Why is good project management so hard? Q&A with Arbela’s Niels SkjoldagerBy Sarah D. Morgan, Customer Success Manager, Arbela Technologies
Why is good project management so hard? I ask this question because I’ve never understood why a company will spend millions on software and not do everything possible to have a successful implementation. So this week, I ask Niels Skjoldager, Arbela Engagement Manager, for his nearly 20 year AX ERP Project/Program Management point of view.
Note to readers, if you’re looking for boiler plate steps to successful project management, you won’t find it here. But if you want the truth about what really throws up the road blocks to ERP project management success, this will be an interesting Q&A.
SDM: Niels, how did you get into ERP?
NCS: I got into ERP by “accident”. In 1998 I was assigned to a project in Arizona, where I was on a team that implemented JD Edwards OneWorld. I was responsible for supply chain and product costing. I then landed a job in 2000 as a PM at one of the largest automotive distribution and retail companies in Scandinavia, called Nellemann. They decided to run on AX 2.5 and went live in 2001.
SDM: When I met you in 2004, you were the COO of Infonizer correct?
NCS: Yes, Infonizer was an AX automotive ISV and then I later moved to Columbus as the service director for all Columbus manufacturing clients in the US, Canada and Mexico. I ran a team of 28 consultants, developers and project managers.
SDM: What is the largest Dynamics AX project you’ve been responsible to implement?
NCS: One that comes to mind is a ~10 billion dollar multinational key card hospitality business. Locations were of serious consideration as was localization and disparate legal entities. This company had complex discreet manufacturing and complex business processes. I was responsible for the US and Mexico implementations.
SDM: I’ve noticed you have a sincere passion for project success.
NCS: I’ve been intrigued by Project Management though I never aimed for it as a career. But when I was put on a project team in Arizona, what intrigued me was the different business applications and what value brought the project to the table. Value drives my passion for success. Key words for value are:
• Understand what value we want to drive in implementing project technology
• Understand it doesn’t matter what the technology is, or what is trending in terms of today’s consulting hype. It is all about the business!
• Ask, “Why are we doing it?”
• Ask, “What are we getting out of it?”
Projects that fail have not specified one or several of the above bullet points. This is the mission and why we do it. When the above is defined, it has to be communicated. People have to know why they are doing what they are doing and the communication has to be repeated, over and over again.
SDM: So Niels, in your experience why do projects fail?
NCS: I break it out like this when asked why projects fail:
1. First, too many top level executives do not know what the strategy is or what the drivers are. Typically a company spends multi millions in software and services. Now they go all in on everything cloud too, expecting a miracle cure. If the implementation team is hired through a professional services company, they make investments in people. The people have to know at all levels the strategy and drivers. This can’t be emphasized enough.
2. Second, no top level sponsorship from the business. Projects don’t need top level executive sponsorship barking orders, but having a keen personal and vested interest in actually going through the success of the project. The question to ask is this: Are the c-level executives willing to go all in on their career path to fully endorse and support the project? If not, stop right there. It is a perfect candidate to fail, out of the gate. When top level is disengaged, it cannot be explained why you can’t communicate the strategy. In those situations people tend to not prioritize being engaged. If the project is not engaged by the top guy then it is not engaged by the implementer. Engagement means communicating the process of implementing how are we going to define the project? How are we going to make the changes? It’s not just about technology – it is not an IT project - it is a strategic business project. Apart from the daily project of running the business. It is about transforming how to do business. Empower and enable employees, reimagine products, engage with customers and optimize operations. This is no small task. It is the epicenter of strategy.
If there is not a project culture where people are allowed to speak up and flag risk at an early stage, but instead they are fearful of reporting failure, then the project is just about guaranteed to fail or at least find itself in recovery mode. Projects are full of surprises. Clients might learn they don’t know aspects of their business as well as they think they do. Companies need to create a habitat where people can make a decision – know when to say no – no when to stop and when to make it right if there is not that culture. This is where business savvy and experienced project managers come into play; both from the professional services organization and from within the client organization itself. Know when to say one of the most valuable word in business: No.
SDM: Why is it so hard to convince the business executives that their true attention to detail is critical?
NCS: If no one holds them accountable and expectations are not aligned they typically just get a ‘check list’ and the instruction to ‘go do it.’ Then the business needs to hold operations accountable as well. If the people at the operational level are not held accountable, what happens is that people don’t know what is expected of them and what the boundaries are, so they will just do what they think is right. That is where problems, where scope creep and budget go out of line and projects fail. To be on a project you want to see a health check and a definition of why we are doing this.
