As I work through the Critical Factors causing failure and the Critical Factors for Success my next
topic is the second factor causing failure “Inappropriate or ineffective executive custody, governance
and corporate policy” with a weight of 19%
Ineffective Executive Custody
The second most important factor causing failure of ERP implementations or, indeed any major
strategic investment in my experience over more than thirty years, is Ineffective Executive Custody
and associated issues – the lack of effective Executive Custody is behind a lot of failed projects.
In its most fundamental form this relates to the CEO not taking overall sponsorship of the ERP
project, this includes:
- Delegating to the Chief Financial Officer – the result is generally the implementation has a
strong financial bias and the operational side of the configuration is short changed. - Delegating to the Chief Information Officer – the result is generally a very tech
implementation with strong emphasis on process and failure to address the core strategic
elements of the business. - Delegating to the IT Manager, a more extreme version of the CIO – a tech centric
implementation that generally fails to support the business effectively. - The worst I have seen – delegating to the Legal Resources Director – an extremely robust
contract that completely crippled the implementer, technology that did not work properly
and, generally, a disastrous implementation.
I have seen all of these and turned them around by getting the CEO to take charge, which is
generally not that difficult once a project has failed dramatically.
Let me share a few examples:
I once delivered an outstanding result, masses of management information, dramatic improvements
in overall operational performance, year end audit cut from six months to six weeks without
qualifications, the first time without qualifications in fifteen years and all with one less staff member
in the finance department. Project sponsor a senior director who was operations director and Chief
Financial Officer with very little input from the CEO. A year after these dramatic benefts the CEO got
involved and messed things up because he was not sensitive to the finer details of why everything
was working so well!
My first ERP project I had exceptional executive custody, the next two I had none, in one case the
CFO had only been with the company a short while and was too junior, in the other case the CFO
simply did not understand the business, in both cases the implementations were disastrous and go-
live did serious damage to the business because core operational issues were not effectively
addressed.
The worst experience and the experience that convinced me to refuse to undertake projects if the
CEO is not the sponsor was a case where a weak CEO declined to get involved because he was “too
busy” and did “not understand technology” and left the project to four strong directors – a maverick
CFO who thought he knew ERP and didn’t, a Strategy Director who was new and did not get on with
the CFO and two operational construction division Managing Directors who had major issues with
the CFO. All pulling in different directions. Eventually I found myself faced with an abusive,
hysterical rant from the CFO because I was doing what the operational directors wanted and not
what he considered appropriate and no one to override or moderate.
I have encountered other situations where inappropriate policies have crippled projects.
I could go on but doing my best to keep this short.