During my many years in ERP implementation, I have observed this. Many companies approach ERP Implementation from a project mindset, not with a transformational vision.
What is the difference?
Project mindset asks the question ‘How do I complete this project’. This mindset comes from the word ‘Project’ itself which evokes the idea of something with a start and end date like constructing a building or a mall or a new product. The goal is to erect that construction or deliver the product.
Project mindset looks at schedule, time and cost. The focus is always short-term.
A vision mindset focus on Customer Lifetime Value Add. It looks at usage and benefits. How are we going to use it? Will it add to the workload of our employees? Will it improve my company performance, will it automate the processes and help my company achieve quick RoI, will it lower my overall costs…
But we know this already. Thousands of manhour have been devoted to this subject.
But even today, 30 years after Gartner coined the term ‘Enterprise Resources Planning’, ERP implementations struggle to deliver these benefits. Why?
There could be many reasons. Here is one perspective that hopefully adds to the discussion
The two stakeholders in any project are Implementation Partner (IP) and the customer. Most of the projects are driven by the IP who has a ‘Project Mindset’. Their objective is to resolve the immediate challenge to get the project to a closure. They look for the easiest option out of many, to configure the system. The focus is on ‘Project Completion’, not ‘Customer Value Add’
The ‘Project Mindset’ is ok for constructing a building. You build it sell it and the customer starts using it. There is no further value add from that building.
That is not the case with ERP. Most of the value add from ERP implementation comes AFTER the implementation. You have to implement ERP with the potential future benefits in mind. That is vision.
Let me illustrate this with an example.
Question from customer: How do I enter and approve an invoice in SAP Business One ERP?
Implementation Partner with a Project Mindset will suggest as follows.
You manually enter it in AP, validate it and send it for approval. Once it is approved, enter manual payments and when the statement comes, upload it manually in Cash application and do manual reconciliation. Regularly run process to ‘Create Accounting’ and account for the transactions – both invoices, payments and reconciliation.
This is the solution implemented in 99% of ERP projects. Whatever may be the product. SAP Business One ERP is just an example since I work in that area.
This is project mindset. Focus is on getting the work done but doesn’t really add any value. Customer just moves from one horse to another. The key stakeholders are spending time on data entry and not on improving controls, handling exceptions, lowering costs or improving relationships with their key vendors. None in the company adds any value to anything.
How this requirement does looks from a Vision mindset? You could have a ‘automation vision’ of automated data entry, automated notifications and actionable alerts and a paperless organization.
For example…..
You automatically import the invoice into SAP B1, do a basic verification, and put it on a manual hold. A hold notification will be sent to a user who will do the final verification and releases the hold. A scheduled program will send the eligible invoices for approval, another scheduled program will account for these invoices and a third scheduled program will create a payment batch. Once the payment is approved, the payment file will be automatically sent to the bank. Once the payment is done, bank will send the statement and same can be automatically uploaded in SAP B1 and automatically reconciled.
Notice how the vision mindset lowers data entry and reduces the load on key users enabling them to focus on what is important for the company like improving cashflow, reducing working capital and strengthening vendor relationships.
It is not just payables invoice. You could create your Purchase Requisitions on your mobile, automatically send it for approval, and automate the entire purchase process without any manual intervention. Only manual work is to go to the collections section and pick up your shipment !!!
But, as I said above, this doesn’t happen in 99% of ERP implementations. They still struggle with entering the transactions, selecting the right vendor, the right expense charge account. The entire process in ERP feels like a sheer and tedious waste of time with some esoteric benefits like ‘data integrity’, ‘end to end tracking’ and ‘advanced analytics’ thrown in without much of a delivery.
Why don’t ERP implementations focus on ‘Vision’?
There are many reasons, I am giving below three of them.
First,the implementation team itself do not have a vision for the project. They just reach the customer site and start the work without understanding the digital transformation context, overall technology strategy and the place of this project in that strategy. They just start placing bricks without understanding how the building is supposed to look like.
In my most recent project for a startup in India, where I was the Project Manager, I set the vision for our implementation as ‘Simple and scalable’. The solution must be simple to use and scalable both horizontally (easy to add new features) and vertically (easy to add new businesses as the startup grows exponentially). One way we converted the ‘Scalable’ part of vision to reality was by adding a ‘Business Segment’ dimension in the Chart of Accounts, even though at the time of implementation the company had only one Business. We also configured the system for Business Segment wise consolidation and reporting. We standardized the automated data entry through Excel Based upload to make the data entry process simple. This was ‘SIMPLE’ part of the ‘Simple and Scalable’ vision for our team.
The problem is that most implementation teams lack this vision. They just start the project like jumping on to a running train and try to make the best of it.
No one has told them to ask these questions.
Third reason is the overt pressure put in by the implementation partner. The fact is that every organizations start the projects with a vision mindset, but as the project progresses, the implementation partner converts it to a project mindset. All those weekly reports and steering committee meetings and risks and schedule slippages and change requests and cost escalations simply wear you down.
Second, nobody tells the end user about the vision or the potential of the application to dramatically transform their work. The vision of paperless organization, process streamlining or long-term ease of business process do not percolate down to the end user. End user focus is on ‘how he can do in ERP what they are doing now in Legacy’ and not ‘how they can do their current process BETTER in ERP’. They want to know how they can enter invoices in the system rather than how to automate invoice entry.
At some point the goal becomes to ‘Just get this over with somehow’.
That is the sad reality. That is why ERP Success statistic confuse the customer feedback of ‘My ERP Implementation is OK’ with ‘The ERP implementation is successful’
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