When you’ve been around enterprise applications long enough, you’ve seen just about everything. Some flawless implementations. A few truly spectacular blow-ups. Plenty of unfinished business. And a lot of frustrated business leaders.
A common complaint is the failed business case. Most can immediately put their finger on a business case that is causing them serious irritation – and for good reason. A failed business case means you’re not getting the performance improvements you invested in. That’s never good news, particularly in today’s environment where every dollar is critical.
What if that unrealized cash was hovering just outside your grasp, and all you had to do to claim it was involve a fresh set of eyes with a qualified perspective? If you’re like most executives, you’d jump at the opportunity to extract more value at little or no incremental cost. But you would have to be prepared to reopen old wounds.
BUSINESS CASE RESCUE
However much it hurts, the first order of business is to examine how that ironclad business case failed in the first place. The pattern is predictable. You drove hard to make sure the case was solid on the front end. You got the right people signed on to deliver specific improvements. But then something happened – or maybe a lot of things happened. A big merger, for example, could disrupt almost any business, especially in the middle of an ERP implementation. Radical changes in leadership can leave organizations feeling rudderless. Vendors go out of business. More urgent issues intervene. But whatever the reason, it’s frustrating. You spent a lot of money and time, but came up short in delivering the shareholder value you expected. Headcount reductions didn’t happen as promised. Accounts receivable didn’t improve the way you wanted; neither did closing times. Bottom line: the business case failed, and the implementation program is being questioned – or worse, labeled a failure as well.
CFOs and CIOs alike usually have a clear sense of what didn’t get done. But after years of slogging through a challenging implementation, they dread the prospect of opening things up again. Digging back into the business case feels like a gigantic black hole, and many are reluctant to put their organizations through the wringer after everyone has worked so hard.
That’s where Business Case Rescue comes into play. The optimal candidate is a business case where the practical benefit of getting what you originally wanted is as clear as a bell. Dust it off, and then hand it over to a highly motivated advisor who will take a quick look to see just how far you really are from the goal line. If you’re within striking distance, ask for a tactical plan to cover the remaining ground at the lowest cost possible. That will include an honest assessment of major gaps, as well as your organization’s current capacity to close them. Look specifically at things like targeted headcount reductions, inventory expectations, working capital improvements, receivables management, shipping costs, fill rates, and process cycle times.
WHAT CAUSED THE FAILURE? The next step is to determine why those targets were missed. If you compare an ERP to a massive plumbing project, consider how a leak in only one peripheral area of a huge, complex organization with multiple businesses and locations can drain away profits. But if you don’t know about it, how can you fix that leak?
Examine the possibilities. Were there process shortfalls? Gaps in business intelligence? Executive dashboard dysfunction? Confusion about key performance indicators? The last layer of implementation activity – customizations and adjustments that provide real-time visibility into costs and revenues and ensure timely information is delivered to executives – is often the one that drives considerable value.
Other common reasons for business case failure are:
• a baseline/starting point that was not clearly understood;
• cutting back on critical scope that would deliver value;
• a lack of accountability to deliver results;
• poor change management;
• the inability to make tough decisions that would have delivered value. Sometimes the reasons for failure are fuzzy. Implementations can fall short simply because everyone gets burned out. They may have the best of intentions, but they give in even though that rich vein of gold is inches away from where they’re digging.
RECAST WITH CURRENT METRICS
Whatever the reason, each circumstance presents a clear opportunity for Business Case Rescue – beginning with a quick revisiting of your original intent. Done properly, a business case can be reopened without a lot of drama and finger-pointing – and with very little financial risk. A good advisor should help you to recast the business case using more current metrics.
ERP implementations tend to be lengthy, which means that the key metrics could have changed. Over the course of a long ERP implementation, new requirements are identified and many changes occur to the program scope. In some cases, commitments are made for the ‘Phase 2’ project. Recasting and recalibrating the business case will help keep the focus on the items that will drive real value versus promises made along the way.
It is therefore critical to have an up-to-date, realistic forecast in order to know the size of the gap. It’s also important to understand whether there were unrealistic targets and assumptions built into the original business case. Understanding those issues may not help save the original case, but will allow you to develop a more realistic scenario for moving forward.
A LOT OF BENEFIT FOR A LITTLE RISK
Consultants often talk about risk-sharing and value-based billing. But getting those kinds of agreements on complex projects can be a challenge. Business Case Rescue projects are different. These types of projects often have the kind of clear parameters and short cycles that lend themselves to performance-based agreements. They are highly focused projects, where a clear path to value can be realized in short order – often within a calendar quarter.
In the face of today’s economic stress, companies and vendors should be able to find common ground for financing Business Case Rescue assignments. With the right approach, you may be able to use real value delivered to fund your project. That means you’ll conserve cash. Big enterprise application projects are tough. While most deliver terrific benefits, many fall short of expectations for a variety of valid reasons. But that’s no reason to stop short of extracting the full value you expected up front. Sometimes all you need is a little back-up plan, and help from someone who knows how to revive sleeping dogs without getting bitten.