Print this article | Return to Article | Return to CFO.com
How CFOs can help ensure that their ERP implementations have a positive ROI by focusing on these critical success factors.
Martha Heller, CFO.com | US
July 20, 2012
All of you smart CFOs who read my last column, "Five Big Ways Your ERP Can Go Wrong," have probably solved your enterprise resource planning problems and are presently luxuriating in its new-found benefits and positive ROI. Missed it? Well then, you better read this column as well as checking out the last.
To write it, I asked a number of chief information officers — all of whom have presided over ERPs at multiple points in their careers — to come up with one critical success factor for an ERP project. They had trouble knocking the list down to just one, but in the end they persevered. What follows are contributions from several CIOs.
1. Understand the benefits. "You should not define an ERP's success by whether it's delivered on time or on budget," says one CIO from a global manufacturing company. "You need to focus on the benefits of the implementation and whether those benefits are realized after go-live. All too often, companies spend huge amounts of money and then forget about the payback."
2. Don't clip the tail of the project. Many companies fail to include "leave behind" resources — both in IT and in the business — when they plan their ERP implementations. "With ERP, processes change, things are different, and the senior who knew his way around the campus [in the old system] is now a freshman who needs a lot of support and guidance," says a CIO. "You must allocate resources to focus on process and system improvements as the implementation team moves on to another site. Businesspeople on the implementation team are always in a rush to return to their 'old' jobs, but when that happens, there's no one left to make the new system better." Or as another CIO put it, "Go-live is the start, not the end, of a true implementation if you want to achieve the positive outcomes you're after."
3. Don't underestimate the importance of master data governance. Data, data, everywhere, but not a drop that's clean. "It sounds so mundane," says a CIO friend, "but master data governance is critical to driving ongoing value from a global ERP." Some companies spend a lot of time and money aligning processes, but not enough on cleansing and managing the data. "It is all about the data," says another CIO. "Bad data equal bad ERP results."
4. Prepare for the dip. The best-laid schemes of mice and men, as Robert Burns knew, "gang aft agley," which, if you're not familiar with Scottish dialect, means your business is bound to suffer a bit during the afterglow of a go-live, bringing, as he wrote, "grief and pain for promised joy." Rather than be taken by surprise, why not plan for it? "Despite best efforts, there will typically be a business-performance dip in the first month or two post-go-live as the business learns to operate within the new model," says a CIO. "Having well-thought-out contingencies and a 'hypercare' support model in place will minimize the dip and ensure that the organization exits from that dip as rapidly as possible."
5. Don't overload the ERP. Perhaps the most critical thing for a CFO to understand is that ERP programs are like replacing the wiring in your house, says Mamasource CEO Marc West, who has spent time in CIO, COO, and CEO positions. "You already have the house [your business and its operations] but you are threading in a new core element. Make sure you don't overload the job with a bunch of wonderful, amazing, bright shiny new things. Be sure that your business today can run against current performance metrics before you add in process reengineering, new features, and deep analytics."
Finally, when an ERP program starts to buckle, everyone loves to throw mud on IT's door. The wise CFO doesn't join the angry mob. As my friend Don Ford, who runs ERP for Amtrak, puts it, "The CFO must continue to cheerlead and drive changes from the beginning of the project until the end. They must be willing to walk the talk or everybody in the organization will see right through the facade."
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.