InformationWeek
Defining The Business Value Of Technology
August 2, 1999
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Savvy companies apply the painful lessons learned from implementing enterprise resource planning software to next-generation applications
By Jeff Sweat
"If we can learn from our mistakes, we can improve our ability to deliver on time and improve user satisfaction," says Kevin McCarthy, VP of IT for General Instrument Corp., a Horsham, Pa., manufacturer of cable network equipment.
Almost every IT department has a story about enterprise projects spinning out of control, growing in scale, and eating up more cash, time, and human capital than anyone anticipated. In the process, IT managers have learned a few hard-won lessons: Shorter implementation times are better than drawn-out projects; customization should be kept to a minimum; and a tight focus stands a better chance of success than a wide reach.
But applying those lessons isn't always easy. Why? Because the people who implement customer-relationship management software, for example, aren't necessarily the same ones who implemented ERP. Also, skills may not transfer: ERP requires knowledge of financial and manufacturing processes; CRM, for example, calls for deeper knowledge of business needs and customer demands.
Still, savvy companies are overcoming barriers to knowledge transfer in order to smooth process planning for the next wave of applications.
Another essential element often missing from ERP implementations is a detailed project plan: why the software is being implemented, what parts of the business it will touch, and how long it will take. These were all things that Pawtucket, R.I., toymaker Hasbro Inc. struggled with when it attempted to implement SAP software in 1997 and 1998. "Because we didn't have a solid project plan, everybody was doing their own project plan," says Steve Marcolini, Hasbro's director of systems integration. "We had a lot of people getting ticked off at other people."
The lack of a clear plan also leads to another common application problem: feature creep. Instead of limiting the ERP application's functionality and scope, Hasbro let users suggest changes and customizations that ate up resources and time. The project took six months longer than planned, and cost $62 million instead of the $50 million originally anticipated.
Hasbro hopes to avoid those problems in its CRM implementation, a custom application built by Dialogos. "If we let these larger enhancements come through, we'll have an open-ended project," says Marcolini. "It'll never get done." The IT organization will develop and manage a project plan and get senior management's commitment--"in stone," Marcolini says--so changes can't be made easily. Any significant changes will have to come in future versions of the application.
Photo McCarthy by Bill Cramer
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nterprise resource planning software has brought efficiencies to many companies--but it's also taught companies a lot about how not to put in enterprise applications. The pain of installing such complex software imparted valuable lessons on how to deal with people, planning, and processes. Now, as companies implement the next generation of enterprise apps--such as customer-relationship management, sales-force automation, and supply-chain software--they're looking to apply the lessons they learned from ERP.
First things first: ROI. Enamored of the technology, many companies failed to make hard return-on-investment calculations for ERP application projects, says Tobey Choate, a principal in the CRM practice at Dialogos, a consulting firm. Choate says his firm began advocating a business justification as an essential element of an enterprise project--and the same holds true for next-generation applications such as CRM. However, in the current wave of customer-relationship management projects, he says, only about one in 10 of his clients asks for such justification. "There's no reason to think that businesses have learned their lesson" from ERP, says Choate.
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