The ERP failure stats
You’d be forgiven if your upcoming ERP implementation project is a source of trepidation. And one commonly repeated stat (attributed to IT research and analysis firm Gartner) hasn’t helped.
It goes like this: Gartner says that 80% of all ERP projects fail.
In actuality, the 2018 Gartner research concluded that around 25% of ERP projects were late or cancelled completely, and another 55% were considered to have missed the expectations that stakeholders had for the project. According to one of the original authors, these stats were rolled together to make 80%. (That’s not to say that 25% isn’t a daunting and worrying statistic!)
In his article in Forbes, the author makes the point that “Meeting the expectations of a wide group of stakeholders and transforming how a company meets the needs of its customers, partners, and employees now and in the future cannot be accomplished with technology alone. It requires the formation of a common culture and mindset that inspires everyone within the organisation to work to meet its goals.”
And we agree. It takes more than technology to make an ERP implementation successful. Project management, change management and project governance all play an integral role.
What is project governance anyway (and how can you mess it up)?
Governance is about having good disciplines and oversight of the big picture.
It covers the make-or-break aspects of an implementation, such as establishing robust processes, monitoring the project goals and business objectives, proactively managing risks, effort and investment going into the project – and ensuring they are met. It’s a top-down approach which sits above the day-to-day milestone focus of project management. Project governance puts anything that may put the project at risk under scrutiny – from system performance to being distracted by the wrong business improvements to any external factors that may impact outcomes.
Above all, successful project governance ensures good structure, communications and alignment of stakeholders, executives, project managers and project teams.
So, what can go wrong?
- Aligning the teams at all levels: If your project vision isn’t clearly communicated, the path to success won’t be either. A failure to align your executive team with the project requirements can spell disaster through differing agendas, perspectives, and objectives.
- Lost time equals lost money and opportunity: Your project timeline can quickly derail through slow executive decision-making, approvals or a poorly defined chain of command.
- Too many chefs can (and will) spoil the broth: Without executive ownership through a well-represented steering committee and project team, you can expect a project typified by project delays, loss of opportunities and key resources, and teams working at cross purposes.
Why adopting good project governance should be a priority
Looking for a highly successful ERP implementation outcome? Then start as you mean to go on – with great governance.
It’s critical to introduce a strong governance framework (of people and processes) from the start and establish the right communication plan for decisions, approvals and escalation points for decision-making and issue resolution from the outset of your project.
What’s a typical approach to setting up governance
- Project governance requires ownership roles and commitment by both client and partner. On the client side, the senior person or owner is often called the project sponsor, and on the partner or vendor side, a senior supplier. If the project is significant in size, your partner may offer a project executive to oversee the implementation further. Everyone on the project team will have an important role to play, which is clearly stated.
- Establish the frequency of the Steering Committee meetings. These are regular gatherings of your governance team to review the project and act where required to keep the project on track. The committee can comprise board members or C-level executives appointed for the project's duration.
- Ensure a process for managing risks and issues, and a clear escalation process. All risks, assumptions, issues and decisions need to be captured and tracked on a shared project RAID register, so there’s complete transparency and accountability for both the partner and the client.
- Reporting at all levels through regular project status reporting to the team and the Steering Committee. We use a red, amber, and green (RAG) traffic light system to articulate the project's status, highlight the areas to focus on, and keep the project on track.
- Expectations for communications, timeliness for responses and how often to meet and collaborate. The expectations of resolution (how quickly will this issue be considered?) and decision-making (who has the final say on this). This requires all parties to agree on escalation points and create a ‘chain of command’ or reporting lines to ensure it’s plain sailing with no decision-making roadblocks.
Does every project need project governance?
Well, no. For most ERP projects, due to size and complexity, there is some form of governance established. However, where the project is simple and smaller, some basic governance is recommended to ensure the necessary mechanisms are put in place for project success.
Can you do without project governance in a pinch?
If you like the idea of signing off on having a new office building constructed for you but never checking on its progress, you accept time and budget overruns and some design ‘surprises’ (hello, no elevator access to the basement carpark?) as par for the course.
The same applies to an ERP implementation.
In theory, you will get what you signed off on. But given the significance of the project and its long-term and strategic impact on your business and its well-being, would you risk a completely hands-off approach without stakeholder oversight?
We think not.
Minimising risk is an active process and demands responsibility on both sides – so buy-in to governance (and organisational change management!) at the executive level is essential. Experience tells us that the most successful project outcomes are born of clarity, collaboration, and trust.
Is all project governance the same?
The short answer is: No, governance will vary across organisations depending on their requirements – particularly if there are reporting or legal impacts for the project.
As mentioned earlier, while all partners have the same end objective for their project governance approach (i.e., customer success), we all have fine-tuned our frameworks and processes based on our previous experience, internal capabilities, and available resources.
Project governance is also not a one-size-fits-all activity. To be successful, the governance model needs to be carefully tailored to meet the client’s specific needs and reflect an appropriate degree and frequency of contact (communications, meetings, reporting) to maximise stakeholder time and availability. In other words, align and engage - don’t alienate and overload.
And then there’s quality control. Fusion5 is certified with ISO 9001:2015 Quality Management Systems accreditation, which provides support to our project managers through internal audits to keep our customer projects on track. Should we fail to complete and meet the audit requirements, we endanger our hard-won accreditation – so it’s something that we take very seriously.
Using automation to streamline the process of project governance (and management) also sets some partners apart.
To ensure that our projects go smoothly, the moment we set up a customer project:
- Our internal processes trigger the mandatory areas for project initiation, e.g., creating a SharePoint site complete with project file structures, client collaboration areas, a ready-to-use risk register, project role descriptions and more.
- A comprehensive framework with project templates and well-documented processes helps improve day-to-day project management and provide stakeholder transparency. Change requests are automated, enter an approval workflow, and outcomes are tracked for full accountability. And certificates for each project stage gate can be viewed online and signed off digitally.
Smarter project governance, better outcomes
A well-run ERP implementation project is an exercise in collaboration and great communications.
Without a client’s top-down commitment, the partner will struggle to keep to agreed-upon outcomes within budget and on time, and user engagement will be lacklustre. And without a partner’s structured approach to quality control and streamlining the intricacies of implementation, your project will drag and stumble.
Governance makes sure you’re better, together.
