ERP failures and pitfalls are not due to chance. Like a car that runs off the roadway, common challenges result from not having the proper guardrails in place.
Organizations and teams often think that hiring a strong project manager or one of the big ERP systems integrators will be enough to prevent some of the common challenges of ERP implementations. But these are just two pieces of a bigger puzzle that must be addressed. Project governance provides an overarching framework to ensure that your team and project stay aligned an on track – something that no one project manager or systems integrator can do for you.
Why ERP project governance is so important
Project governance is a core guardrail to prevent your project from drifting off course. It provides the framework, clarity, and alignment required for your project to be successful. It also provides a methodical way for your project team to make decisions that are aligned with the broader goals and objectives of your organization throughout the project. Your project charter should document and convey how governance will be instituted in the overall implementation program.
ERP projects are difficult to predict and plan for, and companies often have trouble estimating their ERP implementation duration and cost as part of their digital transformation due diligence and execution. The culprit isn’t just one thing, but it can typically be narrowed down to a handful of root causes.
For example, here are a few reasons why so many projects take more time and money than expected:
- Poor project governance
- Poor project plan and execution
- Faulty assumptions
- Misaligned decision making
- The systems integrator has hijacked the project, with not enough ownership and oversight from the implementing company
- Expectations were never realistic to begin with
These root causes often lead to other challenges, including ERP failures and other problems. These are common in SAP S/4HANA, Oracle ERP Cloud, Microsoft Dynamics, and other ERP and HCM implementations. Below are some of the key components to create as part of your overall project governance structure, approach, and processes.
Strategic alignment and ERP project parameters
Executive and project team alignment is the foundation of effective project governance. It doesn’t matter how good your ERP software is, how strong your plan is, or how talented your project resources are – your project will fail without strong alignment from the executive boardroom down through the project team and its stakeholders.
The first step is to identify how to get executive alignment within your organization. If your executives are not aligned, your project team and the rest of the organization probably aren’t either. Most of us can’t force executives to get aligned, but we certainly can facilitate a process to more clearly articulate their vision and translate it into a clear project direction. This video explains:
The business case’s role in ERP project governance
Similarly, a business case provides strategic direction and helps enable decision-making. Most view it simply as a tool to justify the investment in ERP implementation, but its real value is as a project governance tool.
For example, if and when your team encounters requests to customize your chosen ERP system, it will be easy to do one of two things:
- Say “no” because you have a directive to not customize the software, or
- Go ahead and customize the software because your team can’t think of a good reason not to, or perhaps your project team is afraid of rocking the boat.
Neither option is necessarily realistic or ideal, but an ERP business case helps answer this important question. With a clear cost-benefit analysis, we can assess each customization request through the lens of whether or not it creates tangible business value or otherwise supports our business case. Customization can often be a symptom of poor ERP organizational change management, so a business case help smoke out this resistance to change.
Most don’t know how to navigate these and other dilemmas when they come up. A business case provides a logical and business-based approach to decision-making.
We see a lot of companies get stuck in analysis paralysis during their implementations. Decision-making becomes slow and painful, and project teams often look like deer in the headlights when it comes to making the big decisions required for an ERP implementation. Some of these decisions should be made by executives rather than the project team, or in some cases, project resources simply don’t have any direction on how to make those decisions.
These are some examples of the decisions that require clear business processes and approaches for throughout the course of your digital transformation:
- Selection of which of the top ERP systems are best for your organization
- Approval of business process improvements and organizational changes
- Changes to implementation time and scope
- Customization requests
- Resource requests and needs
- How the ERP vendor and systems integrators will be managed
Project governance should provide clarity for these and other critical decisions that are to be made throughout your transformation.
Bottom line: take your time to clearly define your project governance
Before rushing into your ERP implementation or signing that big contract with your systems integrator, be sure to clearly define your project governance. This is the framework that should guide your ERP project team, decision-making, risk management, and other key components of your project.
Final note: don’t leave this critical task to your systems integrator! This is something that you should own, and systems integrators have too much to gain by contaminating your governance structure with biases that put more of the control in their hands. This is your project, so be sure you treat this important planning activity accordingly.
I am curious to hear your thoughts and questions regarding project governance on your ERP or HCM implementation. Please contact me if you are looking for unbiased ways to improve your digital transformation, ERP or HCM implementation strategy and planning. I am happy to be a sounding board for you as you continue your journey!