SDM: What questions do you ask to set up accountability from the top down?
NCS: These are the key questions:
• Is there a clear definition of roles and responsibilities?
• Are people held accountable?
• Are you expecting quality?
• Are they communicating?
• Are the program manager and the project manager empowered?
• Are they running it as a business entity?
• Are they empowered to hold people accountable or are they in a coordinating role and pushing paper but have no authority over people. If people don’t fulfill obligations, they can get away with it.
• When is it necessary to teach higher level executives to make a decision? Someone has to remove the roadblocks that exist. It’s a warning flag this project must succeed.
• Is there alignment with risk all the way up and down the chain?
• Are they on the same page in terms of expectations? Messaging that you are going to hit that date, you will make that happen. Doing it from the bottom of the pyramid will take too long.
SDM: Why are people afraid to ask these questions and set up this accountability?
NCS: Sometimes no one will speak the truth because a new and transformative ERP implementation exposes the truth, may expose bad processes, and uncover political challenges. The CEO, the steering committee they run, they are the executive sponsors. The VP level – corresponding high level execs and usually program manager can only access information given to them. They rely entirely on honest and transparent information. They need to know what is not going well. In other words, risk and they need to be able to manage it. If there is a lack of transparency, camouflaged as it truly is, they’re likely to make decisions that are completely unrealistic. Budget overruns, timelines, and milestones. Pressure will increase – someone will be held accountable – they start making bad decisions just to make a decision.
SDM: How does a top tier professional consultant decide if you proceed with the project or walk away when they see the above accountability strategy is not in place during an interview or during the project?
NCS: That is what happens when everyone knows what needs to be done to get back on track and no one is doing anything about it. If they are not following methodology and blaming the implementation partner but there is no consequence to continue down the path. There is no sense of accountability – and no one makes decisions – project like that is difficult to recover because of a financial risk. How do you professionally say I need to walk away? By actually saying everyone knows what needs to be done and there is no executive power to follow through – it is likely you are going to continue down the path and not hitting the project deliverable.
SDM: And I’ll add that too many consultants see the problems, but need the work, so they stay and at that point the problem just gets bigger because they are simply not empowered for success.
SDM: How would you restructure a project in distress?
NCS: What I do for turnaround is bring everyone back to the table and ask if they are going to accept what they see – be open to what are the challenges are and why it is continuing to not go well. Then it is a matter of catching up on what has been missed in the past. If the problem is that deliverables are incomplete from day one, then it keeps harming the project all the way through. If there is not a functional document, then the design is not the idea of what they want and the development specification cannot be better than the functional specification. Then, you have to do a quick repeat of missed deliverables, define how you want to run the business. Validate that the fit gap is relevant to the solutions support for those processes. Validate the gaps and what would we accept to fill gaps. Or change the process to fill the gap. Go back to the beginning of the methodology and validate that everything is agreed upon. Certain tasks/deliverables should be signed off at the board level. They need to know what is going into the business. They are going to run the company on this project – pull out of ERP and technology as such and back into strategic. I would ask for empowerment to do that. Give me the resources and communicate to them you will be accountable for your success like you would in your real (non ERP project) job. It’s okay to make a mistake, just communicate it. It has to be okay to make a mistake. It is a culture for collaboration openness and honesty but also show that people cannot make the decisions themselves - alone.
SDM: What is the team structure for a successful ERP Project Implementation?
NCS: As a PM, I would have authority to evaluate if the people on the project are the right people do what it takes to be successful. When we assign project activity to someone, ask, “Is that person capable of doing it right with the budget and time is allowed.” A PM needs to be fully empowered, treated like everyone’s chief in command and not just a coordinator and project plan mechanic. It is a leadership position, which requires tremendous empowerment to be effective. I would audit the team, not just the consultants, but also the subject matter experts from the business. Do they need training? Do they need to be replaced? Basically, I would evaluate the team and reorganize the team accordingly. Evaluate who you will keep and what is the key position and who the players are. No different from running a virtual company for a while. It has a purpose, a budget and needs to produce a project just like a standalone business.
SDM: What does a truly successful Project Manager look like?
