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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 360º 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.

Twitter: http://twitter.com/erickimberling

Linkedin: http://www.linkedin.com/in/erickimberling