Accounting and finance systems are essential to a Company’s ability to make key decisions and run the business on a day-to-day basis. If you have been involved in sorting through the remnants of a system implementation gone wrong, you probably already know that failed IT projects are not only demoralizing and a major distraction to employees, but also come with a high price tag of lost time, money and opportunity cost. It is critical that all of the risks surrounding a system implementation, and the mitigating strategies that can be employed to minimize those risks, are carefully reviewed.
The statistics behind unsuccessful system implementations are daunting and without understanding the key success factors, any project is destined to fail. Research shows a staggering 18% of projects will be canceled before being completed. Further results indicate that an overwhelming 61% of system implementation projects are completed with significant delays and cost overruns; 59% of projects had cost overruns, 74% of projects had time overruns and 69% of projects had missed business requirements.1
The costs of project failures are just the tip of the proverbial iceberg. The lost opportunity costs cannot be measured, but could easily surpass the cost of the project itself. Outlined below are three of the most important ingredients of a successful system implementation:
- Executive Sponsorship;
- Project Management;
- Sound Methodology.
EXECUTIVE SPONSORSHIP
The success of any project depends on the level of support provided within its organization, especially at the executive level. When an executive sponsors a project, they can champion the project during its most challenging moments. Moreover, executives have the ability to arbitrate differences in a timely manner and reinforce expectations during conversion. Enthusiasm for the project at the executive level can also spread energy and excitement to stake-holders of the project counteracting any organizational resistance.
PROJECT MANAGEMENT
When the timeline for a project is approached by only planning backwards from a fixed project completion date, experience has demonstrated that this leads to an increased failure rate. Often, project leaders will make decisions about when a new or re-engineered system will be most useful to have in production without the necessary technical knowledge to determine whether or not it is possible to accomplish successfully in the given time period. Moreover, the success of any system implementation project rests on the proper management of four interdependent dimensions: cost, quality, speed and risk.2
It is not possible to have the best of all four factors; a system cannot be built quickly and inexpensively, be of high quality and have little or no risk of failure. Additionally, key finance personnel involved in system implementations have daily responsibilities that need to be prioritized along with project tasks. To help ensure a successful system implementation, adding external resources with the requisite subject matter expertise and experience in implementations is often a critical part of the process.
SOUND METHODOLOGY
Many projects are started with little thought to process and activities are performed without having defined objectives. It is not unusual for coding to begin as soon as there is enough information, which is typically premature and lacks clear definition to the finished product. Even if the project does succeed without the proper planning, it will typically only do so with substantial rewrites and cost overruns. This vicious cycle can be avoided through employing a sound methodology for documenting detailed business requirements by individuals with the necessary technical accounting skills to ensure that the new system will meet the needs of accounting and finance users.
KEY TAKEAWAYS
The focus of a successful system implementation should be about more than just the system itself; it should also be focused on the communication among the people involved and the project team’s ability to remain dynamic over the life of the project. Additional highlights to a successful implementation include:
- Having project support at the executive level;
- Managing the four key dimensions: cost, quality, speed and risk;
- Creating a project plan and empowering team members with the tools needed to actively track against the plan;
- Increasing project bandwidth by hiring consultants with subject matter expertise and project management experience.
1 Standish Group, Chaos Manifesto 2013, Think Big, Act Small. http://versionone.com/assets/img/files/ChaosManifesto2013.pdf
2 Dorsey, Paul, “Top 10 Reasons Why Projects Fail” http://dulcian.com/articles/dorsey_top10reasonssystemsprojectsfail.pdf