Firms need to look at project management

It is always worth repeating the story of Nike’s failure to implement a major IT system: the sneaker giant’s boss Phil Knight famously lost his cool when trying to explain how a planning system had actually lost the company US$100million in sales, despite taking more than a year to implement.

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By  Peter Branton Published  April 2, 2006

|~|Phil-Knightbody.jpg|~|Feeling blue about IT? Nike’s Knight has had his share of project woes. |~|It is always worth repeating the story of Nike’s failure to implement a major IT system: the sneaker giant’s boss Phil Knight famously lost his cool when trying to explain how a planning system had actually lost the company US$100million in sales, despite taking more than a year to implement. “This is what we get for our US$400 million?” Knight famously whined to analysts in a conference call in 2000. More recently, US internet retailer Overstock’s CEO Patrick Byrne last year told analysts that implementing an enterprise resource planning (ERP) system had contributed to his firm making a net income loss for its most recent quarter of US$14million. “I bit off more technology projects than my colleagues could chew. The last bite, an ERP implementation, was one bite too many, and we choked on it,” he told investors in a statement announcing the results (they may have been impressed by his honesty, but they were probably less impressed by his opening statement: “Q3 was rough. My bad.”) What these examples show is that getting major IT projects wrong can have major repercussions for a firm, even serious financial ones. An ERP implementation, which by nature must go right across an organisation, has huge potential for error. So it is slightly alarming to learn that 71% of senior business managers in the GCC said they were not “entirely satisfied” with their ERP implementations, according to a recent YouGov poll, commissioned by software outfit Sage Accpac. That low satisfaction level seems linked in with how the systems were implemented: while just 14% of respondents cited quality of implementation partner as an important criteria in first selecting an ERP system, nearly half, 49%, of people said they would "ensure that the implementation partner is of the highest quality" in selecting an ERP system second time around. One systems integrator we spoke to recently told us that he thought client satisfaction levels for ERP implementations here in the Middle East could be as low as just 10%: he cited the poor quality of project management as being the key factor in so many projects proving to be a disappointment. The common complaint we hear is that Middle East firms look to save money on big projects by cutting down on the cost of implementation, often by appointing junior people to actually do the work. Without strong project management skills however, they can find themselves paying out considerably more in the long-term: a point many fail to appreciate since firms also often rarely look at true cost of ownership of their technology investments. Firms here in the Middle East should learn the lessons from overseas and invest more in making sure they get projects done right, first time. ||**||

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