ERP: The Blame Game Hasn't Changed
Wednesday, April 24, 2013
Since the early days of MRPII, the forerunner to ERP, we have witnessed a very patchy success rate for implementations. In the early days it was thought that the transition from basic manual systems to computerisation was simply a learning curve and that it would improve as time went by and we learnt how to use the technology. The success rate for ERP was around 30% but again success was hard to determine as success for one company was failure for another.
After the rebadging of MRPII to ERP in the 1990s there was a massive shift in the focus and cost structure of implementations. ERP vendors and consulting companies saw a business opportunity and offered implementation services for very large sums of money which has changed the game quite dramatically. The cost of failure has gone from the cost of software, training, internal project activities and ad-hoc consulting to a massive external project team cost from software vendors so-called experts that can cripple companies, or in some cases send them bankrupt, for no better than a 30% success rate, according to consistent survey results. (Again success is hard to define as per with MRPII)
With MRPII it was clearly the responsibility of the company to understand and implement the system and changes required for MRPII to be successful.
With ERP and the change to having ERP vendor and their implementation partner experts driving the ERP projects you would expect that they would accept responsibility for the ERP outcomes. Not so! The external implementation experts continue to blame the company for ERP failures exonerating themselves from any blame.
Our analysis is consistently showing that projects that have run into trouble have not been flagged as problems until the actual disaster happens. ERP is about project management and milestone activities, as is any project. It is inconceivable that experts in the field of ERP implementation do not identify potential problems and address them before they adversely impact the project. Escalation, in writing to the senior management of a company, before the project hits a brick wall would be expected so remedial action can be taken. If the consultants and the project team cannot identify potential problems before they become a crisis then why are they being paid huge sums of money?
Our mediation activities for clients with ERP vendors and their implementation team/ partners show a surprising tendency to simply blame the client for all of the problems and exonerate themselves totally for any responsibility. They point out all of the failings of the client company, and there are many, but gloss over the issue of “what did they do about it” when activities done or not done will have an impact on the future of the project success. Did they even see it coming? Isn’t this what the client company paid them for?
There is no doubt that ERP project failure is a joint responsibility from all the players (see Devils Triangle) but with the huge amounts of money paid over to external third partym consultants you would expect red flags to be raised whenever there is a potential problem looming that has a negative impact on the ERP project outcomes.
Paying ERP vendors and their implementation teams/partners huge sums of money for no better result than was achieved without them begs the question: “Has industry been conned on the ability of vendor consultants to implement systems any better than the company can do using the previous methods used to implement MRPII back before ERP? “ The evidence would suggest that industry is being conned and the money spent on expensive consultants is wasted money when they can achieve the same results without them.
Education and a systematic application of simple rules beginning with the acquisition strategy provides a clear picture of what needs to be done without the huge consulting costs that are part of today’s ERP industry. (see 26 steps)