Isn’t it about time we had a way to really measure the success of ERP Implementations?
Is it just me, or do large scale programmes which set out to deliver a full digital transformation hardly ever reach a successful outcome against their original business case?
The question is a rhetorical one, obviously. Anyone who has spent time involved in delivering a major transformation will have anecdotal evidence of how post-implementation the organisation continued doing the same things in the same way, but with a flashier user interface.
You don’t just have to take the anecdotal evidence prevalent in the sector though. In a new McKinsey Global Survey on digital transformation, 80 percent of companies have undertaken such efforts in the past five years, but on average 16 percent of respondents say their organisation’s digital transformations have successfully improved performance. Select a ‘traditional’ industry (utilities, automotive, pharma, healthcare, etc.) and the number dips to somewhere between four and 11 percent.
The suggestion that ‘major transformation is hard’ might not be revelatory. Years of research on transformation has shown that the success rate for these efforts is consistently less than 30 percent.
The fact that digital transformation is even harder requires, I believe, nothing less than an industry-wide review to define a standardised calibration and audit of the approach to programmes of this scale. This is particularly true where it is public money being spent, as it so often is.
Let’s start with the basics. What is ‘digital’ transformation exactly?
• Using technology to its fullest extent. Software is only profitable if it is used. When adopting new software, organisations should focus on improving employee proficiency, productivity, and engagement.
• Streamlining the digital work-flow. The better an organisation can integrate tools into the workplace, the more efficient the workplace will be. A streamlined digital workflow improves productivity, efficiency, as well as the overall workplace experience.
• Maximizing the returns and value of a software platform. With the right adoption approach, employees can become more skilled and more productive. This results in higher returns on the investment in a software platform.
Essentially, it comes down to the adoption and optimisation of new technology. We regularly read across various mediums that X or Y’s implementations have been ‘successful’, but that’s only the case when success is defined as the completion of an IT project replacing a legacy solution with a new ERP – shiny new user interface, same old systemic issues.
Obviously, no programme sets out to fail in their digital journey. They start off with the best of intentions; board approved business cases, ROI calculations, detailed programme plans, etc, and yet so many of these fail to deliver genuine benefit, leaving organisations to write off the whole thing as a painful and expensive experience.
So the obvious question is, what can we, collectively, do about this? My contention, which I have touched upon already, is the development of a published, industry-standard form of measurement. There are very few things which happen within a business that can’t be measured with the new and shiny products we implement but for whatever reason we do not take the same comprehensive approach to measuring the implementation itself. We need more accountability in the various transformational aspects of a delivery programme
At the very least, in the public sector space, where these things can be mandated, there should be a set of standard measurement outcomes published, based on relevant factors; ERP capability, current legacy digital capability, level of proposed transformation to name a few.
Outcomes require auditing and measures published for the partners involved to be assessed appropriately. These measures won’t be to every supplier’s liking, however if we continue to fail as an industry in achieving digital transformation and ROI without being able to hold companies to account, then there will be no motivation for those companies to improve. Besides, any supplier worth their fee should welcome the opportunity to showcase their ability and track record as a way to win more business.
Of course, the current Implementation market, especially within the public sector, ensures that the cheapest bids almost always win. This is likely to be a significant factor in the consistent failure of adoption or optimisation that we see, with the most cost-effective option selected above, the option which would potentially drive the optimal outcome when measured against a standard methodology of audit. Put another way, I don’t think anyone who has been through or had to turn around a ‘problematic’ implementation would argue with the assertion that delivering as close to full adoption of the solution and change transformation target enables a more rapid and sustainable return on investment, and therefore a low cost of ownership.
If we were able to hold suppliers to account and drive a change in the market towards accountable, auditable delivery, then the better (albeit potentially more expensive) suppliers will begin to be asked to deliver outcome-based bids which are built on auditable outcomes, and not so heavily reliant on pushing down the initial price.
As this begins to deliver a higher percentage of digital transformation and the evidence is collated and published with the relevant track records and an open book accounting of achievements by suppliers, the market would begin to select partners based on the best outcome and return on investment and not the cheapest initial bid.
This in turn, through gradually driving and changing the market place by adding the checks and measures into the right places to achieve or surpass the standards, you would drive up the percentage of successfully digitally transformed programmes. Who’s with me?