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Are You Getting What You Wanted?

by Davin Wilfrid

May 3, 2010

By Davin Wilfrid, ERP Expert

A good friend of mine has the bad habit of sending back her dinner at restaurants, not because it was poorly prepared or tastes bad, but because -- in her words -- "It's not what I wanted." Usually the waiter dutifully returns with a different dish, though I'm sure they mutter "Then why did you order it?" on their way back to the kitchen.

Getting what you want is a lot more difficult that it seems, sometimes. In a recent survey of ERP customers, Panorama consulting found that the average company only realized 37.2% of anticipated benefits from an ERP implementation. Coupled with an average annual cost of $6.2 million, and Panorama estimates that the average company loses $4.3 million of benefits after implementing an ERP system, which would take an extra three years to recover.

Only 5% of customers reported receiving 100% of anticipated benefits.

The Panorama study included SAP customers, but also Oracle, Microsoft, Infor, and several smaller ERP vendors. The study did not isolate the benefits realized by SAP customers alone, but did highlight several issues that could stand in the way of a successful SAP implementation.

For example, the survey identifies a correlation between levels of customization and duration of the implementation project. 34% of SAP customers reported implementing either a "fully customized" or "heavily customized" environment. Naturally, the more customization, the more difficult the implementation.

Then there's the organizational change managem ent component. Panorama advises companies to start with an organizational readiness assessement:

No ERP project succeeds without addressing the end-users of the software. Conducting an organizational readiness assessment prior to making the final ERP decision will help identify pockets of resistance within the company and determine the organizational change management needed to make the project successful.

You can download the full report at Panorama's Web site.

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COMMENTS

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Sven Ringling

9/25/2013 8:43:07 PM

Sorry!
Here is the complete link to the article cut off in my earlier comment:
www.hrexpertonline.com/article.cfm?id=4437

Sven Ringling

9/25/2013 8:43:07 PM

Thanks for this post, Davin.

It is very rare indeed that anticipated benefits are gained to near 100% from any IT project. The weird thing is that few people are talking about in a really open way.
I reckon 90% of "End of project" Parties would be terribly spoiled, would they involve an open discussion about business benefits achieved. They celebrate "in time, in budget, to spec" as a success and forget, what the project set out to do in the beginning.
I find your restaurant analogy quite nice.
"Why the hell did you order it" is certainly one big element: vague (if any) definition of the real benefits are one part of the problem. Remember: "Pacchitta di Albinja" may sound good, but you should clarify, whether it meets your needs.
There are others:
If managers responsible for the value creation of IT projects would behave the same way as a restaurant customer, many would
- accept food they do not like at all, because the chef put a lot of effort in preparing it, the waiter was nice, it was delivered fast and didn't cost more than the menu said. Remember: A piece of software is not a business benefit, neither is a process change. Together, the 2 of them can lead to a business benefit
- buy a 2-year subscription for low carb food aiming at loosing weight without EVER tracking it. After the 2 years they'd celebrate that they managed to stick to the diet and also celebrate the money they saved through the subscription. Never mind the targeted benefit never materialised.

I am absolutely convinced that proper benefits management and portfolio management would
- weed out many low value projects
- make sure that potentially high value project actually deliver the benefits envisaged.

See this HR Expert article about managing a project portfolio and benefits in an SAP context:
www.hrexpertonline.com/article.cfm?id=44...


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