25 years after they were introduced, integrated software systems run nearly everything in your business including customer service, governance, accounting, HR, production and distribution. This integrated suite of software is commonly referred to as an Enterprise Resource Planning or ERP system.
Although widely used, many ERP systems fall short when it comes to organisational strategy, business improvements, customer experience, and meeting budgets and timelines. Good leadership is vital to ensure an ERP implementation ticks all the boxes.
The bad news isn't hard to find
ERP vendors spruik their simplicity, efficiency and increased performance - yet you don't have to look far to discover the pitfalls.
Often organisations end up with over-designed solutions, budget blowouts and missed deadlines, as well as unintegrated data and a pile of extra work due to data inefficiencies. Huge licencing fees and extensive training requirements take resources from daily operations.
Speak to any employee of a large organisation and watch their eyes roll when you mention IT system upgrades or implementation. Jump online and do a search for ERP failures and a slew of nightmare implementations appear.
According to the vice-president of Gartner Research, even today, approximately 75 per cent of all ERP projects fail, despite their focus on delivering better customer service and advanced IT systems.
In a spectacular example this year, German supermarket chain Lidl abandoned their ERP implementation after a €500 million, seven-year investment, because it failed to meet business objectives. The move left many asking why.
Former Gartner SAP analyst Derek Prior said, businesses have less than a 50 per cent chance of a successful ERP implementation.
Odds like this make leadership critical.
The leadership opportunity
According to Hardcastle, organisations must resist the temptation to get started before the organisation is really ready, and without a business-agreed ERP strategy. Leaders must understand what it will take to ensure success.
SAP Implementation Architect, Adrian Vaughan says that in an increasingly digital workplace, C-suite leaders cannot delegate responsibility for the success of ERP implementations. Leaving it to the CIO, project managers and consultants will not deliver the desired results, and could leave technology-unenlightened business leaders exposed.
Digital transformations need to be leader led, digital and culture change events. Systems are a liability if those using them are not on board with the process. Leaders must tap into employees' intrinsic motivation to promote engagement and improved performance.
It's a VUCA business landscape
The acronym 'VUCA', which originates from the US military and stands for Volatility, Uncertainty, Complexity and Ambiguity, certainly finds it place in the ERP conversation. Look at our rapidly advancing technology, artificial intelligence, blockchain technology and the cloud. Combined with the shifting competitor landscape and customer expectations, it's not hard to relate to the idea of a VUCA world.
Unfortunately, many organisations are struggling with the VUCA world and missing opportunities to leverage new ideas and scale the business in the way ERP systems make possible.
Work on Leadership Complexity
In his book A Theory of Everything, Ken Wilber famously said, "If you are not working in all four quadrants, you're not working at all."
Wilber's integral model is a comprehensive 4 Quadrant theory that explains how all forms of knowledge, experience and academic disciplines fit together - and understanding it can help good leaders become great.
Within the model, ERP systems fit nicely into the systems and structures quadrant. System theorists say structure determines performance. That's the pitch of the ERP vendors, too.
Your businesses culture, the collective mindset of your entire workforce is another key facet. This is where the groans and eye rolls at the mention of systems integration comes from. The culture needs to engage or the system will fail.
Your leadership and the authenticity with which you speak is vital a key contributor to a change initiatives success. Others will either follow your lead or resist changing.
The final important piece in the Integral model is your Mindset. Is your glass half-full or half-empty? Neuroscience shows most of our thoughts are triggered by fear. If you are encountering a VUCA world you can't lead a fearful culture from a fearful perspective.
A successful ERP implementation requires an all-quadrants leadership approach. Work on your leadership mind, your leadership behaviour will follow and so will the entire workforce.
ERP implementations can be delivered on time, on spec and on budget - especially when leadership teams step up with one vision, one strategy and a commitment to engagement at all levels.