3. It’s the people, stupid

Implementing new systems is fraught with problems. In a recent survey almost half (48%) said the SAP project failed to achieve their business objectives. So why do organisations invest so much in these projects when they deliver so little? And is there are better way?

In the third in the series of blogs about change management in procurement, I consider the change activities required to implement new purchase to pay (P2P) and source to contract (S2C) solutions. Traditionally, most procurement systems have been implemented as part of a larger enterprise resource planning (ERP) system like SAP or Oracle, however, the market is changing with specialist like Coupa, Curtis Fitch, Ivalua, Jaggaer (Bravo Solutions) and Proactis offering modular systems focused on procurement’s requirements.

I have led several implementations of enterprise wide solutions (SAP, Oracle) and specialist solutions (Ariba, Curtis Fitch). If we assume the basics are in place, namely, a robust business case, an implementation plan based on best practice and an adequate budget, then I encounter 3 common problems:

  1. People should be at the heart of any change. The first stage of Kotter’s 8 stage change model is to establish a sense of urgency so that “a majority of employees, perhaps 75%, of managers overall, and virtually all of the top executive…believe that change is absolutely necessary.” This may sound like a very high bar, however, the same people who believe that change is absolutely necessary will be asked to attend briefings and training courses and will eventually use the system every day. It is better to share information early, even if is going to change, and listen to people’s concerns before telling them the answer to all their problems!
  2. Effective and efficient processes offer competitive advantage, not software. Adam Smith, the grandfather of economics, opened his seminal text with a description of the processes in a pin factory (An Inquiry into the Nature and Causes of the Wealth of Nations – 1776). More recently, Peter Drucker, the management guru, explained the benefits of simplification and decentralisation of processes in General Motors (Concept of the Corporation – 1946). A contract for a software solution from SAP does not, in itself, offer any benefits. And taking a manual tender process and simply automating might remove a few key strokes but will not deliver much benefit. All too often, programmes are described as systems implementations and lead by IT. I believe they should be described as business transformation programmes and lead by the people who are most affected.
  3. Every system implementation plan includes a phase for data migration, however, many organisations fail to recognise the volume of data that is required to power ERP systems and the need to structure it in such a way as to drive compliance. It doesn’t matter how good your P2P process is if requisitioners have to trawl through a list of thousands of suppliers to find one they want. If a new system is needed then it stands to reason that the data held in the old system needs to be gathered, cleansed and enriched before it is migrated to the new system. Unfortunately, improving data is time consuming and requires scarce resources. Managing data well has generated fortunes for Amazon, Facebook and Netflix. Every systems implementation should value process and data equally and follow Carly Fiorina’s matra, that is, “the goal is to turn data into information, and information into insight”.

A new IT system is no silver bullet. It should be seen for what it is, a series of configurable workflows and reports. If organisations want to achieve the benefits of  business transformation then they should invest in engaging with the people affected, design effective and efficient processes and structure the data in a way that makes being compliant easier.

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