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HCM and ERP Success/FailureDecember 5, 2014 Andersen Corporation HQ

Eric KimberlingFounder and Managing Partner Panorama Consulting Solutions

www.Panorama-Consulting.comPhone: 720-515-1377Twitter: @erickimberling

http://www.Panorama-Consulting.com

© Copyright 2014 Panorama Consulting Solutions. All Rights Reserved.2

About Eric Kimberling● Founder and Managing Partner of Panorama Consulting

Solutions● Leading independent ERP systems expert, giving 100%

unbiased advice to clients for over 20 years.● Published over 1,000 ERP articles and blogs● Quoted by leading media and blog outlets as the leader in

ERP, including Wall Street Journal, Fortune, CIO, and Financial Times

● MBA with an emphasis in operational strategy and a Bachelor of Science in business administration from Daniels College of Business at the University of Denver

● Certified Six Sigma Black Belt and a certified practitioner of multiple ERP solutions

● Expert witness for the industry’s highest profile lawsuits


About Panorama Consulting SolutionsThe world’s leading independent ERP consulting firm

Key Service Offerings

• IT Strategy• ERP Evaluation

and Selection• Implementation• Organizational

Change• Benefits

Realization• Business Process

Management• Expert Witness

Our Team• Global base of

consultants• 20+ years of

industry, consulting, and/or vendor experience

• Six Sigmas, MBAs, PMPs, APICS

• 360° ERP Certified™

Offices• Boston• Chicago• Denver• Dubai• Lima• San Francisco


Today’s Agenda

● Review of Panorama’s 2014 ERP Report● Confessions of an ERP Expert Witness● What You Can Do Differently To Make Your

HCM Implementation More Successful

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Panorama 2014 ERP Report- Key findings for HCM


Overview of PCS’s 2014 ERP Report

● Based on detailed quantitative study of approximately 192 respondents

● Polling was conducted over the period from January 2013 to February 2014

● Includes companies of all sizes, industries and software packages


2014 ERP Report Findings

Source: Panorama Consulting’s 2014 ERP ReportCopyright © 2014 Panorama Consulting Solutions


Data Summary by Year


Reasons for Implementing HCM and ERP


Total Annual Revenue of Respondent Organizations


Implementation Outcome


Overall Satisfaction Levels



Top Selected HCM and ERP Vendors



Type of HCM and ERP Software


Cost Savings From Cloud Usage


Level of HCM and ERP Customization


Areas in Which Consulting Firms Provided Guidance


Why Organizations Used HCM and ERP Consultants


Implementation Costs


HCM and ERP Project Duration


Percent of Benefits Realized


Types of Benefits Realized


Timeline to Recoup Costs


Operational Disruption


Key Findings

1. 56% of companies implementing HCM and ERP systems were multi-national, while 77% were multi-site

2. A majority of HCM and ERP software purchases were for less than 100 users

3. 83% used consultants for some or all stages of their HCM and ERP implementations

4. 51% of organizations experienced some sort of material operational disruption at the time of go-live

5. Organizational change management issues washands-down the number one implementation issue experienced by implementing organizations

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Confessions of an ERP Expert Witness

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Confessions of an ERP Expert Witness

● Overview of a Recent Failure● Independent Analysis of the Failure:

● What Went Wrong?● What Didn’t Go Wrong?

Massachusetts Dept. of RevenueFired their ERP Consulting Firm

● In 2013 after a $54M investment, the State fired Deloitte Consulting of New York

● A disastrous test run of the system intended to revolutionize the filing of tax returns prompted the action

● The State believes it can still bring the system in on budget ($114M) by using some of what Deloitte started

● The goal is to go on-line before the end of 2014

Marin CountyERP Implementation Failure in 2010

● County scrapped ERP (SAP) implementationafter investing $30M in the project

● County is suing their SAP system integrator (Deloitte)● Alleging fraud and misrepresentation during sales

process in 2004● Alleges that Deloitte’s consultants were inexperienced

and that the software had a high error rate● Deloitte counter-suing for unpaid consulting fees● Settled for $3.5 million and paid $5 million in legal

fees in January 2013

Lumber LiquidatorsERP Implementation Failure in 2010

● Lost estimated $12M to $14M in net sales dueto troubled go-live

● Company revenues dropped 45%● Company cites lack of user acceptance and

adoption as keys to the company’s failure

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Other Recent Failures

● Our research of publicly announced lawsuitsshow no meaningful correlation between software vendor and failure

● See the complete list:● http://panorama-consulting.com/an-appetite-for-

destruction-the-erp-implementation-lawsuits-continue

Case Study OverviewAbout the Company

● Multi-billion dollar US-based company suedTier I ERP vendor in 2009 for failedimplementation

● The company alleged fraud and misrepresentation by the software vendor

● Implementation failed to roll out software across 20+ locations, barely used by pilot location

● Both parties ultimately settled out of court● Panorama hired as expert witness in the case

Independent AnalysisWhat Went Wrong?

