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Because ERP profoundly affects the business, and because you're responsible for the business, do you want to be engaged with or removed from ERP projects? For CFOs, there are two answers. Only one is right.
Martha Heller, CFO.com | US
June 12, 2012
Last year a midmarket medical-supply company asked my firm to recruit a new CIO. The incumbent had done a wonderful job in her two years in the post, the CFO told me, but, sadly, she was retiring.
Earlier in the year, this CIO had launched a single-instance, global enterprise-resource planning implementation that seemed to be going quite well. All the new CIO would have to do is guide this well-managed program to its graceful completion, with a go-live date set for September 2011.
We recruited the new CIO, and guess what he discovered during his first few weeks on the job?
The ERP project had run amok.
When I asked him what the three greatest problems were, he said: "The systems integrator had dropped the ball on project planning, the development organization had done subpar work on configuration, and the business teams were not prepared for how a new ERP system would impact their work."
"So, just minor issues like project management, technology, and people," I thought. "What's the problem?"
Turns out, the company had to fire the systems integrator, go back to the well for nearly double the budget, and set the go-live date back a full year. Essentially, the company had to start over from scratch, and the CFO ended up in the unenviable position of having to report all of this to the board. The now-retired CIO had reported to him. The CFO was accountable.
This story, unhappily, is far from unique. It happens all the time. Most likely, it has happened to you. What could the CFO have done to prevent this disaster? "Hire a better CIO" is not the answer. I've seen good CIOs preside over failed ERP implementations because their executive peers had not done their part in making the project a success. ERP implementations have a profound impact on the way a business runs, and the degree and quality of business engagement is a critical part of their success or failure. If the business isn't involved, the ERP will fail, and the CFO — along with everyone else — will suffer. Working on the assumption that you do not like to suffer, here's my list of five common ERP mistakes to avoid.
A CIO recently told me that "ERP projects are won or lost at the beginning." If you don't set them up from the start with the right people, product, partners, and expectations, you may as well not start at all. You are the CFO, and when an ERP goes south, you may be able to blame the CIO and even fire him, but the failure is your failure, too.
I wouldn't have wanted to be that medical-supply company CFO standing in front of his board trying to explain why his previous reports on the progress of the ERP project were so far off the mark. Would you?
Martha Heller is president of Heller Search Associates, a CIO and senior IT executive recruiting firm, and a contributing editor to CIO magazine. Follow Martha on twitter: @marthaheller.