Making Your ERP Project A Success CFO

How to get off to a good start
and avoid the challenges other
ERP-implementers have faced.
Making Your
ERP Project
A Success
Making Your ERP Project a Success is published by CFO Publishing LLC, 51 Sleeper Street, Boston, MA 02210.
Mary Beth Findlay and Sarah Johnson edited this collection, with assistance from Jenna Howarth.
Copyright © 2013 CFO Publishing, LLC. All rights reserved. No part of this book may be reproduced,
copied, transmitted, or stored in any form, by any means, without the prior written permission of
CFO Publishing, LLC.
ISBN 978-1-938742-42-2
RP solutions get a bad rap that’s not
always warranted. Any major software
implementation comes with its own set
of challenges and grumbles by those who
are leading the change and have to get others to
follow suit. However, from the beginning of their
existence, enterprise resource planning systems have
been known to cripple some companies during the
implementation and post-implementation process,
consume the precious time of employees, and burn
personal bridges between managers.
Over the past four years, companies that have
gone through ERP implementations have spent just
over an average of 16 months working on it. Just
over 59 percent of those projects have exceeded
their planned budgets, according to survey data
compiled by Panorama Consulting Solutions.
Beyond the extra time and money, poorly done ERP
implementations can leave a company’s willing
buyers in the lurch, unable to purchase what they
came to a website to buy. In worst-case scenarios, it
has led to restatements, apologies, confusion, even
firings of top executives.
Okay so there have been some problems. However,
when done correctly—with proper planning, due
diligence, and eyes-wide-open decision-making,
ERP can provide an enormous payoff. It can help
companies make connections and realize the
integration of its most valuable asset: its data. And
it can actually make one of the main tasks of the
CFO’s job—finding operational efficiencies—easier.
person or one department, and it will affect you
and your organization. Be the one who asks the
right questions, and make sure all the questions
are getting asked—and early. Don’t be afraid to ask
the same question over and over until you finally
understand the answer.
Guess Who Owns It?
Whether you oversee IT or work parallel with
your CIO, you as the CFO need to take some
ownership of the ERP project. It’s too big for one
For example, look past the marketing hype, and
question what vendors are promising. Get at what
your company is signing up for. Is the vendor asking
a lot of questions of you as well? Are the salespeople
truly trying to understand your business and your
needs and goals?
Despite any hopeful rumors you may hear from
your colleagues, there is no one-size-fits-all version
of ERP. This is a not-so secret fact that trips up
implementations; there will be some customization
involved and there will be adjustments that need
to be made by various people at the company.
Prepare yourself and prepare the employees who
will be involved (however far down the road in the
implementation process), and you’ll all be better off.
“We need to spend more time getting people up
to speed about the advantages of new technologies,
and make sure they see the value before they can
accept the change,” said Michael Smiley, CFO of
Zebra Technologies, which sells bar code readers to
manufacturers. Without universal adoption of a new
Despite any hopeful rumors you may
hear from your colleagues, there is no
one-size-fits-all version of ERP. This
is a not-so secret fact that trips up
implementations; there will be some
customization involved and there will be
adjustments that need to be made.
technology, said Smiley during a CFO conference,
you get some people using the tools, some not,
and the result is a “kludgy” process that defeats
the purpose of the change. He should know: his
company spent more than four years implementing
an ERP system.
The upside of those who have come before you?
You get to learn from their mistakes, and that’s how
we’ve put this CFO eBook together—to give you
what you need to know to have a successful ERP
project. A CIO once told one of our writers, “ERP
projects are won or lost at the beginning.”
So, take ownership from the beginning—at least
partially—and get the right headstart, with the
right people, smart planning, and of course the right
product and partners. Spell out the expectations,
the plan of attack, and line up the resources. And
wear your risk manager hat to lay out any what-if
snags that could slow down or hinder the project—
and current operations—along the way. You may
not be able to think of everything, but you will be
preparing your company for a successful system.
ecause ERP profoundly affects the
business, and because you’re responsible
for the business, do you want to be engaged
with or removed from ERP projects? For
CFOs, there are two answers. Only one is right.
In 2011, a midmarket medical-supply company
asked Heller Search Associates, a CIO and senior
executive search firm, to recruit a new CIO. The
incumbent had done a wonderful job in her two
years in the post, according to the CFO, but, sadly,
she was retiring.
Earlier in the year, this CIO had launched a
single-instance, global enterprise-resource planning
implementation that seemed to be going quite well.
All the new CIO would have to do is guide this wellmanaged program to its graceful completion, with a
go-live date set for that September.
The firm recruited the new CIO, and guess what
he discovered during his first few weeks on the job?
The ERP project had run amok.
