Mid-Market ERP: "Soap Operas of the IT Industry"

SearchCIO sponsored development of a white paper, called As the World Turns: CIOs and their ERP Dramas (registration required). It describes the risks.

SearchCIO sponsored development of a white paper, called As the World Turns: CIOs and their ERP Dramas (registration required). It describes the risks. rewards, and failures of ERP implementations, based on the result of a survey conducted by the author. Check it out:

Enterprise Resource Planning (ERP) systems are the soap operas of the IT industry. They evoke the entire spectrum of human emotion, from longing and love to greed and betrayal. Like soap opera plot lines, ERP issues are constantly being recycled. These complex business systems and the people that sell, deploy and support them are major characters in the IT leadership drama.

The story here is not about ERP vendors, which would likely be told as a tragicomedy or courtroom drama.

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Every senior IT manager seems to have an ERP war story. Veterans display their membership in this club like a red badge of courage, recounting tales of heroics and struggles. “I have found that system integrators do not have the client’s interest in mind unless there is an unlimited budget,” says the CIO of a utility company. “They do a great job in the initial phases, but once it gets to crunch time, they are more concerned about contract terms, changes in scope and [profit] margins.”

Implementing an ERP system “took 10 years off my life,” swears the IT chief at a software company. “At this company alone, I have been part of an ERP rollout four times,” adds the weary CIO at one multinational manufacturer. Still, a CIO at a retailer believes that “ERP is a painful journey, but a destination worth reaching.”

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In a moment of desperation, executives make decisions about products and implementation. But once the vendor cashes its check, the incumbent CIO grabs the third rail and gets electrocuted. His successor — and often his successor’s successor — suffers a similarly tragic fate. Only after two or three well-meaning CIOs leave the company in career body bags does the ERP system get deployed.

That’s why so many midmarket CIOs are only now (and quite reluctantly) considering moving forward with an ERP implementation. “Being in the position of an IT executive having to sell the idea of an ERP system to an organization is the kiss of death,” warns the CIO at a specialty chemicals firm. 

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While 44% of respondents view their company’s decision-making process to implement ERP as rational, 56% say there was significant room for improvement (see Figure 3). “The decision was based on the prior experience with that solution by a few key users,” says the CIO at a midsized entertainment company.

Another midmarket CIO was aghast to learn that “someone had decided to buy the product in 2001” but failed to implement it for three years. “It gets worse,” he adds. “The annual maintenance was still being paid on the shelfware.”

The CIO at one financial institution who was brought in to fix a failed ERP initiative doesn’t mince words. “The level of effort was underestimated,” he says. “The required time frame was understated. The degree of re-engineering [to] be accomplished during implementation was overstated. Once the sale was done, the vendor could have care[d] less about our success.”

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By now the reader should recognize that it’s not ERP systems per se that present the stumbling block; the trouble arises from the internal state of the enterprise, the way IT is conducted and how decisions are made. The ERP project ends up being a kind of IT CAT scan, revealing everything that is broken or out of alignment.

So getting full value from an ERP investment requires the organization to examine what’s out of alignment and fundamentally change how it works. The question is one of readiness: Is your company braced for this level of change?

When asked whether their ERP decision-making process was rational, 56% or the respondents said no. That’s pretty amazing. This white paper is readable, engaging, and uncannily accurate. Seriously worth a look.

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