ERP and CRM Implementation: Why Most Projects Fail Before They Start

Welcome to Building Better Developers, the Develop-a-Nor podcast, where we work on getting better step by step, professionally and personally. Let's get started. Well, hello and welcome back. We are yet again in another episode. This is Building Better Developers, the Develop-a-Nor podcast. This season, we're getting unstuck. We're moving forward. We're getting some forward momentum. We're trying to start the year right. And in doing so, we're going to continue to have some conversations, including today of all days. So buckle up. We're going to be ready for that shortly. First, I'll introduce myself. My name is Rob Broadhead, one of the founders of Develop-a-Nor, also the founder of RB Consulting, where we help you do a technology reality check, figure out where you at, what are you doing, what have you got before you make that big investment, that big leap into whatever your next project happens to be so you can make a smart step and not step into something a little bit, you know, cart before the horse. Good thing, bad thing. Bad thing, as you guys may know, I am not currently in the States. I will not be for a while. And my time in Portugal is starting to slowly come to an end. I'm now, as I sit here a few weeks out of it, and it's a little bit of a sadness. I have become attached to Porto faster than I thought I would and more so than I thought I would. The good thing is, is that it is, you know, I'm tired of cold. I'm tired of wintery stuff. Even here, where winter means like, you know, 55, 60 degrees Fahrenheit, I'm ready to go to the beach. And that is where we are headed next. But where you guys are headed next is Michael is going to go ahead and introduce himself. Hey, everyone. My name is Michael Moulas, one of the co-founders of Develop-a-Nor, Building Better Developers. I'm also the founder of InVision QA, where we create reliable tailored software that helps you work smarter, scale faster and stay in control. A good thing, bad thing. Well, unlike Rob, I'm still in the States. And we are. The good thing was, last week we were having our fall spring temperatures up in the 70s, shorts. And of course, you know, it's Tennessee weather. So you wake up in the morning and it's winter. You've been day. It's a nice spring. By mid-afternoon, you might be having summer. So that's the bad thing. You never quite know what you should be wearing at what time of the day you're. And an even better thing is we have our guest, Dustin, here today. I'm going to let you go ahead and dive in and introduce yourself. Hey, Rob, Michael. Good to be with you today. So my name is Dustin Domarice. I've got about two decades of consulting experience with SAP and Microsoft, specifically around ERP and CRM platforms. Excited to chat with you a little bit today. The way you set that up, Rob, is really good about making good technology decisions. That's certainly something that we've all had experience with and can chat about a little bit more. But I'll go with the good thing, bad thing, too. So bad thing, I'm looking out my window and it looks like it's cold and dreary and rainy. And I guess that's a good thing because it normally is covered in snow outside this time of year here in Kansas City. We're actually having pretty decent weather. And bad thing, though, Rob, I wish I was in Portugal with you. I think that would be nice. Portugal is one of my favorite places on Earth. It's such a beautiful, beautiful spot. And this is the right time of year to do that as well. Yeah, it has been really nice. It is definitely unique based on what we've seen and really enjoyed it. I want to dive right in because ERPs, CRM are probably the things that got me into consulting myself was seeing those projects go bad. So often, CRMs, back in the day, now people sort of, I feel, have gotten a little better at it. But definitely now ERPs, things that should take months often take years. And I think a lot of it is because of lack of preparation, lack of understanding what people are stepping into. So I think to just set the table, let's start with the most basic of basics is give me a definition, layman's definition of CRM and ERP, ERP especially, because I think that's where people sort of get lost with that a little bit. That's a really good question. I mean, CRM, customer relationship management, has expanded throughout the last decade. I think whenever I first started doing it, probably the same with you, Rob, it was Salesforce as the dominant player and Microsoft. And then there was the ActPaks, if you remember those software that were out there back in the day. And so at that time, people were calling at CRM. And really what it was was contact management, a rolodex for sales team to kind of be beat with a stick and say, you got to put your stuff in and we need to know who you're calling on a daily basis. And it's evolved over time to now Microsoft's changed the term to more customer engagement where it's kind of an all encompassing sales, marketing, customer service style tool. ERP is kind of undergoing that same change. And I think fundamentally it's been that way all along, but there's a lot of people that are starting to get better educated now as to what is the difference between an accounting system and an ERP system. Enterprise resource planning is a lot different than just being able to track your general ledger and send an invoice out to your customers. And thinking about where businesses start, that's of course always where someone starts. I mean, I can think about a lawn care business that my son's running and he needs to be able to send invoices. And so I think that one's easy for everybody to get their head around. But when you start getting into