When asked what the three greatest problems
were, he said: “The systems integrator had
dropped the ball on project planning, the
development organization had done sub par work
on configuration, and the business teams were not
prepared for how a new ERP system would impact
their work.”
This would make any reasonable person think:
“So, just minor issues like project management,
technology, and people. What’s the problem?”
Turns out, the company had to fire the systems
integrator, go back to the well for nearly double the
budget, and set the go-live date back for a full year.
Essentially, the company had to start over from
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for the Decade Ahead.
scratch, and the CFO ended up in the unenviable
position of having to report all of this to the board.
The now-retired CIO had reported to him. The CFO
was accountable.
This story, unhappily, is far from unique. It
happens all the time. Most likely, it has happened
to you. What could the CFO have done to prevent
this disaster? “Hire a better CIO” is not the
answer. Good CIOs have presided over failed ERP
implementations because their executive peers had
not done their part in making the project a success.
ERP implementations have a profound impact on
the way a business runs, and the degree and quality
of business engagement is a critical part of their
success or failure. If the business isn’t involved, the
ERP will fail, and the CFO—along with everyone
else—will suffer. Working on the assumption that
you do not like to suffer, here are the five common
ERP mistakes to avoid.
Unbelievably, companies often select
ERP packages that are not commonly
used in their industries. In addition to
looking for the right balance of reliability
and flexibility, the ERP vendor you
choose should have a long list of happy
customers in the same industry as your
1. Select the wrong product.
Unbelievably, companies often select ERP packages
that are not commonly used in their industries.
In addition to looking for the right balance of
reliability and flexibility, the ERP vendor you choose
should have a long list of happy customers in the
same industry as your own.
2. Locate program leadership too low in
the organization.
ERP is a game-changing project that requires
leadership in the upper echelons. ERP program
leaders have been known to be hired by management
teams who then want to shove those leaders
three rungs below the executive committee. At
the mid-management level, these directors do
not have either the visibility or influence to lead.
Consequently, the program suffers.
3. Assume that ERP is an IT project.
ERP is not an IT project. It is a business project,
and it requires more than business sponsorship.
It requires business leadership, not to mention
resources, commitment, and engagement. If your
CIO is the only executive giving ERP project
updates, you are headed for trouble. And if your CIO
agrees to launch an ERP project without a true and
committed executive partner from the business, you
have the wrong CIO.
4. Ignore the talent question.
Ask yourself, Can your company effectively recruit
a pool of talent that has experience in your specific
ERP package? Can you pay them enough? Can you
attract them to your company and your neck of
the woods? I have seen companies push back their
ERP launch date because recruiting those rare birds
with the right blend of industry, technology, and
leadership experience is much harder than they
5. Underestimate how long an ERP will
It is rare for a company to complete an ERP
implementation (or upgrade) in the time they
budget at the start. Whatever assumptions you start
out with, be sure to build in a cushion because, if
history is a guide, you are bound to need more time.
Remember the medical-supply company CFO?
Now picture him having to stand in front of his
board, having to explain why his previous reports
on the progress of the ERP fell so far off the mark.
Would you care to stand in his shoes?
e asked chief information officers—
all of whom have presided over ERP
systems at multiple points in their
careers—to come up with one critical
success factor for an ERP project. They had trouble
knocking the list down to just one, but in the end
they persevered. What follows are contributions from
several CIOs.
1. Understand the benefits.
“You should not define an ERP’s success by
whether it’s delivered on time or on budget,” says
one CIO from a global manufacturing company. “You
need to focus on the benefits of the implementation
and whether those benefits are realized after go-live.
All too often, companies spend huge amounts of
money and then forget about the payback.”
3. Don’t underestimate the importance of
master data governance.
Data, data, everywhere, but not a drop that’s clean.
“It sounds so mundane,” says another CIO, “but
master data governance is critical to driving ongoing
value from a global ERP.” Some companies spend a
lot of time and money aligning processes, but not
enough on cleansing and managing the data. “It is all
about the data,” says another CIO. “Bad data equals
bad ERP results.”
2. Don’t clip the tail of the project.
Many companies fail to include “leave behind”
resources—both in IT and in the business—when
they plan their ERP implementations. “With ERP,
processes change, things are different, and the
senior who knew his way around the campus [in
the old system] is now a freshman who needs a
lot of support and guidance,” says a CIO. “You
must allocate resources to focus on process and
system improvements as the implementation team
moves on to another site. Businesspeople on the
implementation team are always in a rush to return
to their ‘old’ jobs, but when that happens, there’s
no one left to make the new system better.” Or as
another CIO put it, “Go-live is the start, not the
end, of a true implementation if you want to achieve
the positive outcomes you’re after.”
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4. Prepare for the dip.
