February 7th, 2010
SAP changes leaders: Time for innovation
Bloggers and Twitters alike are buzzing today with news that enterprise giant, SAP, announced a leadership change today.
The official press release itself is terse:
[T]he SAP Supervisory Board has reached a mutual agreement with CEO Léo Apotheker not to extend his contract as a member of the SAP Executive Board. Léo Apotheker has resigned as CEO and member of the SAP Executive Board effective immediately.
The SAP Executive Board, in agreement with the SAP Supervisory Board, has appointed two Co-CEOs: Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development, both already members of the SAP Executive Board.
In addition, Vishal Sikka, Chief Technology Officer, has been appointed to the SAP Executive Board. At the request of the SAP Supervisory Board, Hasso Plattner, Co-Founder of SAP and Chairman of the SAP Supervisory Board, will continue to play a strong role in advising the new leaders on technology and product development.
“The new setup of the SAP Executive Board will allow SAP to better align product innovation with customer needs. The new leadership team will continue to drive forward SAP’s strategy and focus on profitable growth, and will deliver its innovations in 2010 to expand SAP’s leadership of the business software market,” said Hasso Plattner.
The SAP Supervisory Board thanks Léo Apotheker for his enormous contribution to the success of SAP, which he joined more than 20 years ago, and wishes him all the best for the future.
SAP has suffered in recent years from a combination of strategic missteps and the bad economy. As a result, the company has experienced weak financial performance and lost several public relations battles.
Jim Hagemann Snabe is a product guy while Bill McDermott represents sales. In theory, this combination could work to SAP’s benefit, but, of course the devil is in the details.
My take. SAP needs a clearer, stronger sense of leadership and direction at this critical point in its history. The company faces large competitor, Oracle, on one side and a host of smaller software as a service (SaaS) competitors on the other.
It is now up to Snabe and McDermott to enact customer-friendly SAP legislation and bring product innovation to the market.
[Photo of Léo Apotheker by Michael Krigsman.]
February 5th, 2010
UK tax department: Bizarre IT spending incentives
Phil Pavitt, CIO for Her Majesty’s Revenue and Customs (HMRC), the UK tax department, recently spoke out against huge IT projects. Some of his comments are extraordinary.
Pavitt had choice words to describe the UK tax authority’s £9.75bn ($15.3 billion) ASPIRE project being run by Capgemini. Here are his comments, as reported in Silicon.com:
There have been cases of HMRC’s internal IT team taking on work that should have been carried out by the outsourcer, resulting in the department “paying twice” to get the job done, the HMRC CIO said.
“We have a complication where the role of who does what after a number of years of being outsourced is complex and it does blur,” Pavitt told the GovNet Government IT 2010 conference last week.
“It’s time as an industry, and with my partners it is time as an outsourcer, that we began to reduce dramatically those programmes to sizes that can be understood, swallowed and delivered,” he added.
Pavitt subscribes to the belief that no IT outsourcing contract should be larger than £100m.
“£100m is never £100m - in an £100m programme people forget why they started and the people responsible at the outset are rarely there at the end,” he said.
Pavitt goes on to describe the bizarre incentives that push toward higher, and likely wasteful, IT spending (emphasis added):
February 4th, 2010
Analyst relations: Failure in action
Warning: some people may find this video offensive. Please watch the whole thing before passing judgment.
Bloggers, analysts, journalists, and other influencers are an important component of the enterprise software ecosystem. Vendors seek high ratings from analysts and influencers because many buyers use reports to inform large purchasing decisions.
The video embedded below brilliantly captures, and simultaneously mocks, the power and influence of industry analysts and their effect on enterprise vendors. Although the video specifically targets Gartner, the largest enterprise analyst firm, it offers deeper lessons applicable across the spectrum of industry influencers.
Jonny Bentwood, who works in Analyst Relations (AR) for public relations giant, Edelman, assembled this enterprise comedy. Jonny’s Technobabble 2.0 blog is a great source of information about the changing world of analysts.
