UNLESS YOU'VE BEEN as out-of-touch as the Mars Polar Lander,\nyou're doubtlessly aware that the ERP industry hasn't been\nperforming like the marvel it was first made out to be.\n\nFirst came the ERP vendors' pre-Y2K plunging sales revenues and\nfalling stock values. Second came the realization that all that\nhard work implementing an ERP system didn't actually guarantee\nbusiness benefits\u2014or even a positive payback. Take Meta\nGroup's damning finding, for instance: The average ERP\nimplementation takes 23 months, has a total cost of ownership of\n$15 million and rewards (so to speak) the business with an average negative\nnet present value of $1.5 million. And the news gets worse.An alarmingly long list of top-drawer integrators have fallen\nflat on their faces. Compared to these disasters, merely\nspending a lot of money on an ERP implementation that achieves\nvery little is a consummation devoutly to be wished.Hershey, Pa.-based Hershey Foods, for example, issued two profit\nwarnings in as many months in the run-up to last Christmas.\nWhy?\nMassive distribution problems following a flawed implementation\nof SAP's R\/3 ERP system, which affected shipments to stores in\nthe peak Halloween and pre-Christmas sales periods. In a booming\nstock market, Hershey shares ended the year down 27 percent from\nits year's high.And Hershey wasn't alone in its misery. In November 1999,\ndomestic appliance manufacturer Whirlpool of Benton Harbor,\nMich., also blamed shipping delays on difficulties associated\nwith its SAP R\/3 implementation. Like Hershey, Whirlpool's share\nprice dove south on the news, falling from well over $70 to\nbelow $60. While these two have (so far) been the\nhighest-profile implementation debacles, companies as diverse as\nScottsdale, Ariz.-based trash processor Allied Waste Industries;\nNewark, Del.-based high-tech fabric maker W.L. Gore &\nAssociates; and industrial supplies distributor W.W. Grainger of\nLake Forest, Ill., have all reported serious difficulties.And if "serious difficulties" sounds bad, rest assured it can\nget much, much worse. After Carrollton, Texas-based\npharmaceutical distributor FoxMeyer Drug actually collapsed\nfollowing an SAP R\/3 implementation, its bankruptcy trustees\nfiled a $500 million lawsuit in 1998 against the German ERP\ngiant, and another $500 million suit against co-implementer\nAndersen Consulting. (Both cases were unresolved at the time of\nwriting.)So what's going on? The good news\u2014if that's the right\nword\u2014is that most experts agree that such failures are not\nsystemic. "Very rarely are there instances when it's the ERP\nsystem itself\u2014the actual software\u2014that fails," says\nJim Shepherd, senior vice president of research at Boston-based\nAMR Research. Public pronouncements by both SAP and Hershey, he\nnotes, have acknowledged that the software does what it is\nsupposed to and that no big fixes or patches are planned. What's\nmore, he adds, the prudent observer will differentiate between\nreal implementation failures and not-so-real failures. "Blaming\nthe failure on a system implementation has become a convenient\nexcuse for companies that have missed their quarter-end\n[earnings] target."As for blame, it is evenly spread. SAP implementations are no\nmore likely to go down the tubes than ERP systems from other\nvendors: W.L. Gore's system, for example, came from Pleasanton,\nCalif.-based PeopleSoft. "When an ERP project unravels, or is\nseen not to perform well, one of the suppliers is usually chosen\nas the culprit," says David Duray, London-based global partner\nresponsible for the SAP implementation business at\nPricewaterhouseCoopers. "In my experience, this is usually more\nof a political decision than a proper problem-source\nidentification exercise\u2014and SAP, over the last few years,\nhas been a popular target."Furthermore, adds Roger Phillips, an IT analyst at specialist\ninvestment bank Granville in London, which tracks the global ERP\nmarket, there is no evidence that geography is a significant\ndifferentiator in the success stakes. Disasters, he believes,\n"simply go with the ERP territory." There are, he says, "no\ncultural or managerial foibles that make American ERP\nimplementations any more predisposed to disasters than any other\ncountry's implementations."So what does lie behind ERP disasters? And behind the rather\nlonger list of costly-but-underwhelming implementations typified\nby that now-infamous Meta Group report? Increasingly, experts\nreckon that they've found the smoking gun: poor training. Not\nthe technical training of the core team of people who are\ninstalling the software, but the education of the broad user\ncommunity of managers and employees who are supposed to actually\nrun the business with it.So Much Training, So Little BenefitAs few as 10 percent to 15 percent of ERP implementations have a\nsmooth introduction that delivers the anticipated benefits, says\nA. Blanton Godfrey, chairman and CEO of the Juran Institute, a\nWilton, Conn.