The best-laid schemes of mice and men, as Robert
Burns knew, “gang aft agley,” which, if you’re not
familiar with Scottish dialect, means your business
is bound to suffer a bit during the afterglow of a
go-live, bringing, as he wrote, “grief and pain for
promised joy.” Rather than be taken by surprise,
why not plan for it? “Despite best efforts, there will
typically be a business-performance dip in the first
month or two post-go-live as the business learns to
operate within the new model,” says a CIO. “Having
well-thought-out contingencies and a ‘hypercare’
support model in place will minimize the dip and
ensure that the organization exits from that dip as
rapidly as possible.”
5. Don’t overload the ERP.
“Perhaps the most critical thing for a CFO to
understand is that ERP programs are like replacing
the wiring in your house,” says Mamasource CEO
Marc West, who has spent time in CIO, COO, and
CEO positions. “You already have the house [your
business and its operations] but you are threading in
a new core element. Make sure you don’t overload
the job with a bunch of wonderful, amazing, bright
shiny new things. Be sure that your business today
can run against current performance metrics before
you add in process reengineering, new features, and
deep analytics.”
Finally, when an ERP program starts to buckle,
everyone loves to throw mud on IT’s door. The
wise CFO doesn’t join the angry mob. As Don Ford,
who runs ERP for Amtrak, puts it, “The CFO must
continue to cheerlead and drive changes from the
beginning of the project until the end. They must
be willing to walk the talk or everybody in the
organization will see right through the façade.”
RP can take awhile and test the patience of
any senior executive. While speed shouldn’t
be your main goal for any IT project, it
would be silly to pretend it’s not high on the
Some just can’t look past it. Former CFO and
current consultant Jack Bergstrand believes speed
trumps everything when it comes to making
fundamental changes to a business, including
technology solutions. Now the CEO of a firm
called Brand Velocity, which helps companies in
reinvention mode accelerate their time frames,
Bergstrand draws on his past experience in various
executive roles (including CFO of Coca-Cola
Beverages Ltd. in Canada and vice president of
business systems for The Coca-Cola Co.) where he
oversaw major implementations and restructuring.
What he’s learned (outlined in an edited interview
below) is worthwhile information for anyone
looking for an ERP system or in the midst of an
very careful in how you go about the restructuring.
At Coca-Cola, there was a lot of duplication in the
[SAP and IT] camps, but also a lot of knowledge.
In your book Reinvent Your Enterprise,
you wrote that many companies fail
to realize the difference between
information and knowledge. What did
you mean by that?
To address a problem, you [need to] bring in
people who have different information and skills.
That’s what creates knowledge: it’s more of a social
activity than an information-systems activity.
What is the key to doing major IT
restructuring well?
It’s having a clear vision of what you’re going to
do—and not do. When SAP went live, I was asked
to combine the SAP and IT organizations, which
were separate. There are really two ways to do that.
One is that you take SAP and move it under IT,
which seems reasonable. Unfortunately, what often
happens is that although implementing a new ERP
system is a major investment, when you go live, a
majority of your transactions and talent is [still]
dedicated to legacy systems. If you just keep the IT
structure in place and throw on the new ERP system
as a wing on the house, then you’re probably not
going to get the most out of the investment.
The other way is to build a new foundation for the
house, keeping a very consistent vision for what the
structure is going to be and why. But you have to be
When done right, ERP
could help your workingcapital efforts. Review
current working-capital
performance at large U.S.
companies in Still Not
A lot of companies go down the wrong path by
competing on analytics, where data is seen as the
Holy Grail. Let’s say you’re changing your supply
chain. Information isn’t going to drive that change.
What will drive that change is a social construction
that puts together people who oversee distribution,
manufacturing, IT, sales and marketing, and finance.
A lot of technology projects—about 70%—fail
to deliver what was intended. It’s usually not the
technology itself that fails, but rather the way
people work together to move from point A to point
Your firm’s Website says, “Velocity is
what we stand for, by being experts in
accelerating organizational results.” Why
the focus on speed?
Because the competitive world is continuing to
accelerate. To keep up or move up, you’ve got to
be fast. Where success or failure happens is in the
ability to make a change. Changes require projects,
which need to be accelerated.
We often come in on large technology-project
failures, where it’s important to get stuff done very
quickly. Say you’ve got a major software project
that’s costing $100 million. The normal way of
looking at that is to say, it’s $100 million, so we’ve
got to make sure we get it right, so let’s take plenty
of time. But it’s not really a $100 million project; it’s
a $100,000-per-day project. And what’s happening
per day is that people are busy making trade-offs,
they’re going to meetings, there are too many
decision makers; all of those things bog you down.
You end up doing the wrong things for the right
So how do you achieve acceleration?
We start with a sort of Myers-Briggs approach,
using a tool we created to understand what’s driving
the individual, the team, and the company. Normally
all of that is invisible, because it’s in people’s heads.
