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I am evaluating projects known of troubles to find the reasons of troubles and make remarks how to avoid and how to proceed when already occurred. As I wrote already in:

http://scn.sap.com/community/asap-methodology/blog/2012/09/21/alleged-sap-erp-failures-in-2011

On the list of the biggest ERP (?) failures of 2011 I found three SAP ERP implementations and realized that … no one is really ERP failure! I like to exploit now the Marin County case because of two reasons:

  1. 1. it is very well documented in Internet – by this opportunity: I have no inside information and I am living in the “galaxy far far away“ from California – so I can play the role of auditor(?)
  1. 2. it gives an illustration of some specific aspects for project managed especially in public sector – most probably world wide – which gives really good material for generic hints as I like to do.

My strong belief after almost 18 years of experiences with implementing SAP ERP is that it is 100% “implementable”. There are of course some troubles in almost every project but they are mainly “organizational” in the nature and if properly treated are to be solved on-going on the project. That is why I am hunting for failures to identify the reason. I am sure that neither the product nor the implementation methodology may be the reasons for troubles – as for today after many researches I am sure of this thesis.

There is a lot of comments about the Marin County case. The easiest way is as usual to blame the implementation vendor – and many of that comments are making this. There are however also comments that are based on deeper inside and also naming the obvious negligence of the customer like this one:

http://byrondennis.typepad.com/it_investment_research/2010/08/dont-cry-for-me-california.html

I will come back to this article later to formulate the observation of public sector specific aspects of project management.

Please note that there is a lot of publications of “independent” consulting companies that are making their business based on scarring the audience about alleged dramatic ERP failures. I must say that I realized that they very often even not read the available documentation before formulating their comments and recommendations. Sometimes they are named as ERP also the tailored developments what illustrates their professional attitude and competence.

I am “independent” consultant as well but I am sure that scarring has no fundamental reasons by SAP ERP implementations and the right attitude is to be sustainable in taking the lessons and formulate the hints.

After evaluation of the documentation and information available (there are copies of contracts and the claims as well) I am sure that in case of Marin County we are not allowed to name this as “project failure”:

a) project ended on time

b) project ended in budget (however: there were 10 extensions on the change orders basis – I come to that in next post)

The only thing that may potentially allow to talk about this case as about the failure is that customer is “deeply” unhappy and claims that the system is not fulfilling the expectations. In view on the auditors reports however (ordered by the customer) it seems that the main obstacle is too small and untrained staff. With 1 million $ consumed only for trainings that is reason for consideration because it should be sufficient for intensive training of dozens of users. My opinion after evaluation is – but only short now – there are reasons of this specific for the public sector but not in terms of missing functionality! I will discuss this aspect in next post.

In this post I like to focus on that the Marin County already in 2010 started the process of preparation of replacement of SAP ERP. They made the evaluation of the costs ownership and in the effect they had the conclusion that it will be cheaper to replace SAP ERP with other system than to make the use more efficient:

http://www.co.marin.ca.us/efiles/BS/AgMn/agdocs/100824/100824-8-IS-attach-REP.pdf

I must say this is clear example how to prepare “analysis” to get the expected result. Please note that doing this County is now in conflict with their own evaluation led in the past to chose the SAP ERP for implementation. That’s obvious: how it was possible in 2005 to come to the conclusion that SAP ERP in best way suits to requirement of the County and now – based on similar parameters – to completely different conclusion: that it is cheaper to replace SAP ERP, to make into scrap the whole investment and implement completely other solution?

It seems however that this proceeding is more to strengthen the position in civil trial than really to replace the system. After two years the County came to the idea to take another company to make evaluation which software will be the most suitable as the first phase to replace SAP ERP. This time for 0,599 million $. And that in context of necessary savings due to worldwide economical downturn etc.:

http://www.co.marin.ca.us/efiles/BS/AgMn/agdocs/120207/120207-8-IS-ltr-LTR.pdf

I can imagine that there are many ways to spend public money for something that will lead to nothing. This is similar attitude like of child bored and sulky of the toy.

In this context I can make advice for free: if the initial evaluation (from 2005)  is still valid – what I expect is the fact because it does not seem the County administration has shrunk dramatically – SAP ERP is the right solution, but has to be maintained in the right way to give the efficient support for administration. There are few built important points like: staff training and follow the evaluation of Phoenix from 2010 about the areas that have to be corrected. I will discuss them in next entry.

I come to formulate the general rule number 1:

if the ERP project encountered troubles the right way is to correct them and do not replace the solution. If the chosen solution was SAP ERP there is no other solution that in this point of time will replace SAP ERP and will be cheaper in terms of ownership.

The only one exception from this rule is when the initial evaluation was completely – but really completely – wrong.

I

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3 Comments

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  1. Mark Chalfen

    interesting topic.

    I think you have fallen into a common trap.

    You cannot and should not measure success against budget and time.

    The more important measures relate to the scope that has been implemented and the business benefits these provide.

    If you put in SAP ERP and dont change your processes, the cost of ownership will increase. There will be higher licence costs, and normally data issues or interface issues.

    When deciding on embarking on a SAP ERP implementation it is not enough just to look at the software. You need to review how the software and the SI can drive value.

    How can the time spent to close a month end be reduced. Can manual admin tasks be removed by strong integration via ERP. Can SAP BW or Business Objects provide data that previously was unable to be reported – to enable better decisions.

    These should be the true measures of success.

    Agree why you are implementing ERP in the first place – what are the drivers and what business benefits do you expect to achieve.

    when you go live – measure to see how successful the project really was.

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    1. Waldemar Falinski Post author

      Hi Mark,

      Thank you very much for your comment!

      However I must say that not I have fallen into common trap –  the “independent” consulting agencies have! I fully agree with you that time and even money can not be used isolated as the measure of success or failure. Its obvious: if you plan to put 100 EUR into bank for 5% but then you realize that with 200 EUR for 14 month you will have 8% yearly and you use this opportunity it can be rather success? But for companies like Gartner that will be clear failure. But they set the standards not me – so I simply used the common criteria to show that Marin County case is not fulfilling them.

      Back to Marin County – I am playing the role of “auditor” with limited access only to public information. There is nothing about change and other important things – so I am evaluating only this what is available. As I wrote – the system by Marin County is working now even in wider scope than in the contract – that means as I think “not bad”. ESS was not in the initial scope but the auditors are claiming in 2010 that it is only party working.

      The points you have mentioned are very important and I fully agree with you – but as I observed in public sector they do not like to talk about change and even do not like to share that something takes less time – often they do not change the processes to avoid reductions (?) – it is probably one of specific of public. As you see the article in my post the author is pointing out that in Marin County they have huge overhead.

      I evaluated I my research also the commercial companies and there is completely other view.

      Once again – thank you!

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      1. Waldemar Falinski Post author

        Sorry – I have to explain my explanation about the bank investment (LOL!):

        1. The plan is to put 100 EUR on the account for one year for the yield of 5% yearly

        2. Than – already by payment – there is opportunity to have 8% yearly but under condition the minimal amount will be 200 EUR and for at least 14 months

        My conclusion is: the opportunity from point 2 is great and to make use of that will be clear financial success.

        But for the research agencies the use of the opportunity 2 will be failure of the plan 1 since both: scope and budget will be over.

        I hope now my explanation is now clear – please excuse for confusion.

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