Technology Evaluation Centers (TEC) is a research organization that has several publications on ERP and CRM solutions. In their research whitepaper titled 5 Best Practices for Ensuring a Smooth Software Implementation, they bring up some key points for the customer's implementation team. The highlighted best practices are: Proper Planning, Continuous Monitoring, Updating your Stakeholders, Preventing Scope Creep, and Negotiating Additional Products or Services.
Management buy-in is also considered one of the keys to successful implementations. TEC believes that it is essential for corporate management to be actively involved in the system selection decision by naming an executive sponsor who participates and provides the necessary support for the project. A senior management sponsor to champion the expected organizational change is highlighted as "a critical, must-have step" for successful implementations.
Ensuring the participation of a cross-functional team is another key to success noted by TEC. A team comprised of all the functional divisions and management levels within the organization facilitates active ownership of the project by the entire user community. This also ensures that the implementation team will be able to reflect the requirements of the users, thereby maximizing the value delivered by the solution.
These are good points for the customer team to keep in mind so that they understand their responsibilities for implementing the solution. As the statistics below will illustrate, teams that ignore these lessons do so at their own peril.
Over the years, reports on CRM and ERP implementations typically highlight the existence of gaps between customer expectations and actual results. Studies also pointed out that time and cost performance still remain points on contention between the customer and service provider. It is important to be careful while interpreting these statistics. It is important to understand what the studies are measuring, the different types of respondents, and their methodological approach, before relating their findings to your own organization.
One of the most popular reports to showcase failure of software development was the 1994 Standish's Chaos Report. The Standish Chaos Report shocked the industry, when it reported a 16 percent success factor on software development projects. The same report called 53 percent of the projects to be challenged on implementation, and 31 percent to have failed. Although considered to be controversial, this report managed to attract worldwide attention for solution delivery issues.
Several years later we still have Chaos Reports, but now we have many other studies as well. The 2009 statistics of the Chaos Report showed 32 percent success, 24 percent failure, and 44 percent projects to be challenged. According to a Panorama Consulting 2011 study on ERP implementations:
54 percent of companies said their ERP projects took longer than expected and 56 percent spent more than expected.
Compared to their previous year's study, the statistic actually showed improvement—70 percent of projects reported taking longer the previous year. The study found that 43 percent of the companies that exceed their expected budgets:
Mentioned a lack of project controls and unrealistic expectations. They also tend to focus on software-related costs while neglecting the costs associated with managing organizational change.
Regardless of the statistics, pretty much all of the studies conclude that we have an opportunity for improvement as most of our ERP and CRM projects take longer and cost more than expected. They are good to bear in mind when undertaking ERP and CRM projects, and planning accordingly. Organizations should learn from failed and challenged projects, and the stakeholders involved in the solution implementations should use them as input for continuous improvement efforts.
It also seems easy to transfer the responsibility for all failed implementations to the service provider. But as we have noted in the previous sections, a solution is made up of many components, including the product (software vendor), the service provider, and the user of the solution (the customer). While it might be easy to blame the implementer for all failures, it is not entirely justifiable. It is not uncommon for instance, to see customer politics and organizational inefficiencies impeding their own projects.
Microsoft's own research into customer escalations of Microsoft Dynamics engagements has shown that almost half of the escalations were due to implementation issues. Further research indicated factors such as lack of formal processes within the teams, communication issues, and scope management, corroborating the need for a good methodology for solution delivery.
Many factors decide whether or not a customer perceives a project as successful. Time and cost are two of the most important criteria, but there is another parameter that is important but ignored sometimes—business value. Recent studies allege that ERP/CRM implementations under-deliver business value, and the organizational changes of the solution are reported as ineffectively managed. This again underscores the need for a good delivery process, one that begins with the organization clearly determining success factors for a project before undertaking it. For instance, Microsoft Services requires an understanding of the Conditions of Satisfaction (COS) to be noted within the Project Charter or similar project documentation, and signed off by the customer at the outset of the engagement. COS can be excellent measures of project success, but the key to measuring this is to clearly establish:
Baseline metrics—the values that exist before the project is initiated
Projected metrics—the goals for the engagement
When baseline metrics are established upfront, project metrics are measured after the engagement; the teams can clearly determine the success or failure of the project.
Nucleus Research released a guidebook titled Maximizing success delivering Microsoft Dynamics, in 2009, which still provides valuable reference points. According to the guidebook:
When deployed properly, Microsoft Dynamics ERP and CRM solutions can deliver significant returns to customers — however, that is often dependent on selecting a partner that can deliver the project on time and on budget with minimal changes from the initial project scope and planning.
Nucleus also noted that:
While a structured implementation methodology delivers the greatest success for Microsoft partners, partners also needed to be flexible enough to meet the specific needs of customers and to evolve over time as business dynamics changed…Structured methodologies like Sure Step can help partners balance their approach to diagnosing, implementing, and optimizing solutions for customers. The skills and guidance of implementation partners are a key factor in Microsoft Dynamics's customer success, and those that are most successful have moved beyond ad-hoc diagnostic, communication, and project management to follow a more structured implementation approach such as Sure Step. They reap the benefits through improved communication, greater customer satisfaction, and ultimately through greater profitability and growth.