An Order Management System Installation: How Bad Could It Be?

That’s the rhetorical question Matt Jordan, CEO, Premier Performance, Inc. asked of the audience at the Senior Executive Forum at Operations Summit 2015 about installing an order management system.  Matt is an FCBCO client and he has gone through several ERP and order management system conversions and shared his experiences.

Matt quoted several findings from a study of ERP systems by Panorama Consulting that parallels our experience with order management systems involving call center, fulfillment and ecommerce.

CurtBarryGraph    Source: Panorama Consulting, 2014 ERP Report

The Panorama report says, “Over the past four years of Panorama’s independent ERP research, the average duration has been 16.1 months. In this period, approximately 54% of projects have exceeded their planned budgets, 72% of projects have exceeded their planned durations and a full 66-percent of respondent organizations have received less than 50% of the measurable benefits they anticipated from their ERP software initiatives.”

Matt went on to say that, in his experience, these are Factors Inhibiting Success:

  • Most common problem: “organizational issues”
  • Weak project management
  • Too narrow a scope for budgeting
  • Too  little understanding of the impact of a new system on processes

–      Not capturing all the requirements for all areas of the business

–      Not understanding how the new system works

Matt’s observations about Mitigating Factors That Inhibit Success

  • Staff buy in / sell the rationale for the change.  We have seen many times that the staff complains about the existing system, but they may not fully commit to successful implementation.
  • Adequate resources (right people) –In one case, Matt’s company chose to upgrade the positions and skill sets for the new system implementation.
  • Third-party project manager – independent / speak truth to team / focused.  Managing implementation of an order management system isn’t something most managers do but once or twice in their careers (thank God!).  Plus, they have full-time positions managing the day-to-day operations.  In our experience, the vendor’s don’t have the broader experience in your business and they should not have the broad responsibility for success.  Matt felt that a third-party manager gave the independence about staff and vendor progress and issues.
  • Partnering with the right VAR.  FCBCO experience shows that 30% of the time, the selling VAR gets fired, and contractors, internal staff or another VAR implements the system.
  • Expand scope of implementation budget beyond VAR quote – what other costs are likely?  Matt and FCBCO would recommend including:
    • Overtime that will be required;
    • Accounting write down on prior purchased equipment and systems;
    • Additional staff added that may have more expensive skill sets than in-house personnel; and
    • Lost productivity in the first couple of months where temps may be required.
  • Take time to understand software functionality –Don’t assume anything.  Just because others in ecommerce use the system, it doesn’t mean the system is full functioned or will meet your needs.
  • Minimize customization –A recent FCBCO client project showed that two-thirds of proposed modifications the client staff felt were mandatory could be dropped after fully understanding the vendor’s system, processing and functions.
  • Manage expectations – in small steps.  Most organizations fail to do detailed implementation planning before they make the recommendations on cost and schedule to management and sign the contracts.  In our experience, without better planning, the initial expectations you create are faulty.  Vendors are notorious for giving overly optimistic schedules that fail to get met.

“How Bad Could It Be?”  I think Matt Jordan’s observations about installing large-scale systems like an order management system or ERP system are right on target. You’re changing the way almost everyone in your company does their work.  Studies like these show you can’t over plan or over manage the implementation of an order management system.  I know many readers have the same experience.

Curt Barry is the President of F. Curtis Barry & Company

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