I was called in by a large warehousing and distribution client in the chemicals sector. They were in dire straights. They had implemented a big brand ERP with one of the big four global consulting firms. Things had gone horribly wrong and the consultants could not fix the problem. They had just lost their biggest customer and rumours in the market suggested that their next two biggest customers were seriously investigating alternative suppliers.
This article discusses the third factor giving rise to ERP implementation failure – “lack of effective strategic alignment” with a weight of 16%
Lack of Alignment – a Practical Example
I was called in by a large warehousing and distribution client in the chemicals sector. They were in dire straights. They had implemented a big brand ERP with one of the big four global consulting firms. Things had gone horribly wrong and the consultants could not fix the problem. They had fired the consultants and hired another top implementation firm. The problems continued.
At the time they were referred to me they had just lost their biggest customer and rumours in the market suggested that their next two biggest customers were seriously investigating alternative suppliers.
I conducted my customary one on one Executive Interviews and each executive bemoaned the fact that they had built their business based on a strategic service promise of “order in by 3 pm, delivery by no later than 10 am the following day” Their customers were large manufacturing organisations working on a “just in time” basis. At the time I was appointed the client was missing their delivery deadline by more than 24 hours!
I then interviewed the new implementers and they told me proudly about all the reports they were fixing and all the other things they were doing to improve system operation. There was zero mention of the service promise. I was then given a walkthrough of the software, again zero mention of the service promise, which was the strategic essence of the business.
I then went on a walkthrough of the warehouse, a large structure of several acres in extent with a huge array of chemical products ready for dispatch.
I was taken into a shed in the middle of the warehouse. There a large format printer was discharging large volumes of paper off the big brand ERP. As I familiarized myself with the layout an employee entered the shed, took the printout and sat down at a terminal on the same world class ERP and started typing data off the printout into the SAME supposedly integrated ERP!
In another shed in the warehouse, another employee was taking printer output and manually allocating orders to vehicles for delivery on a white board – this with a world class ERP which supposedly had comprehensive route planning and transport management capability.
When I asked why these things were happening I met a blank. I quickly established that these manual interventions were a major factor in the missed delivery deadline.
I went back to the consultants who were so proudly working on reports. None of them could tell me why this world class ERP was being used this way and, on further inquiry from the management of the implementers I established that no-one knew why this was happening and no-one knew how to fix it. In fact, they had no idea where to start looking to see what was required to fix the problem AND they did not appear overly concerned.
I established that the previous bespoke software system was still in use at another subsidiary of the same group AND that it would not take long for them to reinstate their software for my client. They were confident that they could roll back to backups, update open items, etcetera and be fully operational in no more than six weeks.
The process of arriving at the above conclusion had taken me two days.
At the end of the second day I sat with the CEO of my client and reported my findings.
The implementers were oblivious to the service promise that was the strategic essence of the business, and apparently indifferent. They could not explain the manual processes in the warehouse, nor could they explain why these steps were happening AND they did not know how to fix the problem – the indication was that it could take weeks of detective work to figure out where the problem lay and HOW to fix it with the possibility of a complete re-implementation being floated.
Basically a commercially untenable approach.
I outlined my findings to the client and concluded that they only way I could guarantee that they could reinstate their service promise was to abandon the big brand ERP and revert to the system that had served them well for the previous fifteen years.
The CEO took my advice, fired the implementers, negotiated with theprevious suppliers and with customers and reinstated the old system. A couple of months later I bumped into one of the directors at a function and he stated that the decision to revert to the old system was “the best decision the business could have taken”. They were back in full compliance with their service promise and had not lost any more customers.
This case study evidences how an appropriate one hour interview by an executive of the implementers with the CEO of the client with the right questions and the right attitude at the start of the project coupled with strong implementer executive oversight during the project, in other words, strong strategic alignment, could have avoided a disastrous outcome for the client and both implementers! AND how the absence of that strategic understanding and focus can destroy a client’s business.