● Weak software evaluation and selection process● Unrealistic implementation expectations● Unclear business requirements● Lack of executive sponsorship● Poor project management● Too much customization● Poor organizational change management● Poor risk management and mitigation

Weak Software Evaluation and Selection Process

● Requirements were not well-defined● Company did not appear to leverage lessons

from previous ERP failure several years earlier● Roles and responsibilities between client and

vendor were not well defined or understood● Did not clearly understand scope of what was

demoed vs. what was purchased contractually

Unrealistic Implementation Expectations

● Company expected a multi-site, global implementation in 18 months

● Expectation was that the company would use100% “out-of-the-box” industry functionality with no software customization

● Expected to achieve these goals with little outside support

Unclear Business Processes and Requirements

● Business processes & requirements were notwell-defined prior to selection or system design

● Company eventually defined requirements on a site-by-site basis, beginning with pilot location

● Adopted a requirements by committee approach, leading to heavy customization & inconsistencies across multiple sites

● Defined processes and system design were operational mismatch outside the pilot facility

● Definition continued through implementation

Lack of Executive Sponsorship

● Executive team took hands-off approach to implementation, pushing responsibility deep in organization

● As a result, unclear direction for project team● Slow or non-existent decision-making support● Internal executive misalignment, a problem that

goes beyond the ERP project

Poor Project Management

● Multiple project managers, with frequent turnover throughout implementation

● Lack of direction, accountability, and incentive to make the project succeed

● Lack of previous implementation expertise● Relied primarily on internal resources with little

outside project management support

Too Much Customization

● Despite efforts to the contrary, system washeavily customized to meet requirements

● Over 100 customizations identified during design● Very weak change control procedures, including

validation of customization requests● Did not adequately leverage functionality of

the system● Quickly became a custom system rather than

ERP implementation project

Poor Organizational Change Management and Training

● Identified internal OCM team, but very little user involvement throughout project

● OCM activities were complicated by constantly changing business processes and system design

● Core team did not sufficiently understand system capabilities, leading to customization

Poor Risk Management and Mitigation

● Did not establish risk management and mitigation plan throughout project

● System was not well-tested, neither technicallynor functionally

● Users were not adequately trained prior to go-live● Data was not tested prior to go-live● Company proceeded with go-live, despite internal

audit report warning of severe risks

Independent AnalysisWhat Didn’t Go Wrong?

● The software “worked,” but it didn’t work for theclient’s business

● The software could not define for the client howto run the business

● At the end of the day, software does not determine success or failure of the implementation

Lessons Learned (HCM or ERP)What Can You Do Differently?

● Establish a rigorous software evaluation process● Begin with realistic expectations● Clearly define your business blueprint● Ensure solid executive sponsorship● Augment team with strong project management● Tightly manage customization● Manage organizational change extremely well● Establish a strong risk management process

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What You Can Do Differently to Make Your HCM Implementation More Successful


The Role of Business Process Management

● Business Process Management is Critical and Should be Reviewed for the Following the Areas:

● Workforce Planning● Implementation of Recruitment Solutions● Recruitment and Hiring● Job Analysis and Classification● Position Management and Organizational Review● Policy and Procedure Development● Analytics and Metrics● Strategic Plan Development


Recommended HCM Work Flow


HCM Considerations

● Data Importance● Employee Self Service

● HRIS Architecture● Security● Best of Breed Opportunity● Recruitment● Time Collection● Payroll● Benefits


HCM Implementation Considerations

● Planning● Project Manager● Steering Committee● Project Charter● Implementation Team● Project Scope● Management Sponsorship● Process Mapping● Change Management


Implementation Best Practices

1. Focus on detailed business processes and requirements first and foremost

2. Focus on achieving an ROI from your HCM andERP investment

3. Commit strong project management and full-time resources to the project

4. Gain commitment from company executives5. Take time to plan up front6. Plan and begin data migration early7. Ensure adequate training and change management8. Understand the target benefits of HCM and ERP

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Questions?

Eric Kimberling Managing Partner

Panorama Consulting [email protected]

720-515-1ERP (1377)Twitter: @erickimberling

mailto:[email protected]

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