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Why do so many businesses fail to realise the benefits of ERP transformational projects?

• August 4, 2020

Why do so many businesses fail to realise the benefits of ERP transformational projects?

Having operated in business for over 30 years I have seen first-hand the impact from many ERP transformational projects and whilst there were some successes stories the vast majority were not. Indeed, a recent research article identified that over 70% of transformational projects failed to achieve their business objectives (Mckinsey 2019) 

So why do so many transformational change projects fail and what lesson can be learned? From my experience there are five key areas which are the fundamental lessons learned from poorly executed ERP projects.

1. Don’t focus on Technical, focus instead on the Business.

The common feature which successful adopters of ERP transformation have demonstrated is that they viewed their ERP implementation as a business transformation project and not as a technology project. The executive leadership team understood that a new ERP system will have more impact on the businesses than merely an IT upgrade. They get that it will have a significant impact on employees, business processes and the organisation's overall strategy. 

I would argue that too many organisations use ERP consultants who are more focused on technology and software functionality rather than people and processes. An alternative approach for organisations is to engage with change and transformational experts. These seasoned professionals are adept at engaging with people, securing their buy in and acceptance to design new robust business process supported by the new technology. Such an approach will ensure that business ERP transformational change projects land in the category of success and not failure.

2. Lack of Executive Buy-in

The executive team will have approved the project budget, but they will need to form an executive steering committee to provide project governance and direction. The involvement of the Executive team ensures that the ERP implementation doesn’t become a technology project, but that it fits into the organisation's overall transformational strategy. This enables them to realise the subsequent benefits of improved customer service and sustained competitive advantage which are all associated with successful transformational projects.

An experienced change expert is ideally placed to support the executive team as more often than not they have operated at executive level enabling them with the required gravitas and experience to support the senior leadership team.

3. Insufficient Business Process and Project Management

When I work with clients, I help them to define and map out their current state utilising Lean Methodology Process mapping tools such as 'value stream mapping.' This brings much needed clarity which helps organisation's to define their ERP and digital transformational system requirements, whilst also revealing opportunities for improvement which will address legacy issues.

The application of robust project methodology techniques is the key to ensuring success. Over the last 30 years I have observed and participated in numerous transformational projects, which has resulted in the development of a transformational change project model. The model outlines a number of key workstreams which should be given due consideration and tailored for every system implementation.

4 . Lack of Change and Transformational Expertise



The acceptance by executive leadership that organisational change management will be required in the adoption of ERP technology programmes will certainty enable success. Organisations which simply view change management as an end user training exercise will experience substantial change resistance and significant periodsof disruption in their day to day operations.



However, those organisations who engage transformational change experts with the required skill set to complete organisational assessments, engage with employees using two-way communication techniques and developed customised training programmes will experience a limited period of operational disruption. Such experts who are empathic leaders are able to engage with employees resulting in them buying into the transformational programme. Such an approach will lead to the successful adoption of the ERP technology and the avoidance of deep-rooted resistance to change by the organisation’s employees and stakeholders which is demonstrated by the J Curve (see below). These forward-thinking organisations will see the performance benefits and enhanced productivity associated with successful adoption of transformational change programmes.





5.     Hiring Inexperienced Resources



We already identified that inexperienced change programme leaders will simply heighten the risk of unsuccessful adoption. Interim professional change transformational experts are ideally placed to support organisation's to adopt and implement new ERP technology. Such leaders thrive on the change agenda and they are able to engage with the organisations employees as they have the experience, gravitas and emphatic leadership skills to guide the organisation through the process.  The advantage of utilising interim talent is that an organisation can secure such expertise without increasing their fixed overheads. 



Benefits & Conclusion



So,  now that you engaged with an interim change expert to support you on your transformational journey you can expect the see a number of commercial benefits including;



  •  A upturn in service levels as availability of core product and on time in full delivery performance is increased
  • Reduced stock holdings
  • Lead times shortened
  • Net positive cash flow is experienced due to a reduction in overall inventory.
  • An upturn in customer service levels enables competitive advantage to be achieved, resulting in subsequent top line growth being achieved.



Whilst the majority of ERP transformational change projects fail to meet the business objectives, this can be mitigated through the engagement of interim professionals who are experts in leading transformational change projects utilising robust project management methodology. If the organisations leadership understand that the project is more than simply a technology upgrade, then they can have the reassurance of being able to realise the associated benefits of successful ERP transformation within their own businesses.



Bio



Dominic Proctor is the Managing Director of Matrix which provide Interim Management or Consultancy project support for Industrial Manufacturing, Logistics and FM organisations looking to achieve breakthrough growth for their businesses through the development of Operational Excellence model which delivers transformational change. Dominic has 30 years of supply chain and operational leadership experience in Industrial Manufacturing (Berendsen & Johnson Service Group), Logistics Distribution (Bunzl, Rexel and Big Home Shop) and Facilities Management (G4S and OCS). He is passionate about supporting organisations to achieve Supply Chain Excellence and transformational change which is achieved through a collaborative leadership style and a continual pursuit to achieve excellence. An extensive library of transformational change case studies are available to view at www.matrix.org.uk/blog



If you like to discuss a potential Transformational Change project or Operational Efficiency Improvement project, then you can contact Dominic for an informal discussion at dominic.proctor@matrix.org.uk



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