Hundreds of millions of dollars are lost every year through lousy systems implementations. You, your customer and ultimately the taxpayer will end up paying for the mess. A neutral watchdog is needed to police software salesmen, implementation partners and incompetent CIOs.
Don’t believe me?
Think of the $30 million Marin County-Deloitte lawsuit or the Burnaby and Portland fiascos. They are just the tip of a billion dollar iceberg of waste. Most of these horror stories go unreported because governments and corporations hide them to avoid bad publicity.
Last November, at a meeting with management consulting and tech services company Accenture and British Columbia Hydro’s SAP Work Management re-engineering project in Canada, I asked the Accenture and BC Hydro project managers about their approach to business process improvement. They reacted as if I had asked them about the secret of commercial nuclear fusion. Blank faces, eyes raised to the heavens in search of divine inspiration:
“Umm, what do you mean by process improvement?”
Me: “You know, how the business agrees to change processes in order to gain operational and financial benefits. Do you have any metrics in place?”
“Uhhh, nope. Why do we need them?”
Need I say more?
It’s all about accountability. Who at BC Hydro hired Accenture? Will this person be held responsible for the results? Have they even defined success-failure criteria? It’s likely to get very expensive for the BC taxpayer and consumer if this IT project is not properly audited.
In another case, the BC auditor general reported that a couple of hundred million dollars were wasted on a healthcare systems upgrade that failed to integrate local general practitioner patient data into the provincial health database. Why? Apparently because no one had thought of asking local GP’s about their requirements. Farcical!
So how do you “police” SAP implementation partners? Hire a neutral expert – an ERP watchdog -- an independent SAP business expert with a good track record to keep the SAP teamhonest and to provide you with million-dollar ideas. Your watchdog can easily sniff out trouble and save your organization millions. The watchdog also knows how to bark at SAP salesmen and implementation partners who try to take advantage of you. They will be there when critical decisions have to be made. Keep them on board with a bonus based on post live system performance.
Your watchdog can help you in a number of ways when you use the following tactics:
• Define the mission before landing the troops
History is littered with the wrecks of IT projects that burned up big bucks chasing down what turned out to be blind alleys. Lack of a strategy causes mission creep, frustration and wastes time. Use your watchdog to help develop a business systems strategy and define corporate business objectives. Detail hardware, applications, scope, timelines, critical success factors, benefits and objectives to support the strategy.
• Formalize the partner selection bidding process
Your boss’s tennis partner, your tax auditor (think Anderson-Enron) or SAP’s recommendations do not automatically qualify a plan to implement your new system. Be objective. Cut and paste your systems strategy into an RFP (request for proposal) and use your watchdog to add some selection questions. Sendthe RFP’s out to at least 15 firms. Ignore all the mumbo jumbo about accredited SAP partners. Recommendations can be bought and are not critical to your project’s success.
• Shortlist five bids and interview each team for a day
Use your watchdog to prepare interviews thoroughly. You will be able to sort the wheat from the chaff and learn a lot of valuable insider tricks for free. Compaq invited the whole PricewaterhouseCoopers US SAP team for a day in Houston. After the introduction,the Pricewaterhouse project manager presented methodology, tools, an organizational change approach and communications strategy, followed by a two-hour live SAP system demonstration of possible solutions to key issues. The afternoon was spent grilling individual SAP consultants.
When you do your own interviews, be sure to ambush the project manager with detailed organizational change, business process re-engineering and data migration questions in order to flush out the smooth talkers. You can use video and Web conferences if travel is too expensive. Face to face interviews are better.
• Shock and awe consultant interviews
“Nice to meet you exercises” don’t achieve anything. Here’s what’s better:
a) Ask five detailed SAP configuration questions (e.g., which parameters need to be maintained in setting up an SD sales availability check for make-to-order production?)
b) Ask the candidate to describe alternative SAP solutions with pros and cons for a complex business scenario (i.e., distribution planning across multiple supply and demand points).
c) Get the candidate to demonstrate specific configuration parameters and functions with an online SAP system.
d) Ask a “fake” question. A good consultant will question the question. A bad one will give a “fake” answer to your fake question.
e) Ask the candidate to explain a complex technical or business concept (e.g., a data migration strategy or just-in-time production planning approach) with a whiteboard.
This interview technique has a deadly effect, and even more so if you have your growling watchdog chained up inside the interview room.
• Golden rules for consultants
a) A high-calibre SAP functional consultant is worth four mediocre ones.
b) Small skilled teams waste less time co-coordinating and don’t require full-time managers.
c) Kill bait-and-switch tactics by naming the individual availability you want in the contract.
d) A detailed weekly work schedule with concrete deliverables and deadlines maintains focus and saves time and money.
e) You can only master SAP by doing design, configuration and testing yourself. Use consultants sparingly -- for training, best practice advice and resolving critical technical issues.
• Performance-based contracts
Tie 50% of the total consulting fees to measurable post-live business benefits and degree of sustainability six months after the live start. Project culture
An inefficient office culture will destroy the most perfectly planned project. Communications, teamwork, decision making and work ethics can be ruined. No text book, project management methodology, tool or PM certification teaches this. Set your watchdog to prowl around the office for a couple of days and you will be amazed what he can flush out for you.
• SAP methodology
Most SAP-sponsored methodologies have a track record of failure. Frequently, the people who promote them have never been inside an implementation project before. ASAP is the best approach: A top-down business strategy / value-driven structured approach, together with MS Project, Excel, Word and Visio are rugged and effective. Don’t use fancy sounding fast track approaches or tools unless you want to get distracted from the real work and waste your money.
A live SAP system in Qatar is losing $450 million in sales revenue per annum, thanks to suboptimal SAP production shutdown planning. A Chicago-headquartered food and beverage giant with 40 factories run on SAP ECC 6.0 across the Americas loses over $100 million per year because of poor master data quality and suboptimal MRP (materials requirements planning) processes. A miniscule ERP watchdog fee of $50,000 to $100,000 would have insured that partners were not rewarded for failing to plan for sustainability, and their customers could have saved millions.
I am actually an SAP fan. The business applications are brilliant and simple. It’s simply the best ERP software in the world and promises huge benefits to those who use it right. Wouldn’t it be nice if the consultants who implement it were equally brilliant?
Colin Sparkes has worked around the globe as both quality controller and project manager for SAP AG Germany. He was later director for PricewaterhouseCoopers USA and president of IREX (Integration and Re-engineering Experts) in Korea before starting his own business in Vancouver, Canada. In his most recent SAP work, he specialized in data quality and governance systems as Senior Director at Utopia Inc. He can be contacted at email@example.com.