As an aside, I’m proud to be number six on the Technobabble 2.0 list of analysts who write blogs.
February 3rd, 2010
ERP failure: New research and statistics
Panorama Consulting today released results of a study, called 2010 ERP Report, comparing gaps between customer expectations and actual results achieved on enterprise resource planning (ERP) projects.
While the findings are consistent with similar studies, Panorama is a consulting company and not a neutral research organization, although it is not affiliated with software vendors. This does not invalidate the results, but as a policy matter we should retain some skepticism toward the findings.
Key Findings
The research describes five primary results:
- ERP implementations take longer than expected
- ERP implementations cost more than expected
- Most ERP implementations under-deliver business value
- Software as a service (SaaS) implementations take less time than on-premise ERP implementations, but deliver less business value
- Companies do not effectively manage the organizational changes of ERP
Implementation length. The study states that more than half the implementations surveyed exceed planned time:
According to Panorama’s study, 57% of ERP implementations take longer than expected (see table below). This challenge is partly attributed to the fact that many companies in our study either had unrealistic expectations regarding timeframes and/or did not account for key project activities in their implementation planning processes.
As the table indicates, both time and budget frequently exceed planned levels:
Implementation budget. The report compares implementation budget variance in 2010 to a comparable study performed in 2008:
February 2nd, 2010
Business intelligence success, ROI, and failure
Business intelligence (BI) is one of today’s most important enterprise technology areas. Despite the growth of BI, however, achieving return on investment remains a challenge when implementing this software.
To learn why many business intelligence projects do not meet expectations, I spoke with Michael Corcoran, Senior Vice President and Chief Marketing Officer of BI software vendor, Information Builders. Michael is a veteran of the industry and well positioned to shed light on this topic.
During our conversation, Michael emphasized that poor ROI is an important consideration for many BI projects:
Most BI initiatives fail because organizations make large investments to equip a small number of back office analysts with BI capabilities. It’s better to spread that investment over a broader number of users, raising the ROI for each user. Focusing only on analytical users is expensive and wasteful.
He also spoke about unused software licenses as another problem for the industry:
Shelfware is a good metric to examine. Vendors can decrease the number of unused licenses customers buy in three ways:
- Making the software easier to use
- Offering the software with a server-based, all you can eat license
- Making servers scalable
Michael was clear that improving software usability can raise BI project success rates:
The IT department should build basic screens, such as those on eBay, and use “controlled simplicity” to create what we might call a ‘guided ad hoc system.’ IT should set the boundaries, but offer users flexibility within those limits.
At the conclusion of our meeting, Michael and I recorded a video in which he offers additional insight into important drivers of success and failure on BI projects. In this video, Michael connects project success with areas such as strategy; usability; and alignment between IT and lines of business. I definitely suggest you invest four minutes to watch.
Please watch the video and share your thoughts in the comments:
February 1st, 2010
Call for IT Devil's Triangle research
My previous post discussed the IT Devil’s Triangle, which offers a general principle explaining dynamics that contribute to failed IT projects. In a comment to that post, Vinnie Mirchandani correctly suggests the framework could be improved by quantifying levels of responsibility among IT Devil’s Triangle participants.
The IT Devil’s Triangle states that most IT implementation projects include three primary participant groups: enterprise customer, system integrator, and technology vendor. Since each of these groups has its own definition of success, conflicts of interest based on economic pressures can drive software vendors and system integrators to act in ways that do not serve customer interests. It also offers insight into the ways some enterprise software customers damage their own projects.
In his comment, Vinnie calls for distributing specific responsibility for failure among Devil’s Triangle participants:
In insurance they apportion loss and blame across multiple parties. Can’t you do that after years of studying the subject.
A model that quantitatively links IT Devil’s Triangle participant contribution to project success and failure would be helpful to the industry. In general, most studies today describe project management practices that lead to failure, but I am not aware of a predictive model that quantifies the role of IT Devil’s Triangle participants.
