In a recent post I excerpted passages from Lumber Liquidators Q3 2010 earnings release (NYSE: LL). In this release LL’s management concisely explained the costly impacts of their not-so-successful ERP Go Live.
I think it’s important to applaud management’s candor. Plenty of companies experience serious problems surrounding ERP yet make like a duck, calm on the surface but paddling furiously underneath. I know one company who lost all visibility into collections following Go Live—they really didn’t know how much cash they were taking in for almost six months!
In most cases it’s not the technology that’s the problem—implemented correctly, ERP software works. As with Lumber Liquidators (and MANY others) ERP failure is the result of too many things not being done correctly, or not being done by the right people, or not being done at all.
So what’s the solution: how can you substantially increase your odds of ERP success?
Well, Governance is a very good start.
ERP Governance is the process of deliberately managing relationships so the right things get done at the right time by the right people to ensure your ERP is successfully delivered and used.
It’s obvious, but too often it does not happen. Many business people are “just too busy” to discuss who does what. Few see value in basic Governance concepts.
But ERP is by design integrated and thus demands cooperation across organizational boundaries during implementation and use.
Successful ERPs clarify and manage the relationship between business and IT resources. They deliberately manage the interactions across the different business functions implementing ERP.
We use Governance Maps to decide critical cross-business and business-to-IT relationships during ERP.
Governance Maps are an effective tool for deciding:
1. What needs to be done to successfully implement and support an ERP?
2. Who is responsible for completing each task?
3. At what point is each task completed? (During the Program? After Go Live? Both?)
It’s simple, really.
It just makes sense to decide who is doing what before you take first steps down your ERP path.
But we’re amazed how often these important decisions aren’t addressed until the pain and suffering begin.
