Proactive steps to ensure the success of the next ERP project. The main goal of this presentation is to provide learned lessons and project recommendations by assessing the failure of Avon order managementsystem project from an IT projectmanagement perspective

1. Proactive steps to ensure the success of
the next ERP project.
L'OREAL ERP Project
By: Monzer ALchikh Warak
Under supervision of: Dr.Mamta Bhandar
Jan 2013

2. 1. The Goal
2. Facts related to ERP projects
3. Analysis of Avon’s Project failure.
4. The recommendations
5. References
The content

3. The main goal of this presentation is to provide a learned
lessons and project recommendations
by assessing the failure
of Avon order management
system project from an IT project
management perspective
1.The Goal

4. Enterprise Resource Planning software's attempts to integrate all departments and
functions across a company onto a single computer system that can serve all those
different departments’ particular needs.
There are five major reasons why companies
undertake ERP:
1. Integrate financial information
2. Integrate customer order information
3. Reduce inventory
4. Standardize HR information
5. Standardize & speed up manufacturing
processes
2. Facts related to ERP projects

5. The ERP implementation costs and durations are increasingly hard to predict. Based on
Panorama ERP Report2013, companies implementing in an average of 18.5 months
compared to an expected duration of 14.7 months. Across all industries, expected
durations average 19.3 months while actual durations average 19.1 months.
There are hidden cost, some organization miss to consider it!
Example of some hidden costs:
◦ Training cost
◦ Integration and testing cost
◦ Customization cost
◦ Data conversion cost
◦ Consultants fees
◦ Process re-engineering cost
◦ Support and enhancement fees
2. Facts related to ERP projects

6. The complicated of ERP Projects
According to analyst firm Gartner,
 Over 50 % of projects experienced cost overruns
 Over 60 % experienced schedule overruns
 Fully 60 % of respondents received under half of the expected benefit from their
ERP implementation
YEAR COST
% OF COST
OVERRUNS
DURATION
% OF
DURATION
OVERRUNS
% RECEIVING 50%
OR LESS BENEFITS
2013 $7.1MM 54% 16.3 months 72% 66%
2012 $7.1MM 53% 17.8 months 61% 60%
2011 $10.5MM 56% 16 months 54% 48%
2010 $5.5MM 74% 14.3 months 61% 48%
2. Facts related to ERP projects
Data Summary by Year

7. 2. Facts related to ERP projects
ERPProjectsStatistics

8. Top Reasons for ERP Failures
 Lack of purpose for implementing ERP
 Lack of collecting requirements
 Fail in stakeholder management
 Lack of executive and management buy-in
 Not choosing software that is aligned with the
business and key requirements
 Misalignment between software configuration
and business processes/workflows
 Lack of effective Organizational Change Management and training
 Weak internal and external project management
 Underdeveloped business case to manage business benefits
2. Facts related to ERP projects

9. Avon faced a failure before when its Brazilian operations suffered under an Oracle
system, then decided to switch
the software into SAP, thinking that the problem
from the software!
Although its important to obtain the right software
but Its not always the reason of failure!
It Seems that the failure here was more a result of poor
management decisions and project management on
the side of Avon
Next slides clarify the Reasons behind Avon’s Project failure...
3. Analysis of Avon’s Project failure

10. Reasons behind Avon’s Project failure:
1. Lack of collected requirements
That’s clear from the gap between the users expectations and final products!, the
users expected an easy
to use solution that could work on their
tablet devices.
2. Poor of knowledge of software selection
Its not clear whereas if there was a clear methodology used by the Avon decision
maker in vendor selection process!
Oracle selected then Avon switched to SAP without clear studying of the real
reasons of Oracle failed implementation .
3. Analysis of Avon’s Project failure

11. Reasons behind Avon’s Project failure:
3. Lack of end users training
In additional of old aged users, it seem that people are less patient with
technology!
Users found that the system delay their process and
became more complicated, it maybe not!
But its clear that users didn’t trained well on
the “to-Be“ processes or on the software itself
or maybe on both! Which is very critical.
For that the SAP reported that the end users refuse to use the product as “working as
designed”
3. Analysis of Avon’s Project failure

12. Reasons behind Avon’s Project failure:
4. Lack in stockholders analysis
it’s a nature reason if we know the requirements didn’t collected well! The
expectation of stakeholders
wouldn't be clear, thus it wouldn’t met.
5. Weak change management
Reports talked about The technical project
itself was very well structured and you would expect that cultural change is
necessary for it to work, but for a project of that magnitude need a sponsor right
at the top.
So even if there is resistance to change, things get done with support from above,
which was maybe Absent.
3. Analysis of Avon’s Project failure