-based consultancy. The remainder either experience\nteething problems or a significant shortfall in delivered\nbenefits\u2014with a full 30 percent of companies receiving what\nhe calls "a nasty surprise." It's not a disaster of Hershey or\nWhirlpool dimensions, but it's still a kick in the teeth. The\nfascinating variable to look at, according to Godfrey, is what\ncharacterizes the lucky 10 percent to 15 percent. It's not luck;\nit's better training.In one sense, this isn't new. Everyone knows that training is\nimportant. Especially the ERP software vendors themselves, who\nearn handy revenues from design-once, recycle-many-times\ntraining courses. And most especially third-party training\nvendors, the bulk of whose livelihoods come from running courses\non how to operate an ERP vendor's system. And just look at the\nmind-blowing variety of training formats available: web-based\nvirtual classrooms, computer-based training, knowledge\nwarehouses, video courses, self-study books, pop-up help\nscreens... an almost endless menu to suit almost every need and\nbudget.The provision of all that training, points out Cushing Anderson,\na senior research analyst with Framingham, Mass.-based IDC (a\nCIO sister company), has become a giant business in its own\nright. Revenues for web-based ERP training in the United States\nalone were $915 million in 1998, projected to grow to $2.8 billion in\n2003.\nThe logic is inexorable, he says: "The better the training, the\nfaster you'll see the business metrics move in the direction\nyou're looking for."But the consensus that's emerging is that the training that\nmatters isn't techy, "this field shows this; this button does\nthat" training. In fact, what we normally call training is\nincreasingly being shown to be relatively worthless. What's\ncalled for, it seems, is an ability to figure out the underlying\nflow of information through the business itself. The traditional\nview of training may blind the unwary to its significance and to\nthe tightly woven links that exist between training, change\nmanagement and staff adequacy.The Why Versus the HowThe first problem is that word: training. It conjures up images\nof dogs jumping through hoops. This is not helpful. "I separate\ntraining into two parts\u2014education and training," says John\nConklin, vice president and CIO of World Kitchen (formerly\nCorning Consumer Products Co., manufacturer of Pyrex and\nCorningware) of Elmira, N.Y. "Education is all the why, who and\nwhere issues," Conklin says. "Training is the how part of the\nequation." And of the two, he says, "education is the bigger\npiece of the puzzle. If people don't go through this education,\nyou won't have their hearts and you won't have their minds."There's a tendency for companies to fall into the trap of\nputting employees through training programs that are too\nsoftware-specific\u2014an easy mistake to make, but one that\nignores the fact that ERP systems are designed to operate by\n(literally) codifying a set of business processes. "No matter\nwhat application an organization is implementing, they are\nusually better at the keystroke and transaction training than\nthey are at the business-and-people processes education," says\nIDC's Anderson.And providing that education can be tricky. When St. Louis-based\nPurina Mills implemented SAP R\/3 in its 55 plants, the\ncommercial animal-feed producer outsourced the training task to\na third party, says Operations Control Director Steve Hunt.\nIn-house resource constraints were a factor, says Hunt\u2014the\ncompany wanted its best people implementing, not training. But\nalso, he says, "We assumed that a third party training partner\nwould add valuable insight into training techniques that had\nalready been proven in their previous implementations."The result was an awkward first day, which, Hunt recalls, "saw\nend users at the very first break on the very first day of\ntraining stating that they were going home unless someone came\ninto the classroom to help them translate the material." The\nproblem? "A complete system change is like learning a language,"\nexplains Hunt. "In the beginning, you need to translate the new\nlanguage into the old in order to understand the meaning. In\nthis case, our trainers couldn't provide that translation, as\nthey didn't understand our processes\u2014for example, they\ncould demonstrate how to enter a goods receipt, but they\ncouldn't explain when you should do it, or how to find the right\npurchase order to apply it to."In the end, says Hunt, it became clear that the training company\njust wasn't up to the job. "We asked them to leave at the end of\nthe first week." Rather than opt for another third-party\nprovider, Hunt and his team spent six months constructing a\ncourse that they could deliver themselves\u2014and did so, in a\ncomplete reversal of the original strategy.What Hunt and Purina Mills discovered was that what their\nemployees really wanted and needed to learn about was the whys,\nwheres and whos of the business process not the hows of the ERP\nsystem."Companies often mistakenly regard SAP implementation as a\npurely technical issue," affirms Byron Fiman, principal and\ncofounder of Implementation Management Associates, a Brighton,\nColo.