A few posts ago, I mentioned some survey results regarding the implementation of agile and lean initiatives.

I've found another report with a bit different slant but some of the same central messages...culture change within an organization is an essential piece of any important initiative...and it's difficult to pull off.

I've attached a synopsis of a survey conducted by an outfit called Panorama Consulting Group.  The Industry Week Manufacturing Forums I mentioned in a previous post had a message that led me to the report on a survey the company did regarding the implementation of ERP (Enterprise Resource Planning) systems. (You can see the synopsis here.  By just giving them your email address, you can get access to several other white papers about ERP implementations and organizational change.) I've argue in a number of other places that implementing an ERP system is like implementing agile manufacturing methods in that they both require attention to managing change of culture.

I assume most of you reading this know about ERP systems and the cost of implementation.  It's really, really expensive with respect to money, time, attention, and energy. (One company I worked with spent tens of millions on its ERP system and was successful with it eventually but not before a disastrous year in 1998.) Companies don't take them on lightly and lots of planning go into them.  Leadership attention and commitment is almost assured because of the expense. 

So, with all that money, planning, and comittment, ERP implementation success stories should be aplenty, right?

Let's see what the survey says...

1. Almost two-thirds of the projects end up over budget, with $16% being WAAAAY over budget.
2. More than 90% of the cases ending up taking longer than expected.
3. About 20% of the companies end up being unsatisfied.  Almost a quarter of the respondents (23%) aren't even sure if they like the results they're getting or not!  (Imagine spending perhaps tens of millions of dollars and not knowing whether you're happy or not with the return on that investment.)  To be fair, over half of the respondents are satisfied with their implementations, notwithstanding their being over budget and taking too long.  (On the other hand, if you were buying, say, a house or a car and the salesperson told you the price but added, "There's no better than a 60% chance that you'll be even somewhat happy with this purchase," what would your response be?)
4. Almost 60% suffered work stoppages at some point.  Work stoppages....now there's a real benefit.
5. How many respondents realized even half the promised benefits?  One of five.  (And yet three of five were satisfied with the results they did get.  I guess business people are actually pretty easy to please.)

We seen, then, that companies spend lots of time, money, and energy on changes that very often cost more than anticipated, almost always taking longer than anticipated but that give just a bit better than a 50-50 chance of providing satisfactory results. 

Some of the other survey data give us some hints as to why such unexciting outcomes are realized.

1. More than a third of the respondents say that lack of employee buy-in was a significant implementation barrier.  Could that be because employee buy-in was overlooked as an important element of the implementation plan, thereby assuring that the initiativ would make little or no effort to encourage said buy-in?  Just askin'....
2. Less than ten percent of the initiatives took over 18 months.  And yet 90% of the respondents said the implementation took longer than expected.  I don't know what to make of this except to say that substantial organizational change takes longer than 18 months, I don't care how good you are.  It would seem that leaders have (or are being given) an altogether unrealistic idea of how long such an implementation should take if it's to be successful.  I have the sneaking suspicion the same is true when it comes to agile, lean, and six sigma implementations.
3. Over 70% of the implementations led to staff reductions.  No wonder employee buy-in was difficult to achieve.  (I wonder if the RIF's were a natural outcome of improved processes or to recoup the money lost when the darn thing went over budget.)

My point, then, is not that ERP systems are bad investments.  It's that companies and organizations don't take the steps necessary to make them good investments.  ERP systems work.  Agile and lean and six sigma work.  Failures come from poor execution and that, most often, comes from failure to manage culture change effectively.