Once it is made visible, it’s much easier to put
together a game plan for doing the project in an
accelerated way.
Normally when you get a project team together,
people start to fight, because they’re all different.
Maybe what drives you is analysis, and what drives
me is relationships. If there isn’t a framework
that puts us on the same page, I’m going to battle
you on the weaknesses of the analytical approach,
and you’re going to battle me on the weaknesses
of schmoozing too much. Finally, people give up
fighting and really become a team, but it takes a lot
of time.
The process of understanding up front that all this
storming will be going on, and building a project
methodology that incorporates where you’re going
and why, what you’re going to do and when, and
who’s responsible for what, results in much faster
projects at lower costs.
What other major IT challenges do
companies face?
One of the biggest is around governance. You’ve
got a lot of people fighting for priorities, and a lot of
internal energy is absorbed in trying to get projects
on the table. A lot of times IT organizations try to
please as many people as they can, so they do more
things but do them slower, even the most important
ones. Then nobody’s happy.
In the IT world, you hear a lot about aligning
with the business. That’s a fundamental problem,
because IT needs to be integrated with the business,
not aligned. There’s a big difference [between the
two]. Integration requires trade-offs: one system
is chosen over another, and therefore one person
loses to another. Alignment is often just about
trying to make people happy. With ERP projects,
it’s not uncommon to have more than 100 people in
steering committees and subcommittees. That never
works. It gets bogged down until somebody says
“enough,” and then it takes more of a turnaround
mind-set. Then people aren’t aligned anymore;
they are integrated, and making decisions faster and
getting stuff done.
hether a CFO oversees IT or not, the
CIO role plays a critical factor in the
finance organization’s happiness and
ability to get things done. But the CIO
role is often the most difficult to understand and
keep a handle on, since it changes so often and partly
because other executives (ahem, CFOs) don’t always
necessarily understand the work that CIOs do. You
may finally understand software-as-a-service, for
example, but may still be baffled by platform-as-aservice.
Adding to the issue, of course, is the fact that IT is
so expensive. You approve a $50 million IT budget
and then wait . . . and wait . . . and wait for the return
on that investment. To improve your chances of
having successful implementations down the road,
think of the possibilities for the type of CIO you
want. Better to identify the right kind of leader and
groom him or her than to do a rip and replace at the
11th hour. Do you have the right person to lead your
company’s ERP effort?
Need a smoother
relationship with your
CIO? Consider Can We
Chief Improvement Officer
Chief Innovation Officer
With their program management and change
leadership responsibilities, CIOs are ripe for the role
of enterprise continuous improvement champion.
As more IT functions are outsourced, and business
leaders get more comfortable reaching to the cloud
for their technology solutions, the CIO will be
released from overseeing IT operations and free to
make business processes across the company faster,
better, and cheaper. In a number of companies,
CIOs are raising their hand to add continuous
improvement to their plate. If you don’t have an
enterprise continuous improvement champion, you
really should. And you should consider your CIO for
the job.
CIOs have been driving productivity for decades.
They got on the map, way back when, by making
the business more efficient by automating some
basic manual processes. Then they began delivering
communication systems, like e-mail, which made
everyone more productive. With ERP, CIOs moved
into the arena of business process change (and began
devouring large chunks of enterprise revenue). Along
the way, they also made good use of outsourcing for
increased productivity and cost savings.
Chief Intelligence Officer
In this version of the CIO role, the “I” stands for
the transformation of business information into
actionable business intelligence. Wayne Shurts,
former CIO of Supervalu, a $38 billion grocery
company, developed a solution for improving sales
and “freshness” in his stores’ produce departments.
He supplied sales data to store managers so that they
could allocate shelf space accordingly. What kind of
technology did he use? RFID? Smartphones? Nope.
“Sticky tape,” he said.
Many CIOs have evolved beyond the “I have a
technology hammer, so everything is a technology
nail” mindset and now see their role as serving up
information to solve business problems. Sometimes
the right business-intelligence solution has no
technology component at all.
Sources for Making Sure Your ERP Project is a Success:
“CFOs Will Determine the Future of the CIO,” Martha Heller,, February 28, 2012. Copyright 2012 © Martha Heller.
“Five Big Ways Your ERP Can Go Wrong,” Martha Heller,, June 12, 2012. Copyright 2012 © Martha Heller.
“Five Big Ways Your ERP Could Go Right,” Martha Heller,, July 20, 2012. Copyright 2012 © Martha Heller.
“IT’s Need for Speed,” David McCann,, April 14, 2010. Copyright 2010 © CFO Publishing LLC.
“Look Out, CFOs! The Future of Finance Is Changing,” Taylor Provost,, October 4, 2012. Copyright 2012 © CFO Publishing