-based change management consultancy. "In fact, at least\nhalf the issues in ERP disasters are not technical but people\nrelated and culture related." In terms of getting things right,\nhe adds, "the soft stuff is really the hard stuff."And even if a Hershey- or Whirlpool-style disaster doesn't loom,\na failure to deliver benefits is all too likely. "The screens\nare up, but nothing has changed: the cycle times are the same,\ncustomer satisfaction metrics don't shift and the costs remain\nthe same," Fiman says. The problem is that too many companies\npay lip service to the education part of the pre-ERP change\nmanagement process. "Every SAP implementation partner says that\ntraining is important, but it's often one of the first things to\ngo when the talks about pricing get tough."Millions for Software, Pennies for UnderstandingToo many companies treat training as a check-the-box activity,"\nsays Dan Klein, vice president of education services at\nPeopleSoft. "The resulting mind-set: 'Did you train the users?'\n'Yup, we trained the users.'"Just as common, training typically occurs at the end of the\nimplementation cycle, when activities are often running late and\nbeing compressed. So training, too, gets squashed in as a\nlast-minute activity. "One of my favorite questions," Klein\nsays, "when speaking at user seminars is to ask, 'How many\npeople would go about their training differently on their next\nimplementation?' Seventy-five percent of the people put their\nhands up and say that next time they'd allow more time for it,\nand that they'd tailor it more around their own business\nprocesses."A typical result of such skimping, says David Beresford,\nexecutive director of one of Europe's premier SAP rescue\nservices, systems implementation consultancy Diagonal, of\nFarnham, England, is that users often fail to appreciate the\nconsequences of their actions\u2014with disastrous results.\nInformal practices that worked just fine in the era of paper\nprocedures or standalone legacy systems can have catastrophic\neffects on an integrated ERP environment."The classic example is the sales order process," says\nBeresford. "In the past, people could put in the wrong price,\nthe wrong customer, the wrong delivery point\u2014and somehow,\nthe business coped. Now, surprise, surprise, they don't get\ntheir invoice paid. And it's even worse if the wrong product is\nentered. What people need to understand is that the sales orders\nare now automatically linked to the manufacturing and accounting\nfunctions."They didn't understand this at A-dec, a privately held dental\nequipment manufacturer headquartered in Newberg, Ore., which\nwent live with a Baan system in 1997. "We made the mistake of\nteaching everybody how to do their job but nothing else," says\nDirector of IS and CIO Keith Bearden. "Everybody knew the\nkeystrokes to do their job, but that was all. They didn't\nunderstand the ERP process, the degree of integration and the\nimportance of data being right. A clerk would enter an order\nincorrectly and manufacturing would start making it. Changes to\nsales orders after we'd started manufacturing were a real\nproblem."Six months later, Bearden threw in the towel and conceded that\nusers needed better training. But how? Baan ran a course, but it\nlasted a week, cost $5,000 per head and, Bearden decided, wasn't\nabout A-dec's business processes. So the company decided to\ndevelop a course itself, using instructing staff from Portland\nState University's business school. "Folks from the university\ncame to the business, talked to people about how we operated and\nworked with a team from inside A-dec to develop the course and\nthen give it," says Bearden. In all, some 450 employees went\nthrough the one-day course during the summer and early fall of\n1998."The human-factor side of ERP\u2014understanding the\nrelationship between the people in receiving, shipping,\nmanufacturing and the customer\u2014is crucially important,"\nadds Johnnie Foster, vice president and CIO of St. Louis-based\nspecialty chemical manufacturer Solutia. The timetable for\nSolutia's own SAP R\/3 implementation, which concluded in May\n1999, he adds, was driven both by the need to achieve Y2K\ncompliance as well as separate from former parent Monsanto. "Now\nwe're going back, taking it to another level and getting people\nto better