How not to implement an ERP in today's world

I recently met one of the senior team members of an enterprise who had decided to move away from bespoke custom developed solutions to implement a market leading ERP solution. For the company it was a big step forward after much discussion, debate and hesitation on the changeover and expected resultant business impact. They had thought about it many times, engaged with different consultants to assess the business case and every time decided to retain status quo fearing business disruption and no change readiness.

The ERP wave that started in the mid and late nineties ebbed almost a decade back with almost everyone taking one or other solution. The resultant automation, integration of business processes, and transparency brought about a quantum jump in efficiency for most. Some enterprises resisted the change to process and practices embedded in the solutions, ending up with highly customized implementations. They delivered superior results over the earlier tailored solutions though with overhead of maintaining the custom code.

In the ensuing years with the changing industry and economic dynamics, maturity and evolution of the solutions with new features and technology, and new business models, the ERP implementations began to appear as monolithic and unwieldy. The high level of customization became a roadblock towards leveraging newer technology and innovation. Soon it was evident that new strategies will be required to overcome the agility challenge; to gain benefit from the new age solutions, it became imperative to review the IT landscape.

Business CIOs took up the challenge and recommended trimming bolt-on and fringe solutions with every version and technology upgrade. The brave ones endorsed and took up reimplementation of their ERPs which eliminated changes to the core solutions and depended on parameterization over custom code to the extent possible. Advent of the Digital world and on-demand service models gave them an opportunity to stay current and relevant. Few who had implemented out-of-the-box solutions stood validated and happy.

In conversation with my friend I was curious to learn about his journey on the project which had high visibility in the industry due to the large size and complexity as well as the reputation of his company being risk averse. They had gone live after multiple misses to the timeline stretching the project to a level where the fainthearted would have got palpitations. He was not too happy with the end outcome; the project which to begin with had been planned well down to the last level of detail had not gone the anticipated way for many.

The going in mandate was to stay with out-of-the-box best practice processes and functionality with help of one of the best global implementation partners. Everyone had aligned to this direction which was deemed to be the best approach for a large enterprise. Functionality was cast in alignment to available features, changing process to ensure that business requirements are met. Progress suddenly faced potholes and bottlenecks with some new constituents challenging every decision that steered away from changing the system.

Archaic views prevailed over commonsense and best practices were overruled as being irrelevant to the company’s context. The direction was changed to the well-trodden path of an era gone by as the new players had only been on that track which lay mothballed and abandoned by the newer generation of IT leaders and followers. Thus began the regressive journey of change that brought in a battalion of programmers to fit all processes with customizations even if it meant breaking the core to batter the system into a familiar face.

When the secret chambers are opened and fundamental innards tinkered with, something has to break; and it did colossally spinning a spiral from which it became difficult to surface. Despite the writing on the wall the team plodded through with fear of retribution should they even raise a whimper. Deadlines came and went. The chaos and delays started hurting the business who finally found their voice and asked uncomfortable questions. The inept leadership reduced project scope, blamed everyone but themselves, and finally declared go-live with a badly bandaged system.

With an embargo on communications, the real state of affairs will probably never be known, though murmurs are heard off the records of the adverse business impact and the loss of credibility of the team with the business. Published numbers do indicate everything is not hunky dory; I guess that this episode will remain under the carpet for some time to come. Custom applications and customizing commercial off the shelf systems are getting buried. Unfortunately the challenged in positions of power continue to hurtle enterprises down the ravines of ignominy.

What is your ERP strategy ?

Technology evolution has created many opportunities and challenges for IT departments. The pace of change in recent times has been going up exponentially with obsolescence setting in faster than the adoption curve maturity. Each new flavor  trend and hype creates a flurry of activity which forces the CIO to react. Despite claims of various consultants, there is shallowness of expertise to get some real stuff done. Today it may be difficult to find COBOL programmers; it is equally difficult to find UX or Big Data experts.

Every company and function wants to retain talent and leverage the years of experience and expertise rather than losing them. This is more so if the person is really good at what s/he does; which is why we have retention plans, fast-tracked development, high potential identification and many other financial and non-financial incentives. We also face the challenge of managing a few members who have failed to change with the times and are unable or unwilling to adapt to the new world.

The technology treadmill keeps some of us running to explore and evaluate how and what could be potential uses that will create a differentiation. We embrace the technologies when something works and soon you find the trend becoming main-stream with everyone following. Consultants, vendors and tech media keep the hype high with new buzzwords and technology lead disruptions. The already scarce resources end up stretching to explore the opportunities over and above their operational activities if any.

Operations are necessary and critical to ensure that business as usual continues while the new stuff keeps the excitement going. Most enterprises have teams that either built the systems a few decades back or were part of the teams that conceptualized the implementation. If you are lucky they have been able to re-skill and stay current while managing the legacy. It is also possible that some have not been adept. Many organizations outsource the legacy sustenance and thereby the BAU operations.

The challenge that many face is to find productive use for the team members that failed to stay current with technology or business. These old-timers built the legacy that did well for the business contextual to the need at that time. With evolution their inability to adapt makes them dead weight in the current hyper-competitive business environment. The quandary for the CIO is to find useful work for them or find a humane way for their easing into other functions or out of the company.

One of my CEOs in the past had remarked of this phenomenon “We offer employment to qualified people on merit, we do not guarantee employment”. With profitability pressures and economic uncertainties this is true even for the better ones with work not just shifting to lower cost but also adding on to existing staff. Do more with less is here to stay and the bar keeps rising every year. Discussing this with a CIO, when she asked me “What is your ERP strategy ?” I was stumped.

ERP is presumably the new term for Early Retirement Plan, effectively created and deployed with HR. Her company had moved off the legacy technologies that had survived more than two decades and through the planning process she had attempted to re-skill the old workforce offering those positions that would have created a graceful exit over a period of time. Most took the opportunity clutching straws and made the grade. A few who did not had to be offered the new ERP !

In some companies old tech still stays, so do people; the pressures of current technology enabled disruptions will require them to sooner or later transition to newer and contemporary solutions. Recent times have seen many transitions from custom legacies to COTS systems to compete in the new normal. The eventual will arrive; CIOs need to hasten their people strategies to ensure that they are not left with a situation where they are pushed to a wall to take a decision.

All ERPs require planning, so why wait ?

Agile development, elongated deployment

Exchanging notes with some old friends, reminiscences of long drawn ERP or similar projects and some quick wins took us on a rollercoaster ride. Everyone had been through a couple of implementations that stretched patience and planned deployment timelines that now seem unreasonable. In those days 5-year multi-geography deployment was acceptable; after all the first implementation/deployment had to stabilize and learning imbibed before taking the next steps. Baby steps before running you know !

I remember my first ERP implementation almost two decades back that lasted almost a year; that company was the size of today’s small medium enterprise. But in those days business agility was measured in years and not in quarters or months or for that matter weeks. A decade later I was involved in a global deployment of a large back office system; we were at the tail of the global project spread over 5 years. Since the business impact was considered nominal, no one saw any issues with the 5 year cycle.

A debate then ensued attempting to answer the question that in the current uncertain world how long is long indeed and untenable ? In the age of SCRUM and hyper time sensitivity towards every change in business process or new business idea, what is an acceptable implementation plan for a project that spans multi-countries ? How long should it take to replace an ERP system or a financial accounting system across say 50 locations, each with some variances or country specific regulations or statutory reporting ? No easy answers here, I have not come across less than 3 year plans for such deployments.

It is an acknowledged fact of IT implementations that they bring about change; when we look at large scale projects, the change is always disruptive (the level of disruption varies from positive to extreme negative). The subject matter experts from the business end up with pressure of maintaining existing operations while dividing their time to project led improvements. Setting expectations and constant communication that is the hallmark of large projects rarely finds its way into the smaller innovation projects. But can this be sustained over 3-5 years ?

What about systems that are created with urgency portrayed by the business but languish in their use ? Many times IT organizations work under undue pressure to create solutions deemed critical towards continued success or to react to competition, but they end up as shelfware. Unanimous in their reality this thread triggered reactions on or lack of sign-offs. Can the CIO in such cases cite past instances and refuse to toe the line ? Probably not, the backlash of such behaviour would be extremely negative to IT.

When cloud based solutions deploy new releases, some offer customers options to use earlier versions for a short while. Not so in the case of consumer apps; when a change occurs, everyone is impacted and learns to live with the new. Why is it that we are willing to accept the change in our personal space but abhor it in the corporate environment ? Is it because that the stakes are higher or the risk averse nature of the corporate world ?

I believe the answer is in our ability to switch off and move to another in the personal space, which is not even a dream in the enterprise. If the production planning or financial accounting were to face issues post an implementation or change/upgrade, our ability is limited to rollback and not to explore new options at that time. But I am hoping there will be a day when what applies to our personal needs will also be good for the enterprise. Then the CIO will have to work harder to stay in the same place.

Achieving business agility between ERP and Cloud

An intense debate between two CEOs ensued while I was listening with concentration to them; there was no debate on the need for every business to leverage technology to stay ahead of industry growth curve. Both had experienced success, but there was indeed a bone of contention. One of the leaders vehemently recounted the inability of ERP solutions and vendors to address the market dynamics. He cited many instances where the ERP vendor as well as his IT organization took longer time than business could afford; small solace that his competitors also used the same solutions and thus had similar issues.

The other CEO countered with an equal number of scenarios when the specific ERP had indeed been ahead of others. Now every ERP solution provides a complex array of parameters and settings that can be manipulated to provide functionality for most business processes. This complexity also becomes a bottleneck when any change is required. It is rarely as agile as other smaller solutions that can quickly be customized. CIOs have had difficult discussions on this aspect with Business and Vendor alike. The monolithic nature of the solutions indeed poses a challenge. Not that there are too many options, so the technology ecosystem has created multiple layers to manage the agility requirements.

Grudging acknowledgements later, both glared at me as if to validate their arguments and then turned back to each other. Before they could continue, I pitched in with thoughts on the new opportunity that has everyone confused and wondering with benefit statements ranging from better ROI to TCO, time to market, productivity, and the panacea to all ills that face every enterprise that uses technology.

This brought a smile to the face of the second CEO who began to lecture on the future being cloudy and why current IT models will no longer survive. He elucidated the benefits of the new disruptive paradigm the Cloud is and why enterprises should be embracing this. Now the other looked imploringly at me to help him and I could not refuse the request. After all I had broached the subject so I had to provide a perspective.

Differing flavours of clouds offer different value propositions; the viewpoint put across by the CEO related to Application and Software as a Service. Both offer an easy way to deploy and get started on any new business area or process. The most widely accepted scenarios are sales force automation and collaboration; for SME the benefit is limited upfront investments and no worries about managing complex technology. Beyond these mainstream business process remain firmly grounded in corporate data centres.

Irrespective of their physical location, the big ERP remains the same animal, big monolithic and complex. Separating processes like sales force or collaboration (read email, chat, etc.) does not in any way create an opportunity for agile business process alignment for the rest of the enterprise. In fact with the cloud, the base expectation is that business processes are standard and can thus be uniform across multiple companies. Clouds provide faster start points, but the change ability remains similarly constrained. A question from the audience inquired about ROI models for evaluating Clouds; that is another story for another day.

The two CEOs representing a large business house and a leading global ERP vendor acknowledged the reality and it was time to move on. The CEOs and CIOs listening to the interaction went away with both sides of the coin clear (?) to create their own agenda and discussion in their enterprises.