October 05, 2016
October 05, 2016
Contributor: Susan Moore
The right sponsor can make the difference between ERP project success and failure.
A group of government agencies began an enterprise resource planning (ERP) initiative to standardize processes, as part of a shared services initiative, with the aim of gaining greater financial visibility across agencies. The CIO perceived this project as "career making" and argued his case for becoming the project sponsor. Fourteen months into the project — with $16 million spent and little to show for the effort — the project was abandoned and the CIO fired.
The major issue was the CIO's inability to create consensus and drive the needed transformational change across varying agencies. The departments simply did not see him as a credible figure for business transformation and blamed IT for trying to impose its will on agency processes.
“The mark of a good CIO is to know when to hold a position — and not taking on the business sponsorship role is certainly one of those occasions,” says Denise Ganly, research director at Gartner.
“Don’t put on the project sponsor hat simply because nobody else will,” says Ganly. “You can set yourself up for failure. Instead, take time to secure the right business sponsor to ensure success.”
Unless it's purely a technical project involving an infrastructure, operating system or database upgrade, CIOs should resist the temptation to take on the role of sponsor for ERP projects.
Some CIOs seize the sponsor role as they believe they will gain power and control through performing it. An ERP implementation is usually one of the largest investments an organization makes and has far reaching scope, impact and influence. The reality is that CIOs don’t have the political muscle and clout to push the transformation through the organization.
An effective project sponsor is not a figurehead who blesses the project, turns up for monthly steering committee meetings and then authorizes the end of project celebration. It's an active, fully engaged role that is accountable for the ultimate success of the ERP project — always remembering that the measures of success are improved business outcomes.
“ERP system implementations are business, rather than IT projects,” Ganly says. “Yet far too often it falls to the CIO to take on the role of project sponsor when there’s a vacuum created by the unwillingness of business leaders to take on the role.”
Business leaders may be unwilling to take on the role of sponsor for a variety of reasons. Most commonly, they mistakenly believe an ERP implementation to be an IT project. Some may have had a bad experience in the past. Others feel that they don’t have enough time to devote to it. Often they simply misunderstand what the role of sponsor is, confusing it with program direction, for example.
While an overall corporate business sponsor is essential to the project, it's important to recognize that local sponsorship must augment this in ERP projects that include multiple business units, divisions or countries. Otherwise, there’s a risk that the project will be seen as something imposed from the corporate center or global headquarters that can be "opted out of" or ignored at a local level.
The project must be treated as a business change or transformation enabled by ERP. As CIO, you must support the appointed business sponsor of the ERP project to secure and maintain active, engaged, and informed sponsorship throughout the project — even if the project extends over several years, as many ERP implementations do.
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Recommended resources for Gartner clients*:
Why CIOs Must Refuse the ERP Project Sponsor Role
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