13. Reasons behind Avon’s Project failure:
6. Project’s Risk didn’t monitored well
Although it’s a good action to testing the product in a smaller market before
going global, but it was very late action to take (after 3 years)! Project Manager
should not wait until one of senior sales executive lost 1/3 of her total sales team,
he/ she must take a preventive actions to mitigate this risk!
Based on the data provided the Payback period calculated by the following:
So, the project manager could recognize the problems from the first year especially
when he calculate the net present value NPV!
3. Analysis of Avon’s Project failure

14. Reasons behind Avon’s Project failure:
8. No learned lessons documented
If there would be a documents that contained the
learned lesson from the 1st failed project, that
would clear the real reasons of failure,
so it would not repeated.
9. Quality flaws
This is a normal and Expected problem because the root (Project Requirements )
were lack!
3. Analysis of Avon’s Project failure

15. Reasons behind Avon’s Project failure:
8. Lack in communication
Lack in communication make the team members don’t know what is expected of
them, as well as Differences in expectations, also No one knows what the status of
the project is. One of Avon’s senior sales managers wrote: “I think Avon’s biggest
failure is not IT, it is its inadequate communication with its independent
representatives.”
3. Analysis of Avon’s Project failure

16. From the result of surveys and statistics that presented in the first slides; Its clear that
the ERP Projects is critical and dangerous.
Based on the lessons learned from the Avon Failure and based on the best
practice methodologies of implementing
ERP Projects the recommendations* for LOREAL
are in the next slides.. It divided to be**:
 Recommendations Before Implementation
 Recommendations During Implementation
* Please note that the following recommendations are applied on whatever ERP software obtained (SAP, Microsoft, Oracle ..etc.)
** Some of recommendation should apply before and during implementation project
4. The recommendations

17.  Perform the objective of obtaining the ERP solution
Its important to write the vision, goals and the critical success factors of this project.
Write them in Project Charter document in additional to the key elements of a project
such as project scope, budget, deliverables, milestones and risks..
 Make sure from the readiness of Business Processes and Business Policies
documentation
Such this documents give the vendor a clear idea about how your business work, so its
easy to match with software processes.
 Analyze the organization situation
Hold a brainstorming sessions with all employees levels to list all problems that faced
by LOREAL; enclose all problems that’s faced with employees vendors & customers.
4. The recommendations
RecommendationsBeforeImplementation

18.  Involve All stakeholder in earlier stage
A key critical success factor in IS projects is the involvement of users, whose input is
especially critical in the early stages of the project where system requirements are
identified. Their needs should be taken into account before moving forward with new
technologies that will greatly impact their workflow.. Employee involvement reduced
the resistance of use the system.
 Issue a Request For Proposal document (RFP)
This document is a key, It contains the details of user requirements.
The vendors' answers on this document will help LOREAL to
decide with the best software.
 Calculate a Payback period and Cost Benefits analysis to take a right decision
To identify the accurate measurement of benefits and costs in monetary terms, and
calculating the payback period
4. The recommendations
RecommendationsBeforeImplementation

19.  Perform ROI
One of the most misleading legacies of traditional software project management is
that the company expects to gain value from the application as soon as it is installed,
while the project team expects a break and maybe a pat on the back. Neither
expectation applies to ERP.
 Create a strong communication plan
Good communication is a major factor in successful
project management, ITs a central to the success of IS projects.
 Manage scope
Avoid the temptation to implement every possible module and every available
feature all at once. Focus on the most critical components, allow the organization to
absorb a reasonable level of change and discover the value of the new system and
processes. Do the most necessary things first and do them well to build confidence,
credibility and acceptance.
4. The recommendations
RecommendationsBeforeImplementation

20.  Put a strong governance structure in place with top management
who will be engaged in the project
This involvement sends a strong message that the entire enterprise is
behind the effort and helps ensure the necessary resources are devoted
and buy-in are achieved.
A strong and engaged steering committee ensures key decisions are
made and issues can be escalated and resolved quickly. The failure to
have this structure in place is one of the major reasons projects go over
budget.
Enforce the minimization of system customization. Top leadership plays
a key role in adopting “best practice” work processes rather than simply
mechanizing existing work processes.
4. The recommendations
RecommendationsDuringImplementation

21. LOREAL should Adopt a collaborative model to involve a number of 3rd party
consultants that rely on the technology – and those charged with providing the
technology to create The Information Technology
Executive Steering Committee (ITESC)
to set a consistent enterprise-wide IT
strategy to ensure the business needs
of the departments drive technology
decisions.
The ITESC reviews major IT issues and
decisions based upon what will make
the departments most effective.
 Project Manager must having a high power and support from the high
management
4. The recommendations
RecommendationsDuringImplementation

