Time to Stop Digging
SteveThis is what was said in the Enterprise Systems planning meeting:
We have to expand the ERP system footprint, get more business processes integrated, really 'use' the system, and maybe we will start to see the return on investment that we've been waiting for.
This is what is closer to the truth:
We've sunk about $5M into this, we are in upgrade, maintenance, and crappy UI hell, so we better figure out a way to make this seem worth it to the executives or we're all in trouble.
The exact amount of the sunk cost in the installed system is not really the issue, it's more the fact that whatever the (large) investment was, many organizations are at the crossroads.
They've implemented big ERP systems for core HR, maybe payroll, tossed in a bit of self-service, perhaps dabbled in workforce management, but more or less have not really leveraged the capabilities of the massive system.
To the left, upgrade the ERP, get on the latest release (a daunting proposition for many), and try to take advantage of the new capabilities and features that are available (that will never be backported to your release from 2002), and upgrade the UI to something that looks relatively modern.
To the right, scrapping the upgrade, patching the legacy ERP together for employee tracking, payr
Flickr - AidanBrooksoll, and benefits and looking to a modern SaaS-based platform for more strategic functions like Performance Management, Succession Planning, and Learning and Development.
Now there is even a third option, tossing the ERP entirely and moving to a SaaS HR system that will over all of those processes like Workday.
Obviously there isn't a blanket one size fits all solution for organizations in this predicament, and I won't offer any sweeping recommendations, but I will say this:
When you have dug yourself into a deep hole, it's probably time to stop digging.
Reader Comments (7)
If it weren't so sad, it would be funny. PeopleSoft, in its day, was the product that was going to reduce IT involvement, bring us all self-service we could really use, unleash much-needed strategic HRM functionality, etc. etc. And if you were an early adopter (not too early, but early enough to catch the wave), and you did an excellent implementation, and kept moving quickly to the newest releases, then you have by now gotten a tremendous return on your investment and can move on with confidence. But if you were a late adopter, perhaps even now implementing your phase 3 project to unleash all that new functionality in R9.0, you've really missed the wave and find that you've been overtaken by the next generation of HRM software -- and you can't afford to catch the new wave because you have used up your business case and management patience. There are lessons here for everyone in HRM technology and HRM leadership. First, early adopters get the full benefit of new technology if they are able to implement quickly and well. Next, late adopters never catch up. Finally, SaaS offers a chance to solve the IT-related aspects of the upgrade problem, but you still have to implement quickly and well and know how to take full advantage of all that new functionality as soon as possible after it's delivered. There are no quick, painless, cheap fixes to ensuring that you have a terrific HRM delivery system platform any more than there are to ensuring that you're never overweight. But we keep hoping.
When looking at implementing software too often everyone looks at total cost of ownership but neglect the fact that people have to use the software regardless of the cost. The real issue is cost of adoption - how many people really use it.
The typical response is: build it - make'm use it. Nothing but trouble with that approach. You're asking people to change behaviors - long standing ones in many cases - and the only "benefit" they hear about is the one the company realizes.
Every implementation needs a good reinforcement and reward/recognition strategy attached to it in order to get people to want to use it - want to help other use it - and see the benefits for themselves. It's rarely a software problem - almost always a change management problem.
This is exactly where we are. Thankfully before investing further in our ERP we are looking at SaaS providers for things like Performance Management, Learning Management, etc. Timely topic!
Naomi - Thanks for sharing your thoughts on this topic. Frankly, I was inspired to revisit this after listening to your recent Webcast on the HR System of Record. I totally agree with your statement 'Late adopters never catch up'. Once the wave has passed you by, and you are deep into an ERP system (many years, lots of $$$), it is almost impossible to see any other way forward. I look forward to seeing you at the HR Tech Conference in October.
Paul - You are right that implementations of all types have to be done will the 'soft' issues in mind. Whether ERP, or newer SaaS projects effective change management, and a solid articulation of the benefits are needed. Thanks very much for your comments.
Mary - All I can say is good luck! And I hope it goes well for your organization. Thanks for reading and commenting.
I'm fully in agreement with Naomi. As a long time PeopleSoft Techie I also thought that PeopleSoft was the be all and end all of ERP systems and would all but cure world hunger. However in the last few years, all I see is the enormous costs associated with maintaining these large systems. Legacy ERP systems do not have self service at the core and the UI has not kept pace with modern technologies. It is time for companies to stop digging and start looking at SaaS providers such as Workday. Although implementation costs will be high, ongoing maintenance costs are low and modern ERP system have been architected with overall usability in mind.
Michael - I agree, as a long-time Oracle user, we always looked at PeopleSoft with envy. It was always so much 'better' than Oracle or SAP. I am not sure if the takeover by Oracle caused a slowdown in innovation or not. But it does seem that now, PeopleSoft users are pretty much in the same boat as the rest of the ERP world. Thanks very much to your comments, and look forward to seeing you at HR Tech.
Steve – great post and thanks for shining a light on this subject. According to various industry analyst reports, on average most companies use only about two-thirds of their enterprise system’s core functionality, often due to either not needing all of the features they’ve been sold, not knowing how to deploy/use the ones they have, or simply because they never developed a cross-functional project plan with collaborative input from other departmental users. This challenge in the industry has led to a new concept called Total Realized Value, or TRV, coined by Steve Goldberg. In short, the main idea centers around the need for companies to evaluate whether the promises of an ERP solution translate into tangible, measurable value. Goldberg has written a white paper on TRV for anyone who’s interested. You can find it at Star-Tincup: http://gw.vtrenz.net/?CAQLWHZENE. It’s an interesting concept and one I’ll be watching closely.