That’s the rhetorical question Matt Jordan, CEO, Premier Performance, Inc. asked of the audience at the Senior Executive Forum at the Operations Summit 2015 about installing your order management system. Matt is a client of ours and he has gone through several ERP and order management system conversions and shared his experiences.
Matt quoted several findings from a study of ERP systems by Panorama Consulting, which parallels our experience with order management system installs involving call center, fulfillment and e-commerce.
Source: Panorama Consulting, 2014 ERP Report
The Panorama report says, “Over the past four years of Panorama’s independent ERP research, the average duration has been 16.1 months. In this period, approximately 54-percent of projects have exceeded their planned budgets, 72-percent of projects have exceeded their planned durations and a full 66-percent of respondent organizations have received less than 50-percent of the measurable benefits they anticipated from their ERP software initiatives.”
Matt went on to say that in his experience these are Factors Inhibiting Success:
- Most common problem: "organizational issues"
- Weak project management
- Too narrow a scope for budgeting
- Too little understanding of impact of new system on processes
- Not capturing all the requirements for all areas of the business
- Not understaning how the new system works
Matt's observations about Mitigating Factors That Inhibit Success
- Staff buy in/sell the rationale for the change. We have seen many times, the staff complains about the exisiting system, but they may not fully commit to successful implementation.
- Adequate resources (right people) - in one case, Matt's company chose to upgrade the positions and skill sets for the new system implementation.
- Third party project manager - independent/speak the truth/focused. Managing implemenetation of an order management system isn't something most managers do but once or twice in their careers (thank God!). Plus they have full time positions managing the day to day opertions. In our experience, the vendor's don't have the broader experience in your business and they should not have the broad responsibility for success. Matt felt that a third party manager gave the independence about staff and vendor progress and issues.
- Partnering with the right VAR. Our experience shows that 30% of the time, the selling VAR gets fired and contractors, internal staff or another VAR implements the system.
- Expand scope of implementation budget beyond VAR quote - what other costs are likely? Some costs that Matt and we would recommend including:Take time to understand software functionality - don't assume anything. Just because others in ecommerce use the system it doesn't mean the system is full functioned or will meet your needs.
- Overtime that will be required
- Accounting write down on prior purchased equipment and systems
- Additional staff added that may have more expensive skill sets than in-house personnel
- Lost productivity in the first couple months where temps may be required
- Minimize customization - a recent project for a client of ours showed that 2/3 of the proposed modifications the client staff felt were mandatory could be dropped after fully understanding the vendor's system, processing and functions.
- Manage expectations - in small steps. Most organizations fail to do detail implementation planning before they make the recommendations on cost and schedule to management and sign the contracts. In our experience without better planning the initial expectation you create are faulty. Vendors are notorious for giving overly optimistic schedules which fail to get met.
"How bad can installing an order management system be?"said Matt. I think Matt Jordan's observations about installing large scale systems are right on target. You're chaging the way almost everyone in your company does their work. Studies like these show you can't over plan or over manage the implementation of a system. I know many readers have the same experience.
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