The Power of Guiding Principles in ERP Implementations

Having now been involved in a dozen system implementations, I believe that defining guiding principles for your IT initiatives is “necessary but not sufficient”. Guiding principles are a set of heuristics that guide organizational decision making in a common direction. However, if defined during a one-off activity at the outset of a project they will be stowed away and forgotten. The real value of guiding principles appears when everyone involved in the project refers to them during day-to-day activities. Once defined and agreed upon with all key stakeholders, these principles should be:

• Part of organizational slide deck templates

• On big posters scattered throughout the office

• Re-stated and elevated by leaders during all-hands calls

• Integrated into the team's performance management process

• Integrated into the interviewing process to bring on aligned team members

• Etc.

In short, these principles need to be the north star that guide the team’s actions as they wade through the murky waters of IT implementations. As humans typically forget half of all new learned concepts within days, your guiding principles should be repeated often to become second nature.

Why Can Guiding Principles Be So Impactful?

1. Guiding principles align the organization’s decisions around common values and objectives

80% of ERP projects still fail to deliver the initially stated business outcomes (I feel like this number hasn't changed for 20 years). Therefore, it is crucial to align everyone in your project team in a single direction. In an ideal world, existing company values, objectives and strategy provide this guidance. However, if these concepts aren't brought down to the ground floor via guiding principles, they remain abstract ideas that do not drive behavior.

2. Guiding principles define the “rules of the game” before it starts.

Have you ever played monopoly with a group of friends only to realize they had “house rules” which you discovered while playing? Inevitably, the game ends prematurely after one too many disagreements over the rules. The same thing happens on projects.

Unless you develop a set of principles that are reviewed and agreed to by all members of your team before they start delivering, you’ll inevitably find yourself in a “monopoly-type” situation. For instance, consider the architect on your project recommends a new technology to satisfy a requirement. This new tool is the best suited for the scenario at hand, but you are trying to curtail your application portfolio and already own a similar tool. A guiding principle helps center everyone back on how to take the right decision.

How to Craft Your Guiding Principles

To be effective, your guiding principles need to support your company's missing and competitive advantage. Consider a company is executing against a differentiation strategy. However, their teams are delivering systems in ways that stifle your ability to generate value. Misalignment is clearly present and needs to be addressed.

To prevent this from happening, you can use the following thought process to get to meaningful guiding principles. I've illustrated using Costco, the low-price bulk retailer.

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