understand their role in the process: This is what\nyou're doing, this is why you're doing it and here's how it\nimpacts other people," he says.The Black Hole of Middle ManagementWithout understanding the whys of the process, decisions that\nwould make sense in a pre-ERP environment quickly turn\nsour\u2014particularly when those decisions are made by middle\nmanagers whose day-to-day tasks revolve not around the computer\nscreen but the directing of people who sit at the computer. "We\ncall it the black hole of middle management," says\nImplementation Management Associates' Fiman. The problem that he\nidentifies is one of cultural inertia. "Companies have confused\nculture with wallet cards," he says, referring to the printed\ncrib sheets on which businesses set out their value statements\nand mission statements in a handy-but-forgettable format.The\nresult? Managers who talk the talk but walk any which way they\nchoose.Consequently, when companies hit Hershey-style problems, there's\nan instinctive middle management reaction to ship products to\ncustomers rather than lose sales even if that means\ncircumventing the system, says David Dobrin, chief business\narchitect at Benchmarking Partners in Cambridge, Mass. And, says\nDobrin, that's just about the worst thing you can do. Not only\ndoes the order still sit in the system, ostensibly unfulfilled,\nbut the actual inventory is now out of whack with the inventory\nlogged in the system. And without the shipment going through the\nsystem, it's hard to raise an invoice. "The ship-it-anyway\nsyndrome is definitely a lack of understanding," slams Dobrin.\n"People need to know what an incredibly stupid idea that is."Training in how to operate the system will not, however, help\nthe middle manager see down the road far enough to decide to\nforgo the short-term benefit of shipping product come what may.\nOnly a broader-based, holistic education in the company's\nERP-mediated business processes will do that.But if end-user and middle-management training is so important,\nwhy isn't it given more priority? One answer, perversely, is\nthat it is being given more priority\u2014now. "Companies have\nbegun to wake up to the fact that training is a key\nrequirement," says Patrick Newton, former CEO and president of\nthird-party training company DA Consulting Group of Houston.\nTraining as a proportion of overall budgeted project costs was\ntypically around 5 percent as recently as two years ago, he\nnotes, citing analysts' published estimates. Now, he says, the\nfigure has more than doubled, to around 11 percent of project\nbudget.While that is reassuring news, the analysts are less sanguine.\n"Very wide ranges make industry averages meaningless," observes\nDebra Hofman, managing director of Benchmarking Partners, whose\nown study found that even though training averaged 8 percent of\ntotal project cost, the actual costs of training ranged anywhere\nfrom 1 percent to 30 percent. CIOs who aim for the average\nfigure (and nearly every CIO interviewed for this story could\ninstantly cite what percentage of their company's implementation\ncosts were dedicated to training) may therefore be running the\nrisk of undershooting the target requirement.Senior Doesn't Mean SmarterAnd therein lies another problem. ERP training needs to embrace\nsenior management\u2014and early on in the process, when budgets\nand timescales are still fluid, argues AMR Research's Shepherd.\n"Senior managers often don't particularly want to be told that\nthere's a high level of risk and that there's a great deal of\nexpenditure involved in minimizing it," he maintains. "It's just\nnot a message they want to hear." The result is an invidious\nconspiracy of silence. "The people with the message don't want\nto tell it, and the people to whom it should be told don't want\nto hear it."In particular, he worries, the senior and middle management of\nAmerican companies don't have the extensive operating background\nof, say, their German counterparts. "Unlike in German companies,\nwhere managers have engineering degrees and shop floor\nexperience, too many American managers have management degrees\nand have come from business school straight into a management\nrole," says Sheperd.The result? A critical blind spot when it comes to understanding\nhow their brand-new systems actually operate in the lives of\ntheir employees and on the shop floor. But with awful examples\nlike Hershey and Whirlpool to focus their thoughts, companies\nmay be expected to give some hard thought to eliminating that\nblind spot.It's either that, or that light you see at the end of the\nimplementation tunnel will probably turn out to be that of an\noncoming train. And you know how that story ends.\n\n\nDo you think ERP training stinks? Give us an earful at\firstname.lastname@example.org. Malcolm Wheatley can be reached at\email@example.com.