Friday, January 30

BIG E.R.P → R.I.P ?

No long winded pre-amble for you this time. Just the facts:
  • 93% of ERP implementations take longer than expected
  • Only 35% of ERP projects are completed on or under budget
  • Only 21% realise at least half of the business benefits they expected
  • Only 13% of those interviewed are very satisfied with the results
  • 57% of systems suffered operational stoppages after implementation

Now, don't get me wrong, I have no axe to grind against big ERP projects. We know that big systems projects, particularly those designed to replace mature legacy systems, all share similar failure rates and can cause equal levels of
stress. But it's the ERP projects that grab the headlines because they carry with them the real possibility of killing the operational side of a business. You know, the boring stuff like making sure there is enough inventory, collecting cash in a timely fashion and paying the staff. Think I'm exaggerating? Well here is just the latest tale of woe: SAP project costs cited in jeweler's bankruptcy filing

What frustrates me is that these failures, whether in the absolute or relative sense, give the vendor-side of the business a bad name. During the nineties there was a swing of the pendulum from a build to a buy mentality and package software vendors became large and very successful. But selling a complete package solution means you must start from the position that the existing system is 'legacy' and should be replaced - how else can you justify the multi-million dollar price tag of new package? Who ever actually measures the functional overlap to determine whether, say, 70% of the new functionality is actually just a re-implementation of what was already there? For instance, there hasn't been much innovation in the area of double-entry bookkeeping in recent years so you can argue that many of the fundamentals must still apply. I am arguing that too many babies are being thrown out with the proverbial bath water and it's time to stop and think differently about the value and role of legacy systems.

My experience at LANSA has been a real eye-opener in terms of what is possible to achieve by sweating the existing assets rather than spending millions on a new system. I was reminded of this fact when reading the latest edition of the LANSA Review magazine. Inside you will find an excellent Showcase article entitled 'Making Money and Saving Money with LANSA'. I don't mean for this post to be a blatant advert for my employer but I honestly know of no other vendor that can tell so many real stories - from different industries and countries around the world - that demonstrate just how much extra business value and longevity can be squeezed from existing systems.

There is never a good time to experience a big project failure, but there are times of exuberance when you can chalk it up to experience and move on to the next big idea. But however you choose to describe the perilous state of the global economy, I think you must agree that few companies currently have the wherewithal to absorb such a massive failure - particularly in already fragile industries like retail, manufacturing and financial services. This new reality means that even the mighty SAP is feeling the pinch. They have reported lower than expected earnings, instigated their first large reduction-in-force and effectively withdrawn guidance for 2009. Ouch.

The good times may one day roll again for the big package software vendors. In the mean time I urge you to think different and take a more creative approach this year. You might place the pendulum somewhere between extend and selectively replace for a while rather than watching it swing violently between build vs. buy. That kind of sanity is welcome during good times and bad.

Thursday, January 15

Hey, Make Do & Mend Mister!

Yes I’m talking to you sonny-jim, the CIO making plans for 2009 when the only certainty is that the pressure on you to deliver is relentless and funding for new projects is evaporating faster than spit on a hot griddle.

A dilemma for sure, so where to turn for inspiration and support? It struck me that - after hearing pundit after pundit comment that this economic melt-down is the worst since the war (WWII) – what actions would a war-era CIO have taken if computer systems had been as prevalent in business then and not just military code-breakers?

The British government ran a campaign during the war encouraging all citizens to Make Do & Mend. With the nation's industrial output concentrated on the war effort, basic clothes were in short supply and high fashion was an unknown commodity. Adults were issued as little as 36 coupons a year to spend on clothes. But a man's suit could cost 22 coupons, a coat 16 and a lady's dress 11, so the need to recycle and be inventive with other materials became more and more necessary.

Are there any useful parallels to be drawn from comparing the recycling of curtains into dresses and old sheets into underwear with the reuse of IT systems? When times are good then nobody wants to be caught walking around in pair of old curtains. But there exists a nadir after which it is not only socially acceptable to ‘Make Do & Mend’ but somewhat de rigueur and stigma transfers to conspicuous consumption.

NOTE: I first came across the 'Make Do & Mend' maxim applied to the IT sector on the excellent UKHotViews blog published by Richard Holway and Anthony Miller. It is a theme that they come back to time and again but here is a post from early 2008.

By the end of 2009 I expect that ‘smart’ CIOs will be identified as those who dreamt-up ever more creative and compelling ways to extract business value from existing systems. When business is flush with cash it is easy to pooh-pooh ‘the old ways’ and go cap-in-hand to the CFO for a shiny new system. But finding ways to deliver 80% of the same functionality of a new package for only 20% of the cost takes real imagination, skill and, dare I say it, balls (or big cojones for those across the pond).

At LANSA we see both sides of the coin on a daily basis – new systems being designed and built from scratch as well as projects to enhance, extend and integrate existing systems. Drawing on that experience I humbly submit my Top 5 list of quick win application modernisation projects to do this year:

Web customer self-service to lower operating costs
Shortening the supply chain (digital B2B communication)
Mashup business apps to increase end-user productivity
Second-generation e-commerce solution to ramp-up sales
Replace 5250 UI with a rich GUI to reduce training costs

NOTE: A good result would be delivering any 3 of these 5 projects during a 12 month period.

For a while the 'next big thing' in IT will not be a new technology. It will be a business focus on improving the top and bottom line. With this in mind, IT projects are likely to be re-prioritized. Now is a better time than ever to reuse existing systems and to extend and modernize these systems with cost-effective enhancements that will pay for themselves in the short term and provide genuine value. BTW, demonstrating how to deliver 80% of the solution for only 20% of the cost is also a good way to make yourself indispensable.