It’s an old axiom – I think I picked it up from some former EY consultants who said it used to be common knowledge with their project managers. If addressing a problem in the planning stage costs $1, it will cost $10 to fix it during implementation – and after implementation, to go back and do it right costs $100. The point is, planning dollars are well spent – and often overlooked.
Some other Standish Group findings – only 16% of projects are completed on time, with the proposed functionality in place. 53% of projects studied came in at 189% of budgeted cost. The average time to completion was 222% – twice as long, nearly twice costly as proposed and that’s an AVERAGE – meaning fully half came in OVER that number. And fully one fourth, (28%) of all IT projects are abandoned, cancelled, quit, – even after investing a great deal of funds in software, hardware, etc.
So what do we do in the Implementation Audit?
We basically examine the project to determine if the elements of success are in place. Can the project achieve the proposed functionality? Are the resources in place (both on the company and vendor side) to achieve the goals? Are the goals clearly defined in terms of time, ROI, and value to the company? Do we have a roadmap with small successes clearly benchmarked? What are the risk assessments and contingency plans? Are the right people on the project? Sure, the software may be in place in 2,000 widget manufacturers worldwide, but if the consultant installing it never saw a widget until he laid eyes on your shop floor – you’re paying for a pretty big learning curve.
It’s really basic stuff – but we have some definite advantages once we get to the Implementation Audit stage.
Unlike the software evaluation – now everyone knows more. The client project team knows a great deal more regarding the functionality of the software. Unlike what looked easy in the demo – there’s a better understanding of how difficult or straightforward certain functionalities perform. There’s usually a better idea of what’s missing that didn’t come up in the demo. On the other side of the equation, the vendor consultants understand much more as well: How talented is the customer project team? How much time do they really have to devote to the project? Is there top level access to decision-makers or is it taking weeks to reach a simple consensus on configuration issues?
Because we’re not tied to a particular software platform, we can also evaluate whether or not trying to stuff a square software package into a round functionality hole makes sense – or is it time to add on a 3rd party functionality. Often, with a general ERP system to handle the basics you can increase functionalities without overcomplicating your base business software system – but as with everything we do – a cost-benefit analysis tells the story. It may sometimes say this project belongs in that one-fourth of projects that are never completed – it would be more cost effective to scrap the system and move to something more suited to your specific requirements. (Bad news at any time, but why we ultimately recommend bringing us in at the software evaluation stage in the first place.)
Implementation Audit Deliverables
Our Roadmap Presentation lays out our recommendations for the project. Our assessments of the elements of success will reinforce the Project Charter, Project Scope and Project Plan – or show missing elements in the planning stages (remember, 1-10-100). Evaluation of the project teams on both sides will highlight if additional resources are needed. Evaluation of the software functionalities will show if the proposed functionality level is likely to be achieved.
And the Roadmap lays out steps, prioritizes benchmarks and breaks the project into manageable achievements. For example, a recent assignment had us looking into the ERP implementation at a mid-west manufacturing plant. One of the key things we found was that on-hand inventories were over $11m – but totally un-cataloged, with no visibility or location information in the system. The CFO, however, was intent on first securing accurate costing information to examine profitability by line, product and customer (along with other competing issues from every department head). We found that by bringing inventories on line, sales and marketing could create new products using existing supplies and within 4 months, they were able to utilize $4m in existing inventory and convert sunk cost into bottom line profit without any cost increases to the customers. A much quicker and greater ‘win’ than trying to determine why a $60K order had only 12% margin instead of the projected 14% margin.
The Roadmap ranked each department’s functionality request by the amount of projected ROI – which not only prioritizes the project strategically, but has the tactical advantage of further motivating the project team toward a measurable, achievable, time and dollar based goal.
Of course every Implementation Audit starts with different requirements, but generally we find by following our process outline, we’re able to deliver rapid value to our customer base.
For more information: Gene Hammons, MBA can be reached at GH@GeneHammons.com