAGEMENT Successful Projects above all require Business-IT Leadership White Paper March P a g e

2 Table of contents Introduction ERP Projects ERP Project Management ERP Project Leadership Conclusion About Prigogine & Partners and the Author Introduction At the beginning of every company s ERP adventure an inventory of critical success factors is assembled. As every ERP implementation requires a huge effort from the organization it is indeed of utmost importance that all risks with regards to the project are mitigated in order for the project to be heading for success. Critical success factors identified typically come down to the following: Management support (lack of support, changing requirements and scope) Organizational factors (User experience, Departmental conflicts, Sufficiency of resources, Scope changes) User involvement (lack of commitment, ineffective communication, internal conflicts, best project resources are also often best company resources) Project management (Project control functions, Project authority) Technology changes Training of end-users, end-to-end process understanding (seeing the company as a whole and not merely one s own department) It is also very typical that of the end of an ERP project (as if and ERP implementation can ever be called finished) during its evaluation, most of the upfront listed success factors seem not to have stood ground during the project! The true question one should ask is WHY? The answer however is clear: ERP projects are business-it projects, it requires leadership to navigate this vessel into a safe haven. And leadership is much more than project management skills. Following paper intends to reveal some insights based on personal management experience in more than 17 full life cycle ERP implementations using several software tools (SAP ERP, MS NAV, OpenERP). ERP Projects An ERP Project lifecycle typically comes down to following phases: Definition Method Selection Software Selection Partner Selection T Project Organisation Training Implementation Data Migration B Go Live Support Correct Learn & Improve R 2 P a g e

3 The typical Think Build Run phasing comes into play. The most important phase within the cycle is the thinking, as it determines what the build and the run phase will look like but it should also set the goals clear for the entire project. It cannot be stressed enough that this phase is often not underestimated but under-performed by most of the companies I came in contact with (ranging from large multinationals to small midsized companies)! If almost all companies outsource the build phase of an ERP project to an external partner, the think phase is often kept internally. Only a minority of the organizations I worked for decided to manage the entire project (T-B-R) in collaboration with advisor consultancies. Often the software selection indeed is outsourced but this is but a minor part of tasks to be taken care of. Moreover, this approach does not guarantee smooth knowledge and experience handover between the Think Build Run phases and often results into silo thinking on these three pillars while handover and continuous measurement across these phases with regards to the true project drivers for the company are crucial. Think about the Project Definition! The reason for under-performance is often clear; leading an ERP project is not most companies main business. It s only to be performed once every decade, thus internal experience and knowledge on how to run an entire ERP project is poorly available internally. However, internal experience, ownership and leadership in the Think part of the ERP project and thus the phase in which company specific understanding is key, is what will make your project successful, regardless of what all the possible implementation partners might try to fool you into! For that reason we dive into more detail on this most important process. If you start thinking on the project s definition during the implementation, you re far too late. The project charter you will draw is a copy of your integrator s earlier projects. Do you want to be treated similar as anyone else? Sure you want, but for the right reasons? Not at all, you want to be treated as the ones before you in their quest for ERP to avoid risks, you especially want to avoid the pitfalls the front runners did end up with BUT you also want to make sure that the ERP project will serve your company s goals and that it will fit your company and not that average competitor of yours! The different business needs that trigger the ERP Project Definition typically surface slowly within an organization as it touches all little corners within an organization s departments and entire eco system. Nevertheless, the most important to understand is the company s drivers to engage into an ERP project. Once the true drivers are clear these should be captured within the further measurement of the entire project ranging from its communication strategies up to its implementation and training concepts. Your company drivers to engage into ERP should be the drivers for your ERP projects. By embedding your company s true business drivers for ERP into the project management and entire execution it will be aligned with the company s operations and thus head for a more successful delivery. Typical drivers a company can lead into an ERP project (new or replacement) are: improved operational efficiency, improved process measurement, cost reduction, increased customer intimacy etc. Think about the Method Selection! When heading for another ERP platform it is important that it is aligned to your project definition. Should your company go for a custom developed ERP platform as its ERP functions are that typical and company specific that it cannot be modeled into available ERP packages, or should your company align to existing an ERP platform? Most of the elements providing an answer to this question are to be found in the project definition and more specifically your company s drivers to engage into an ERP project. 3 P a g e

