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ERP - Management Disconnect
Monday, August 05, 2013

ERP projects are complex and if done properly impact across the organisation.

The many surveys on the success of ERP show a gloomy picture indicating results that make any ERP acquisition a risky venture.

Whilst there are a multitude of reasons ERP systems end up underperforming or at worst bankrupting companies one issue always seems to raise its head when discussing ERP: “What was management doing when the ERP disaster was evolving?” It is not as if the ERP system was taking place on another planet! It was happening right in the middle of the day to day operations of the company yet there are rarely red flags being raised indicating that problems were there for all to see.

This is the interesting thing about ERP. Senior management typically hand off the project to subordinates with some form of reporting requirement to give them feedback when issues arise that management need to get involved in. The problem is when issues are raised of a difficult nature senior management want to avoid making hard decisions for concerns over upsetting the applecart and putting people offside, particularly the senior departmental managers.

This disconnect simply passes the issue back to the internal project people that have the responsibility of implementation but who do not have the authority to make the necessary decision concerning the problem which remains either unresolved or compromise decisions are arrived at by default, all having the potential to undermine the ERP outcomes.

I visit a number of companies that are experiencing significant ERP implementation problems and find that the problems causing the project to go off the rails were well known within the project but lacked management action to resolve them at an early enough stage to prevent a disaster from happening.

There are two issues here: 1/ The ERP project manager feels that they need to manage the issues and not go to management. This is some type of professional mindset that somehow feels by going to management it is an indication they cannot do the job.

2/ Management tend to avoid dealing with the issues for the afore-stated reason of not wanting to rock the boat and engage in wishful thinking the problems will somehow be resolved. The other issue for management is that they see ERP as a technology project and do not feel competent to handle the issues involved.

The combination of the project managers and senior managements reluctance to deal with the issues effectively result in problems escalating to the point of crisis instead of being dealt with effectively when the issues were first identified.

Management’s involvement is a must at an early stage and the ground rules for escalating and dealing with issues should be resolved at the very beginning of the ERP acquisitionstrategy. Many ERP disaster could have been avoided if this was in place.