Book Image

Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations

By : Grady Brett Beaubouef
Book Image

Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations

By: Grady Brett Beaubouef

Overview of this book

Using packaged software for Customer Relationship Management or Enterprise Resource Planning is often seen as a sure-fire way to reduce costs, refocus scarce resources, and increase returns on investment. However, research shows that the majority of packaged or Commercial Off-The-Shelf (COTS) implementations fail to provide this value due to the implementation approach taken. Authored by Grady Brett Beaubouef, who has over fifteen years of packaged software implementation experience, this book will help you define an effective implementation strategy for your packaged software investment. The book focuses on Commercial Off-The-Shelf (COTS) implementations, and helps you to successfully implement packaged software. Using a step-by-step approach, it begins with an assessment of the limitations of current implementation methods for packaged software. It then helps you to analyze your requirements and offers 10 must-know principles gleaned from real-world packaged software implementations. These 10 principles cover how to maximize enhancements and minimize customizations, focus on business results, and negotiate for success, and so on. You will learn how to best leverage these principles as part of your implementation. As you progress through the book, you will learn how to put packaged software into action with forethought, planning, and proper execution. Doing so will lead to reductions in implementation costs, customizations, and development time.
Table of Contents (19 chapters)
Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations
Credits
About the Author
Acknowledgement
About the Reviewers
Preface
Summary of Challenges

Chapter 1. The Silo Approach is Alive and Well

For the past fifteen years, I have been what you call a "hands-on" student of the packaged software industry — specifically, Enterprise Resource Planning (ERP) software. One of the hard-learned lessons of early packaged software implementations is that we should not take a functional silo approach to implementing an integrated business solution. Enterprise solutions support business processes, and business processes typically span multiple functional areas (silos). Having a functional silo perspective typically results in underestimating integration considerations. ERP, or any packaged software, is only as strong as its integration across the functional areas that support a business process. As an industry, I can see that we are maturing to take a more holistic approach to packaged software implementations. However, there is room to grow.

Consider the following: business software providers are evolving their applications to be more business process centric. There has also been a resurgence in the subject of business process re-engineering and business process management. "Focus on your business processes!" is the advice that you will hear from analysts and implementation partners alike. Too bad that this advice focuses on only one component of a business solution.

Why do we need to change?

Based upon a survey of customers who have implemented ERP solutions, the overwhelming message is that customers are not satisfied with the business results. The following surveys provide statistical data on the rate of failure of ERP implementations:

  • Robbins-Gioia Survey

  • Conference Board Survey

Robbins-Gioia Survey

Robbins-Gioia, LLC, a provider of management consulting services located in Alexandria, Virginia, conducted a study of the perception by customers of their ERP implementations. The study included 232 survey respondents, spanning multiple industries, including Government, Information Technology (IT), Communications, Financial, Utilities, and Healthcare. A total of 36% of the companies surveyed had, or were in the process of, implementing an ERP system.

Key findings:

  • 51% viewed their ERP implementation as unsuccessful.

  • 46% of the participants noted that while their organization had an ERP system in place, or was implementing a system, they did not feel their organization understood how to use the system to improve the way they conducted business.

  • 56% of survey respondents noted that their organization had a program management office (PMO) in place, and of these respondents, only 36% felt that their ERP implementation was unsuccessful.

Conference Board Survey

This survey interviewed executives at 117 companies that attempted ERP implementations.

Key Findings:

  • 34% were very "satisfied"

  • 58% were "somewhat satisfied"

  • 8 % were unhappy with what they got

  • 40% of the ERP projects failed to achieve their business case within one year of going live

  • The companies that did achieve benefits said that the achievement took on average six months longer than expected

  • Implementation costs were underestimated for the year following implementation by an average of 20%

  • Support costs were underestimated for the year following the ERP implementation by an average of 20%

Nearly 90 % of ERP implementations are late or over budget 1 and the ERP implementation success rate is only about 33%. What are the causes for such dismal results? I am firmly convinced that our expectations and approaches to ERP or any Commercial Off The Shelf (COTS) software implementations are the primary drivers. I will spend some time on a few of the key areas that we need to address in order to improve upon the packaged software implementation experience. First and foremost, what I am talking about is the implementation of a business solution.