Linking buyer, vendor, and consultant responsibility to project outcomes could be expressed in this form:
| Project result: | 75 percent positive |
| Relative Contribution: | |
| Enterprise buyer | 33 percent |
| Technology vendor | 33 percent |
| System integrator | 33 percent |
If you are a researcher and want to take on this important challenge, let me know.
Update 2/2/10: In a comment on the Enterprise Irregulars blog, industry expert Dennis Moore proposes a method for thinking about the research problem discussed in this post:
There are a number of statistical methods you could use if you have a large enough data sample – where “large enough” gets even larger when there is a lot of variation in the data, as I’m sure you’ll find in this data set.
You could also use an approach where you first study a number of real projects, identifying in each case the actions that contributed to failure. Just identifying them and attributing them to the erring party could help progress this discussion. For example, the vendor was at fault for not better controlling the promises made by the sales reps. The sales rep was at fault for making claims s/he did not know to be true. The customer’s IT shop was at fault for not verifying the accuracy of the sales rep’s claims. The customer’s purchasing group was at fault for not writing all requirements into the contract. And so on …
Fault is subjective in a complex situation like an IT (or other business process change management) project failure, unlike the simple (simplistic?) case of a car accident. In the case of the car accident, there are very clear laws/rules, generally a very small number of responsible parties involved, generally objective facts that can be proven or at least inferred with a high degree of certainty, generally very clear costs, and generally very clear outcomes. This subject area is just a little more complex – no clear rules, often very large number of responsible (or irresponsible?) parties involved, few objective facts, unclear costs, and unclear outcomes.
Go for it, Mike! Your research is important to the industry.
Please share your thoughts on quantifying the IT Devil’s Triangle.
[Image from iStockPhoto.]
January 29th, 2010
'Pain chains' and the IT Devil's Triangle
The IT Devil’s Triangle binds together enterprise customers, technology vendors, and system integrators in an unholy trinity that leads directly to failed projects. These failures are fraught with “pain chains,” a term used by Altimeter Group partner and enterprise strategy analyst, Ray Wang, to describe clusters of difficulty that cause angst between IT customers and their line of business counterparts.
The pain chains concept recognizes that the organizational impact of IT failure is multi-dimensional. Similarly, the Devil’s Triangle states that broad, rather than narrow, conflicting agendas among the trinity of customers, vendors, and integrators cause failure.
- Related: Exploring the Devil’s Triangle
The shared themes of interdependence, shared responsibility, and impact characterize both pain chains and the Devil’s Triangle. Therefore, I view large, serious IT failures as a constellation of dysfunctional activities that come about from overlapping, conflicting, and distorted relationships.
In some cases, inexperienced customers bring higher cost and waste upon themselves through sheer mismanagement of their own affairs. Other times, unscrupulous external consultants or software vendors take advantage of the customer’s lack of experience.
Either way, in the aftermath of failure it’s tempting and easy to unfairly shift blame onto one party or another; however, such finger pointing often ignores shared and inter-dependent causes of failure.
Here are three examples that illustrate no-win situations spawned by the Devil’s Triangle:
1. Software vendor’s sales person promises something the software actually can’t do.
Potential solution: Directly ask the software vendor for specific examples of organizations where it has successfully deployed the features in question. If you’re buying software based on certain key features, perform plenty of due diligence on that particular functionality. Unfortunately, it’s sometimes a practical impossibility to learn the truth about specific points of reliability until after you have bought the product.
2. System integrator makes technical scoping errors that remain undiscovered until mid-project.
January 26th, 2010
Social CRM: The inner meaning
Enterprise software is rapidly evolving to reflect the growing importance of both social software and channels such as Twitter and Facebook. Nowhere is this change more obvious than in customer relationship management (CRM).
Historically, CRM systems were primarily transaction-based, intended to facilitate operational activities associated with managing customers. For example, typical CRM tasks might include tracking customer calls, organizing mailings, and reporting sales statistics to management.