22.  Focus on change management
One of the greatest challenges in any significant IT project is change management. Hardware and software
are the simple parts of the project. Implementing standardized best practice work processes often requires
a culture change - the time and effort required to accomplish such a change should not be
underestimated.
The steering committee must be in place to ensure the leadership of the departments is aware of the
project, timeline and potential impacts.
 Focus on training
Not only on Software, but on business processes itself after it could be reengineered (Very Critical)
 Manage Risk carefully
The natural of ERP Projects has a high degree of risks! A small misunderstood in one of project’s
requirement would cause an error, that error will inherits and effect the whole project, Thus it is necessary
to provide the customer with prototype before go to the next steps, Thus spiral method project
management Is preferred because it is tracking the risks along the project life cycle; it uses the iterative
prototyping as a means of managing project risk.
4. The recommendations
RecommendationsDuringImplementation

23.  Study the possibility of adopting a SaaS model to reduce the cost risk
The trend today is Cloud computing, it would be a good idea to eliminate the license and
hardware fees by get a cloud computing, at least until to make sure from the stability of the
system.
 Divide the project into phases and deliverables
That To be able to
track and Measure
the work
4. The recommendations
RecommendationsDuringImplementation

24.  Avoid long delays between major implementations
There are two basic deployment approaches illustrate in below figure
Either approach will work, but long delays between the next set of modules or the next
group of agencies will drive costs up, delay savings and make change management
much more difficult.
4. The recommendations
RecommendationsDuringImplementation

25. 1. Online Article: “Avon's Failed SAP Implementation A Perfect Example Of The Enterprise IT Revolution”, By: Ben Kepes, Forbes 12/17/2013
http://www.forbes.com/sites/benkepes/2013/12/17/avons-failed-sap-implementation-a-perfect-example-of-enterprise-it-revolution, Accessed in 27/04/2014
2. Online Article: “Avon to SAP: We can’t put enough lipstick on this pig! – A failure in program risk management”, By: John Belden, Upper edge Blog, Dec 13, 2013, URL:
http://www.upperedge.com/2013/12/avon-to-sap-we-cant-put-enough-lipstick-on-this-pig-a-failure-in-program-risk-management, Accessed in 27/04/2014
3. Online Article: “ERP Definition and Solutions”, By Thomas Wailgum, CIO magazine, URL: http://www.cio.com/article/40323/ERP_Definition_and_Solutions, Accessed in 27/04/2014
4. Online article: “What Our Research Reveals About Manufacturing ERP Implementations” By: Eric Kimberling, Panorama Consulting Solutions, January 22, 2014, URL:
http://panorama-consulting.com/what-our-research-reveals-about-manufacturing-erp-implementations, Accessed in 27/04/2014
5. Online Article: “Inside Avon's Failed Order-Management Project”, By:Doug Henschen, InformationWeek , 12/16/2013, URL: http://www.informationweek.com/software/information-
management/inside-avons-failed-order-management-project/d/d-id/1113100, Accessed in 27/04/2014
6. Webinar: ”Managing Organizational Change on Your ERP Project", By: Eric Kimberling, Panorama consulting Group, November 2010
7. Whitepaper: “Enterprise Resource Planning (ERP)”, By: SCOTT WALKER and others, WISCONSIN IS OPEN FOR BUSINESS, July 1, 2013
8. Report: “2013 ERP REPORT”, A Panorama Consulting Solutions Research Report, URL:http://Panorama-Consulting.com/resource-center/2013-erp-report, accessed in: in
27/04/2014
5. References
14. Segment 2: Information Systems Project Organization, Project Communication
15. Segment 3: Project Adoption and Initiation, Project Evaluation Methods
16. Segment 3: Project Adoption and Initiation, Project Charter
17. Segment 3: Project Adoption and Initiation, Requirements Analysis and Management
18. Segment 4: Project Planning, The Spiral Model
19. Segment 6: Project Control and Closure, Risk Management.
20. Segment 6: Project Control and Closure, Earned Value
21. Segment 6: Project Control and Closure, Project Closure
22. Segment 7: Managing Inter-related Projects, Integrated Governance
9. Segment 2: Information Systems Project Organization,” Information Systems Projects:
Success and Failure”
10. Segment 2: Information Systems Project Organization, ”Project Stakeholders and
Sponsors”
11. Requirements traceability captures the relationship between identifiable business
needs to individual requirements, and then to the actual specification
12. Segment 2: Information Systems Project Organization, Information Systems Project Life
Cycle
13. Segment 2: Information Systems Project Organization, Information Systems Projects:
Critical Success
References from IS Project Management course material: