After working wth erp implementations for the last 40 years it is still both a surprise and a concern to read of so many failed projects. Lessons can be learned from both good and bad projects. These cautionary tales ftom 2011 may give you some useful insights into what to avoid for example:
- naivety about realistic timelines and budgets to do a quality implementation,
- the need to evaluate both the vendor and software properly, to ensure that the cheap quote does not mean inexperienced consultants are used,
- for the cusotmer to take responsibility for providing clear requirements. and detailed testing
It takes two sides to make a project succeed and two sides to let it fail.
SAP project woes impact Ingram Micro’s profits In April, massive technology distributor Ingram Micro announced that problems with an SAP project in Australia had made a significant dent in its first-quarter profits. Net income stood at $56.3 million, a drop from $70.3 million in the same quarter the previous year, Ingram Micro said at the time. The shortfall was “primarily attributable to difficulties transitioning to a new enterprise system in Australia,”
New York’s massive CityTime payroll system project, was wracked by cost overruns and a criminal probe into an alleged kickback scheme involving former employees of systems integrator SAIC and a subcontractor, TechnoDyne. CityTime originally had a $63 million budget, but costs since skyrocketed astonishingly, with total estimates reportedly reaching $760 million.
In May, Montclair State University in New Jersey filed suit against Oracle, claiming the vendor had completely botched a PeopleSoft project that was supposed to replace the school’s aging legacy systems. Because of Oracle’s alleged misdeeds, it might cost up to $20 million to finish the project, Montclair has claimed. Oracle quickly fired back, claiming that the problems were the school’s fault. ‘When issues arose during the course of the project, it became clear that MSU’s leadership did not adequately understand the technology and the steps necessary to complete the project’; Oracle said in a court filing.‘Instead of cooperating with Oracle and resolving issues through discussions and collaboration, MSU’s project leadership, motivated by their own agenda and fearful of being blamed for delays, escalated manageable differences into major disputes’. Montclair filed an amended complaint with detail to its claims, including an allegation that Oracle ran a “rigged” software demo during the sales process and was also guilty of extortion.
Commercial outdoor furniture seller ParknPool took Epicor to court in late November over a “big mess” of an ERP project that it says will results in it taking a loss this year. Nothing seemed to go right once the contract was signed, according to ParknPool, which has about 20 employees.;Epicor said they could do it in seven weeks. We gave them seven months, and we got zero,”
In February, the government of Marin County, California, sued Deloitte Consulting and SAP in federal court, claiming they had “engaged in a pattern of racketeering activity” aiming at bilking the county out of more than $20 million in connection with a failed ERP project and claimed that the systems integrator had dumped inexperienced workers on the project, which led to the problems. The county has decided to rip out the SAP software and replace it with something else, in the belief that doing so would be a lower-cost option to finishing the job. The lawsuit has yet to go to trial. A case management conference is set for Jan. 27.
Whaley, which sells and fixes equipment used by commercial kitchens, started talking to Epicor about an ERP project in 2006. The system was supposed to be implemented and live in Whaley’s home office as well as a dozen branches by March 2007, but that goal was never met and the software has never worked as it was supposed to, according to Whaley’s lawsuit. The project’s implementation topped $1 million, or more than five times the original estimate of $190,000, according to the suit. Epicor has denied wrongdoing, and says that under the terms of the companies’ agreement, Whaley still owes it more than $283,000.
Nurses in Nova Scotia reportedly suffered through at least six months of faulty paychecks this year due to problems with an SAP system project led by IBM. SAP’s payroll software is solid technology, but tricky to implement given all the variables with worker pay, as well as the job of mapping over details from the legacy system, said consultant Jarret Pazahanick . Most problematic SAP payroll project failures have the same characteristics, according to Pazahanick:’The common thread is junior consultants and weak testing.”
Payroll is one of the most difficult solutions to implement well and quickly. Minor errors in data can often be tolerated in an erp ssytem e.g missing tel number, or an estimated cost or lead time, or mislocated inventory For payroll it has to be 100% correct. Few companies have identical payrolls, and there often exceptions for specific staff. Senior management and their staff tend to be mcuh more uspet abou their own payslip and whether it reaches their bank on time than they are about about the layout of an invoice or whether a vendor is paid a day late. It takes time to adequately define and to test the precise logic and the different scenarios – e.g.
- I get paid the same amount for a calendar month but my entitlement is based on working days
- I am paid on the 25th but my salary is for the whole month
- I go on holiday mid month for 2 months and receive advance pay
- Does overtime affect my entitlement to gratuity
- If I work extra hours then do I get time off in lieu, or overtime payment, if so when or at that rate and are the rules the same for all nationalities and staff grades?
- If I start a job mid month then is my part month pay based on workling days or calendar days and does that mean 17/30 so 17/ 31 or 17/28 or a month or 17/365 of a year or… ?? IS the sam eloic used for entitlement to gratuity and holiday accrual?
What about reports?- how many do you require? – will you cbeck that those out of the box reports really meet your need? How long should it take to specify a report’s content, and layout?, and will you get everyone of those right first time? How long to develop it and to test it: for content, layout printing and distribution and archiving and security access – and for testing?. That means creating enough data and transactions and postings and running processes like mrp. inventory close or month end and if changes are needed then the whole process has to be repeated.
These examples indicate the level of detail that needs to be specified and tested. So be realistic when looking at your own inputs and the consultants quoted delivery time. If it looks too good too be true. then it probably is. Pushing too hard for timelinr or price drop may not always be in your best interest if you cannot complete your own tasks in the same time frame with skeleton vendor support.