In traditional CRM, company efforts to channel customer responses in pre-determined ways were the paramount center of gravity. Enterprise vendors designed these systems to help organizations control customer behavior related to buying and interacting with the corporate mother ship.
Today, social software and the Internet have created a “culture of participation,” in which consumers can quickly pool their power into a strong, and historically unique, collective voice. Technology enables consumers spontaneously to form ad hoc affinity groups, sometimes comprised of literally millions of participants. For example, about 7.5 million people have watched United Breaks Guitars, an anti-United Airlines video on YouTube.
These changes have caused substantial shifts in the balance of power between buyers and sellers. Social CRM reflects these power shifts and recognizes that lasting customer relationships arise naturally from genuine engagement, discussion, and interchange.
The era of organizations thinking they can use technology as a means to control customer behavior is ending.
===============
To better understand Social CRM and learn about buyer/seller power shifts, I spoke with Paul Greenberg, who is among the strongest and most influential CRM voices. Although we intended the conversation to focus on the new fourth edition of Paul’s seminal book, CRM at the Speed of Light, the discussion immediately shifted to Social CRM.
In this podcast, Paul offers a brilliant summary of Social CRM and explores the inner meaning of this important topic. Click the player at the top of this post to listen.
Here’s a summary of key points we discuss in the podcast. These are edited snips and not intended to be a transcript. If anyone out there wants to transcribe and publish the recording be my guest, but please reference this post.
January 14th, 2010
Information silos and IT governance failure
“Governance” is a badass sounding phrase that simply means establishing policies to enable consistent management by exception. Unfortunately, many so-called governance initiatives are doomed to enter the annals of IT failure history.
In a post titled, Linear Thinking and the CIO, blogger Eric D. Brown describes a scenario of governance gone wrong:
The CIO commissions the IT group to create and implement a governance model & document to manage all IT projects. This governance document is developed as a closed system with little input from the rest of the organization. The model is put i
nto practice and is now ‘law’ within the organization.
Based on the governance model, all new projects over $25,000 must go through the governance process. Why $25K? Very few projects can be completed for less than that…and those that fall under $25K aren’t really that important right?
So…the HR team is ready to implement a new system. They come to IT and ask for some assistance and are told that the project will undoubtedly be over $25K and must go into the governance process and be subject to ‘proper’ project and portfolio management practices.
The HR team are good corporate citizens and begin the governance process. They fill out the paperwork. Determine an estimated cost for the project (and it is over $25K) and wait for the governance process to kick in. And they wait.
A month after submitting the paperwork, a meeting is held to prioritize the projects within the organization. The HR team doesn’t get to attend this meeting…they have to rely on the IT team and submitted paperwork to make their case.
The project is deemed a lower priority than others and not authorized. The HR team is furious. The implementation of this system is a part of all of their performance goals for the year and it has to get done.
So….what happens?
January 13th, 2010
IT / business silos: Bridging the gap
Many problems and difficulties in the business world arise from poor communication across groups and teams. These information silos are often opaque and difficult to understand from the outside their own borders.
These communication gaps are probably responsible for more failed projects than any other reason. However, even understanding the problem does not make it easy to solve. “Poor communication” is often a management buzzword that translates into “I’m right; you’re wrong. But, since I’m the boss you better do what I want. Are we communicating now?”
- Related: Reflecting on IT / business silos
At a high level, the obvious solution is connecting the silos. This involves building bridges across the organization through the ranks of middle management, all the way from top to bottom. Of course, organizational transformation is far easier said than done.
It’s a difficult, but essential, task for any company that wants to run better IT projects. More broadly, connecting groups, through collaboration and other means, is foundational for all aspects of running a successful organization in 2010.
This photo shows a bridge connecting the silos:
Ironically, older organizations, which presumably have enjoyed long-term historical success, often find these issues more difficult to manage than do younger companies. Bureaucratic tendencies tend to grow over time as an organization tries to standardize processes for growth.
Breaking through information silos is among the most difficult challenges facing any organization. Please share your experience and practical advice on this topic.
[Photo by Michael Krigsman]
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
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