NCS: A truly successful PM has a great deal of business experience and leadership. Starting with that rather than with PM certifications. Reading a book about PM does not make someone a PM. Following any methodology stubbornly just because it is what the instructions say, in and by itself introduces a lot of risk and potential downstream challenges. It is about people, working to enable people across both the professional services and the client organization to work together efficiently, to join up on culture, to reach goals together, to work through challenges and become problem solving Jedi’s. That is a skill set that reaches far beyond the mechanics of project management. The point of it is PM is not the correct terminology – Project Leader is a more ideal title. Someone who is overseeing a process in a certain way – leadership is motivating and driving someone to do something – involve them motivate them encourage them. That is a clear difference. A great PM has a lot of leadership experience and skills from a business background. They should have skills that relate to the client. For example, a PM that is going to manage a discreet manufacturing environment but does not understand what people are talking about at the business level is a setup for failure.
At the beginning at the project – the SME’s are experts at their business. Each know bits and pieces of the business they work in. Consultants know nothing about the specifics of the business. The SME’s know nothing about the technology, such as the ERP system, CRM or BI solutions. They may have some sort of idea of business transformation, but usually, do not have the experience actually doing it. In reality, the combined level of lack of knowledge and initial skill set is remarkable, and that is perfectly fine, for as long as the journey to fill all those gaps are managed tightly all the way around. The consultants are experts at running business transformative projects and implement technology to support that. The SME’s are business experts and the PM helps fill the gaps. They help the consultants get up to speed on the business and the SMEs up to speed on the ERP. That’s what I mean about leadership.
Being an AX Project Manager is not just about using project methodology templates, such as SureStep or Agile, or anywhere in between really. It’s a lot of coaching. Can you coach this line of business user to write a functional requirements document– not just the mechanics of the project. Leading people to success.
A successful PM needs to be qualified to run a business unit. The wrong statement is: “I’m trusting you with an $8mm project, you need to report weekly and monthly of the status and manage the resources.” The right statement is: “I have an $8mm ERP implementation project that I am going to treat like a separate business unit until the project goes live. I will trust you to run it like a business unit with an internal product line. I’m trusting you with our business. You are responsible for that P&L and all people report to you. But eventually you are responsible for the P&L, choosing who runs the $8mm business unit.” Think about that when staffing a project. You are trusting someone with say $8mm of funding to deliver a product. An internal service that is profoundly attached to strategy and the future of the entire company in many ways.
So, suffice to say it is expensive at the PM level. 95% of top level executives don’t see it this way. They might as well call it a project coordinator following/inventing a timeline and reporting to someone. They have no empowerment and no authority and in turn people have no respect for this person. This person has no empowerment to do something.
SDM: For an $8M dollar implementation how do you structure a successful project leadership team?
NCS: You would want to have a board level Program Manager, a Project Manager driving the project plan, and a Project Coordinator following the project plan. You will want to have a professional and highly vested steering committee, meeting frequently, being individually on the hook for driving the project to success.
SDM: Software implementation is expensive – isn’t it less expensive to do it right?
NCS: Money. Everyone sees the direct cost is tied to hours by rate per hour. So executives want to lower the cost but that is not a correct assumption. Lower cost means lower cost people. In particular in ERP where resources are everyone is competing for the same great people across different rates. False to say lower the rate. Why? Because if someone has a lower rate there is a deliverable 15 versions later. Time goes by – time is a clear cost – the consultant time is paid by the hour – the actual cost increases exponentially.
If you have the most experienced resource, there is high likelihood things will get done right the first time around. The overall time consumption of cost is lower. Just a simple example, a less expensive person costs $100 per hour and takes 50 hours to get it right. A more expensive person can do it in 20 hours. That is absolute reality. It is always on the SME’s to have the skill set.
To do follow up cost calculation, the internal time should also be included. They don’t get paid more but it is still a cost. That is the complex answer to that question. Have to manage the weakest link in the chain. If you decide to place a not adequately skilled professional because their rate is low then you have brought in a weak link in the chain. The higher rate is higher value and lower risk. Goes back to running a project like a business – same principles apply. You always look to fill an open position with the strongest possible candidate to get the job done right.
SDM: What are your parting thoughts for a company entering into a new ERP implementation?
NCS: The key to success is about preparation. Why are we doing this? Why are we hiring these people? Why do we expect this to be successful? Are we investing enough up front? Are we enabling the project to be successful? If projects start to fail, don’t be afraid of going back to the beginning and reevaluating and adjusting to make decisions quickly and efficiently. The cost of not doing that is going to be much higher.