4 Analysis by Computer Profile (2012) on the Belgian installed base of ERP systems reveals that only 19,3 % of the ERP installations are custom build applications. All the other company ERP platforms are package based. The two main players in the Belgian market (SAP and Microsoft) together occupy a market share of almost half of the installations. Think about the Software Selection! Often the ERP software selection comes down to a BID analysis, rather than a FIT analysis. This is a clear proof that the company s homework was not done properly, the project definition and the method are not entirely sharp and clear within the organization. In the short term it might lead to success but in the long run a mismatch between a company s drivers and what the software can deliver will unfold itself. Execute a software FIT analysis rather than a BID analysis when selecting ERP software! But how can a good software selection be made within an organization that lacks sufficient experience in the software market? Often external companies are hired to assist in selecting ERP software, and often this is successful, but more often it does not add much value. In order to build a fit analysis between your company s project drivers and the software splendid horse power analysis skills should be present, able to distinguish between important and less important software features, between critical and non-critical process flows. The analysis should focus on how the software can contribute to accomplishing the targets put forward in the project drivers. Project management during the entire ERP project should focus on managing all the steps required to realize the business drivers leading to the project, all evaluations and decisions made in the ERP project should be measured against the metrics defined with regards to the drivers identified. From personal experience, I must say that every ERP software in the market has its reason d être, all have specific focus points and added value. It is thus up to the company looking to start up an ERP project to invest in understanding what value can be brought to the table by what software and of equal importance, the software implementation partner and how this value maps to the project drivers identified. Think about the Partner Selection! From personal experience I can tell that I ve witnessed great ERP software to have been implemented with poor results, and lesser ERP software implemented that cleaver that it outperformed functionally more elaborated ERP platforms. Here it is where the implementation experience of the integrator and more specifically his team comes into play. But an ERP project requires much more than merely ensuring the right skills are on board to execute the specific tasks. I will come back on this topic in more depth within the paragraph on ERP Project Leadership but will reveal a little of it right here. In order for the ERP project to be successful bear into mind the following main working tools required for success: Content (or skills or software knowledge and expertise), Protocol (or the way it will be organized, led, communicated, structured) and Relationships (or how bound between people will be lead to doing the right things because of the People Factor in projects). 4 P a g e

5 If the potential partner would not have the skills of implementing the software he would not be requested to present his case to you; This is the condition sine que non. But it is the less important element that you will need to get your project successful. Of course you will need the most experienced consultants, of course they need to know the software insight out but what you need is consultants that do have these skills but more important and that understand how to use these skills in the most efficient way within your company! Your company has its specifics, its people, its processes, its current tools and ways of working; all together referred to as your company s culture! That s what has built your company to what it stands for today. Safeguard it! Also within your ERP Project, as this is what will ensure you of a successful ERP Project. Therefore you need a partner that has a similar company culture as yourself (you will need it to solve conflicts that will arise along the road, make sure that you and your partner do speak the same language when this happens!), a partner that understands the difficulties a company goes through when engaging into ERP, that knows the protocol to bring the right message clearly, that structures the path towards a successful go live together with you. ERP Project Management ERP Project Management is about controlling the way a project is organized, prepared, executed and delivered to operations for running the solution. Several methodologies have been very successful in structuring the activities needed to administer projects correctly such as PRINCE II, AGILE, LEAN and many more. But what is a company with a perfectly managed project that does not deal with the drivers put forward in the project definition. The most important for a project is that it delivers the value that it was supposed to deliver. This turns the ERP project into a business project, more than an IT project. Should business than lead the ERP project, not necessarily, it should more importantly be led by the department that can best bring the project to life within the organization in order for all parts of the puzzle to fit together: People, Processes and Technology. In my opinion the management of the project should be in the hands of a Leader, the company visionair who can bring change to the organization, who can lead the troops through difficult times, who can celebrate successes and morn about losses but who never loses track on the drivers put forward. This because he thinks about the project in terms of the business value it is supposed to deliver. Therefore: don t hire an accountant of hours, a micro level task manager, but engage with someone who breathes the spirit I ve seen that, I ve been there, follow-me. He might not be structured enough an report detailed enough, back him up with a simple project management office but have trust in his leadership and alignment to your company s ERP drivers! ERP Project Leadership This brings us to the ERP Project Leadership. To my personal belief ERP Project Leadership comes down to three main pillars your ERP management should be built on: CONTENT PROTOCOL RELATIONSHIP CONTENT = KNOWLEDGE ON ERP and the chosen SOFTWARE Of course your Project Leader should know the software or he should be backed-up with knowledgeable team members he can build on, he should not be misled by a lack of knowledge! He should be analytical, a quick learner to understand problem descriptions by its content but mainly by its impact on the business and the project drivers. Without content a leader cannot convince, the project manager cannot make the right decisions, without content the leader cannot ask for commitment. But content should NEVER be in the way to 5 P a g e

