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(CFOZone) By Stephen Taub
In a $30 million lawsuit filed last month, Marin County, Calif. accused Deloitte Consulting of misrepresenting its skills and capabilities when it was trying to win the county's business and handle an ERP implementation, according to this report.
Also in June, a District Court in Texas awarded Dillard's $246 million in its lawsuit against i2, which is now part of JDA. Dillard's had alleged that i2 failed to meet its obligations under a software license and related maintenance agreements.
Even software implementations that don't end up in court often fall short of expectations. Most take longer than expected and cost more than initially anticipated, while more than four in 10 fail to deliver at least half the benefits expected, according to the 2010 ERP Report by Panorama Consulting. Lawsuits and disagreements over allegedly botched ERP and other major software implementations have been occurring for at least a decade. It would seem like both sides would have wised up by now. Why hasn't that happened? There's plenty of blame to go around.
In some cases, the consulting firm may take a strict cookbook approach to implementation, and fail to consider a company's actual business, says Michael Hawksworth, president and CEO of Phoenix-based MSS Technologies. Other times, the ERP customer may think that their role is complete once they've signed the licensing agreement.
In reality, their work is just beginning. Moreover, the keys to ERP success typically lie more in the so-called soft skills of change and expectation management, along with communication, rather than in the specific features of the software itself.
As a starting point, identify the problems you're trying to address, and how you'd like your operations to run. Are you trying to standardize business processes across different units? Cut inventory levels? "Spell out clear goals and objectives," says Hawksworth. Before signing on the dotted line, determine just what you expect from both the software and any consultants you're engaging. Check references - don't just ask for them. Commit the resources necessary to adequately manage the project. That means getting clear support from the executive team, as they're the only ones who can iron out the larger issues that inevitably arise, such as conflicts between the needs of two different business units, writes Eric Kimberling, president of Panorama Consulting. "Support from a CIO or IT director is fine, but it's not enough."
At the same time, your firm needs to dedicate its own employees to the project; the consultants can't bring their knowledge of your operations to the table. What's more, they'll be around to work with the system once it's up and running. Any consultants are going to walk out the door and take their expertise with them.
Avoid modifications that change the source code. Once you head down that road, you boost the cost of implementation, support and upgrades, notes Hawksworth.
Finally, do your best to manage expectations, particularly of front-line employees whose jobs will be most affected by the application and any accompanying changes to established business processes. "Employee inertia can be a powerful force in derailing an ERP implementation," Hawksworth writes. To get employee buy-in, you'll need to take the time and effort to let them know how the application will help the organization, and the ways in which their work will change.
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