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SAP Implementation Gone Bad:

Learning From the Mistakes of Others
November 4, 2010 10:00 AM
Filed Under: Enterprise Resource Planning (ERP)
Tier I ERP systems are generally more robust, complex, and as a result, more difficult
to implement than Tier II counterparts. SAP implementations, in particular, get a bad
rap because of the large, high-visibility companies that have tried and failed to
implement SAP. Marin County is the most recent example of a company that failed
with its SAP implementation. In addition, the media has covered the SAP failures of
Hershey, Waste Management, and Shane Company in great detail in recent years.
So what is it about SAP and other Tier I ERP implementations that make them so risky
and subject to failure? First of all, it is important to debunk the myth that SAP or other
Tier I ERP implementations are more likely to fail than Tier II or SaaS counterparts.
Our research data shows that there is very little correlation between specific software
packages and their failure rates. In other words, different ERP vendors do not have
materially different levels of ERP implementation success and failure.
Which brings us to a second point: while it does matter what software you choose in
that you want a solution that fits your specific business needs, you are just as likely to
experience problems if you don t handle the implementation correctly. Even an
ERP system that is a perfect fit for your organization isn t going to be implemented
smoothly if appropriate measures aren t taken. In our work as expert witnesses in
ERP lawsuits, we have found that mistakes and failure points are fairly consistent
across various ERP systems and have very little to do with the software itself.
Having said all of that, there are some things that make SAP, Oracle eBusiness Suite,
and other Tier I ERP solutions more difficult and risky. The good news is that those
risks can be mitigated once you understand them.
Top 3 SAP Implementation Risks
1. Complexity. As we ve outlined in our Clash of the Titans report comparing
SAP vs. Oracle, both leading ERP vendors are complex compared to Tier II
counterparts. They both have extremely broad, deep, and integrated
functionality designed for a variety of industries, which is generally a good
thing, but it s very easy to get tangled up in the web of complexity. One
change to a single aspect of your master data can have profound impacts on
your end-to-end business process flows. This can be overwhelming, especially
if your implementation team doesn t have the necessary technical and
functional experience.
2. Degree of Change. Most companies that implement SAP or Oracle EBS are not
migrating from one robust and sophisticated ERP system to another; instead,
they are going from fairly primitive business processes and business software to
something much more powerful. Think of a 16-year-old that is just learning to
drive: he isn t going to handle a high-performance racing vehicle well if he
hasn t even mastered driving a Ford Focus. Most companies drastically
under-estimate just how big the change is going to be from a technical
perspective, but more importantly, from a business process perspective.
3. Flexible Business Processes. SAP and Oracle EBS have tremendous amounts
of functionality and potential configuration variations. Both products have
powerful configuration and integration tools, which means that implementing
companies have a world of possibilities at their fingertips. However, the
configuration of the software doesn t matter at all if the business operations
and its people can t adopt the new processes. For this reason, generic and
transactional-based training materials do very little to get employees
comfortable with the systems. As a result, the business processes typically
don t integrate well with the software, and vice versa.
SAP Implementation Risk Mitigation Strategies
Organizational Change Management. If I had to pick one single biggest
reason why SAP, Oracle, and Tier I ERP implementations fail, it would hands
down be because there was not enough focus on organizational change
management. Basic core team training is one thing, but how are people going to
adapt to the multitude of changes they re facing: in addition to a new ERP
system tool, they have new business processes, new job descriptions, new roles,
new data structures, new access to information, and new reports to work from.
While these new things have noble purposes, they can actually cause the
implementation to fail if they are not handled appropriately. Your
organizational change management strategy should include organizational and
job design, process gap analysis, detailed business process testing, employee
communications, and benefits realization, all in addition to basic training.
Business Process Integration. New business processes need to be well-defined
before your Oracle or SAP consultants hit the ground to start configuring.
Otherwise, the tail will be wagging the dog and you will have technical
configuration people making decisions on how to run your business rather than
your internal operational experts. Once these business processes have been
defined in detail, you will provide a clear blueprint for the technical consultants
to build to. These business process definitions should also act as the foundation
for business process and system testing, organizational gap analysis, security
roles and profiles, and a host of other key project activities.
Although these are just two risk mitigation strategies, you will be ahead of most
companies if you effectively manage both during your SAP implementation, Oracle
implementation, Microsoft Dynamics implementation, or other Tier II ERP
implementation initiatives.

Originally posted on 360 ERP Blog
Blogger Profile: Eric Kimberling
With over fifteen years of consulting experience, Eric Kimberling has a wide
range of professional expertise in companies ranging from the SMB market to
large corporations. Eric s background includes extensive ERP software
selection, ERP organizational change, and ERP implementation project
management experience.