One CIO perceived an ERP project as 'career making' and argued his case for becoming the project sponsor. Fourteen months later — with $16 million spent and little to show for the effort — the project was abandoned and the CIO fired.
Enterprise Resource Planning (ERP) system implementations are business, rather than IT projects.
Yet far too often it falls to the CIO to take on the role of project sponsor when there’s a sponsorship vacuum created by the unwillingness of business leaders to take on the role. Don’t fall into the trap of taking on the role because nobody else will. Instead, secure the right business sponsor to ensure success.
Some CIOs seize the sponsor role as they believe they will gain power and control through performing it. An ERP implementation, particularly one that aims for significant business transformation, is usually one of the largest investments an organisation makes and has far reaching scope, impact and influence.
The reality is that CIOs don’t have the political muscle and clout to push the transformation through the organisation. They can assist in doing so, but are more influencers and providers to the enablers, rather than assuming the leadership mantle.
Other CIOs fall into the trap of thinking that they are better positioned than business peers to be the sponsor. Some CIOs, failing to secure business sponsorship, step into the role assuming that once they build it others will follow, particularly when they themselves recognise the absolute imperative for the project.
The fact that so many ERP projects are compromised (or fail outright) is attributable to many reasons, such as failure to recognise it as a business project, lack of business ownership of the ERP strategy, over reliance on a system integrator or inappropriate scope. But at the root there’s invariably an absence of effective business sponsorship.
You must support the appointed business sponsor of the ERP project to secure and maintain active, engaged, and informed sponsorship throughout the project — even if the project extends over several years, as many ERP implementations do.
Don’t be tempted to take on the role of sponsor for ERP projects, unless it's purely a technical project involving an infrastructure, operating system or database upgrade. You can set yourself up for failure. Think strategically here, rather than of tactical expedience.
A group of state government agencies began an ERP initiative to standardise processes, underpinning a shared services initiative, and thereby gaining greater financial visibility across agency reach.
The CIO perceived this project as "career making" and argued his case for becoming the project sponsor. Fourteen months into the project — with $16 million spent and little to show for the effort — the project was abandoned and the CIO fired.
The major issue leading to the project's abandonment was the CIO's inability to create consensus and drive the needed transformational change across varying agencies. The departments simply did not see him as a credible figure for business transformation and blamed IT for trying to impose its will on agency processes.
The mark of a good CIO is to know when to hold a position — and not taking on the business sponsorship role is certainly one of those occasions. Resolving, securing and retaining the right ERP sponsorship for the life of the project may not be easy, but it is imperative for complete business success with ERP investments.
Who is the right sponsor?
An effective project sponsor is not a figurehead who blesses the project, turns up for monthly steering committee meetings and then authorises the end of project celebration. It's an active, fully engaged role that is accountable for the ultimate success of the ERP project — always remembering that the measures of success are improved business outcomes. The right project sponsor really can make the difference between ERP project success and failure.
There are several reasons why business leaders may be unwilling to take on the role of sponsor:
·They mistakenly believe an ERP implementation to be an IT project, and don’t understand this type of project well enough to act as sponsor.
·There’s been a previous bad experience with ERP implementations in the enterprise and senior leaders don't want to have anything to do with it due to fear of failure.
·They may have had a bad ERP experience elsewhere and fear that the role of ERP sponsor will damage their standing in the organisation.
·They feel that they don’t have enough time to devote to the sponsor role because of other conflicting priorities.
·They simply misunderstand what the role of sponsor is, confusing it with program direction, for example.
The project must be viewed and treated as a business change or transformation enabled by ERP. You must support the appointed business sponsor of the ERP project to secure and maintain active, engaged, and informed sponsorship throughout the project — even if the project extends over several years, as many ERP implementations do.
Recognise local sponsorship
While an overall corporate business sponsor is essential to the project, it's important to recognise that local sponsorship must augment this in ERP projects that include multiple business units, divisions or countries. Otherwise, there’s a risk that the project will be seen as something imposed from the corporate centre or global headquarters that can be "opted out of" or ignored at a local level.
Support the corporate business sponsor in identifying and securing local sponsorship. If you have local IT leadership, connect with them yourself to ensure that strong business and IT leadership from the centre translates seamlessly to a local level. If the local IT leadership is capable, have it perform the mentor or support role locally that you perform centrally.
Denise Ganly is a research director at Gartner, covering ERP strategy, business cases, benefits realisation, selection and change management challenges facing organisations with enterprise-class applications. She will be speaking about ‘The 10 Ugly Truths of Postmodern ERP’ at Gartner Symposium/ITxpo 2016 on the Gold Coast, 24-27 October 2016.