6 ensure the project of its success. Don t hire an engineer as project manager if only the resolution of details and detailed knowledge can make him decide to act, hire that engineer for his analytical skills and his holistic capabilities to see the broader context of the project. PROTOCOL = THE SKILL TO PRESENT DIFFICULT DECISIONS IN A SIMPLE WAY Your Project Leader should be a top communicator, someone who can bring difficult things in a simple way. Your Project Leader should be a facilitator, prepared to put himself aside and let other people provide their point of views and help getting to the solution. Your Project Leader will consider himself successful because the project is successful and not because of all the things he did in the project. RELATIONSHIP = THE UNDERSTANDING OF DEEPER UNDERLYING BOUNDS BETWEEN PEOPLE As a Project Leader you know how to read the organization, its people and processes. You listen to what people say but you understand to deduct what they really mean. Only by being able of going deep under the surface and entering in the true culture of the organization you will find the elements needed to drive the project to success. As a Project Leader you are innovative, cleaver but your acts are always based on integrity. You focus on the results. You understand that projects are made by people, not by tools just as companies. Conclusion Companies engaging into ERP projects from a clear insight on the drivers behind the ERP project requirements and that succeed in embedding these business drivers into the entire project management are more likely to end up with a successful project. ERP project management, that truly understands and hereby aligns to the company ERP drivers, develops leadership to guide the organization through the different phases of a typical ERP project. The more preparation and focus on the Think phase of the project, this from a clear objective to engage into a successful ERP implementation, the smoother the project build and run phases will become. Spend your time right! About Prigogine & Partners and the Author Prigogine & Partners is a management consulting firm. Our mission is to provide our clients with comprehensive and data-driven insights to challenges and questions they are being confronted with, principally in the following business areas: Sales & marketing Field technicians & service delivery Asset management & maintenance Supply chain management The answers and insights we provide support our clients' decision-making management. In order to facilitate informed decisions, we provide our clients with recommendations aimed at improving their 6 P a g e

7 business, primarily in terms of increased revenue, reduced costs, defining a clear strategic direction, and designing required competency sourcing. Prigogine & Partners stands alone in excellence and quality. We are focused on offering expert advice by collaborating partners and consultants who possess extensive business knowledge and profound backgrounds in business applications (ERP, APS, CRM, ALM,...), resulting in analytical horsepower and an unbridled ability to generate fresh perspectives based on innovative practices and technology. Patrick Carmans ( 1973) is co-founding partner of Prigogine & Partners management consultants. He holds multiple university degrees and has worked as project manager on numerous national and international ERP projects within a broad range of industries. Patrick was sales and managing director for a local top IT consulting firm, responsible for portfolio management, sales and marketing management for the Belgian market space. More information: Prigogine & Partners Frankrijklei Antwerp (Belgium) Patrick Carmans M: E: [email protected] 7 P a g e