Business solution defined

Today, the majority of business software vendors say that they provide business solutions. The term "business solution" is one of the key buzz words used to try to uniquely identify a software product offering. And as such, it is being misused and basically getting "watered down" — just like the term "business process".

I believe in the term "business solution"; however, no software can provide you with a "business solution" — only the vehicle to get your organization from point A to B. Before we can implement a business solution, we must first understand what a business solution is. I like to view a business solution as three components:

  • People

  • Processes (business processes)

  • Technology (software and technical infrastructure)

What is the most important component of a business solution?

Now, here is something interesting to consider: "Do you need all three components to have a solution for your business?" Let me address this in another way, "Do you need software in order to conduct business?" I am persuaded to say that the answer is no. Business was being conducted before the invention of the computer. However, I am quite aware that not having software as a part of your business is not practical in today's competitive marketplace. I do want to demonstrate that software only supports, and therefore can only have a certain level of benefit to, a business. Packaged software does not have the capability to make key business decisions. It is key business decisions that drive business results. Business software can provide information and data to assist people in making business key decisions. Seen in this light, one can conclude that people are the most important component of a business solution. Case in point: I have been on successful business solution implementations in spite of software limitations. I have been on successful implementations in spite of not having all of the business processes clearly defined. However, in my fifteen years of implementation experience I have never been on a successful implementation where the people (i.e., organization) were not ready for the new business solution. People have the greatest impact on the success of a business solution. Is it not interesting to note that the majority of packaged software implementations focus mostly on products and technology.

What is wrong with existing packaged software implementations?

I have listed the components of the business solution in the order of priority and significance. Very often, you will see business solution implementations deal mostly with products and technology during the first three-quarters of the implementation and only at the ending phase of the implementation is there any consideration of the other components of the business solution. Software and technology are important; however, your implementation strategy should not fixate on a single silo. The optimal implementation strategy will focus proportionally on each component of the business solution based upon the impact that each respective area (technology, business process, and people) will have on the implementation's success. To accomplish this change in our implementation strategy, we must first address a couple of popular perceptions in our industry today.

IT does not matter? Think again!

I would like to take the opportunity to note that I do not prescribe to the "IT Doesn't Matter" crowd. It's like saying "I can travel San Francisco to New York without any mechanical means". This is a true statement but how realistic is it in today's competitive landscape? Conversely, the IT community should continue to evolve their support approach where IT supports a business solution — not only software. Software by itself generates no business value. What software can do is enable efficiencies of people in order to produce business results. There is a healthy and optimal balance between the three components of a business solution that is required to generate maximum business value. Each customer and implementation partner must work together to find this balance. One thing is for certain: as part of your implementation, you must focus on all three components in parallel.

Is technology changing Business?

I do not believe that technology is changing business, but rather that technology is finally catching up with leading business practices. For example, back in the early nineties, I read a book on the e-business revolution. The major premise of the book was that technology was transforming existing business models into an e-business model. The book provided an example where inventory stocks could now be checked in retailer stores and inventory orders could be generated to maintain a desired stock level. The book explained that this is an emerging requirement due to new e-business technology.

I have to humbly disagree with this analysis. The above requirement had always been a desire of business. I remember back in the 1950's when my father would make the rounds as a salesman to his retailer customers to see their inventory levels and manually created orders to maintain the retailer's inventory levels. Many businesses did not perform this process because (a) it was manually-intensive work, and (b) it reduced focus on higher-priority business activities. Technology is now providing a cost-effective vehicle to accomplish this business requirement. Everyone has heard the phrase "build it and they will come". This philosophy may have worked out in the era of "green screens" and emerging client/server technologies, but not in today's world. Technology driving the business is like — forgive the cliché — putting the cart before the horse.

It is important to understand and appreciate what technology can and cannot do for a customer. Often, the true problem lies not with the COTS software itself (granted, there are always software bugs and fixes) but rather the demand for quick fixes and rapid cures to the challenges posed by the underlying business model. If the packaged software did not improve the performance of the underlying business model, then executive management would conclude that the implementation was a failure. This statement leads us to the first principle of implementing a business solution:

Focus on Business Results!