supply chain and manufacturing and tracking bill of materials and assembly orders and some of those other things, it starts to get a little fuzzy for people about where does an ERP system start and stop versus CRM start and stop. So that line is becoming more blurred over time for sure. But core business systems, everybody as you grow in an organization and mature in business, they've got to have those kinds of systems in place to be able to do a better job of tracking customers and business related tasks. Now, have you seen in your because you're in like the perfect sweet spot of time as this has grown. It feels from the outside and from the projects I've been on, I'm wondering from somebody that's in it all the time. Have you seen it get more complicated? May not be the exact word, but more more pieces. Because you talk about especially when you had like drop shifting shipping and all of the various the supply chain itself. Does it feel like this somewhere there's like there's more players in it. So even a smaller company has to sort of step up a little bit to be able to just to just go through their normal business. Yeah, absolutely. I mean, think about like the you know, if you go buy a shirt online, you see an ad on Instagram or Facebook and you're like, oh, that's a that's a cool shirt. Let me go let me go buy that T-shirt or dress shirt, whatever it is. That organization could be selling a few thousand skews a year. Like they may not be that large. They may be shipping things out of their garage. You don't know because the brand looks big. The customer service experience can look big. I mean, they may have a sophisticated chat, omni-channel customer service experience where you can chat on their website. You can interact with them on social media. All of those things that come with the big brands, we're starting to see smaller and smaller organizations being able to roll out those kinds of advanced tools. And I think this creates this this disparity between organizations that are actually mature enough to adopt those kinds of tools and the availability of the tools themselves. It's really simple now for somebody to go on Microsoft's website or Salesforce or Oracle and say, I want to stand up a new NetSuite environment or a new Microsoft Business Central environment. A few clicks, they can have an ERP system. But that doesn't mean that their organization is mature enough to be able to adopt some of these complexities that come along with it. So that's and this gets you're getting right into my sweet spot of stuff here is like is is it almost too simple now? Is it one of those things that ever let me actually rephrase that. Is it sold as simpler than it is to do that? Because you said it is with SaaS and the rise of it and especially the sort of the dominance and it's not against them, but like if your NetSuite and your Salesforce is in places like that, they they are now marketing to smaller companies, to smaller businesses, to startups, to younger companies that just they don't have that. They don't have as deep a team, a deeper bench, I think, to do some of those pieces. And so are you seeing that where it's like it's almost it's not I'm trying to think of how to do it. It'd be nice about it because it's not really bait and switch or anything like that, because it is valuable stuff. But it's almost like it's selling people more than they need or at least opening up to more that they need. And then in your experience, it's like, how do you address that if somebody says, hey, I can I can get something spun up, I can have a Salesforce site and, you know, 30 minutes, I can have my stuff in there and I can be doing everything I want to do. Well, how do you how do you tackle that? Think about this. Standish Group says 66 percent of these kind of projects fail. McKinsey says 17 percent of them threaten the survival of the organization. And BCG says 70 percent that do launch. So like you're already dealing with a pretty small margin that ever actually go to market to begin with, like you end up going live. 70 percent of them fail to deliver the outcome that the business expected that the system would generate to begin with. So we're dealing with a tiny little percentage of these types of digital transformation, ERPCRM specifically, that that fail and and very few that ever even delivered the outcome that they're expected. So I think you're right. Like we we think about software in the sense of it's going to come and solve our business issues. It's going to fix the drop ship problem. Right. If I had some software that would allow me to dynamically be able to do addresses and drop ship locations and change the bill to of where I'm where I'm billing an invoice, that's just going to magically make me a better seller and a better deliver overnight. And if you don't have the core processes in place to handle drop shipping today, I got news for you. People have been doing drop shipping for a long time. They've just been doing it with sticky notes on a wall somewhere in the warehouse. Right. Figuring out where they've got to do it. So if you don't have good processes today, implementing an ERP system is just going to expose the core processes and it's probably going to end up shutting down your organization for a period of time while you catch up to the maturity of that kind of software. So it's scary stuff for organizations that try to do this when they don't have that level of maturity. You know, you should probably stay on QuickBooks if you're if you don't have the process maturity to support that kind of an ERP system. Now, do you feel like that's that message is being is getting across or is that something maybe where people are underserved and a little bit more they're pushed to like to be bigger maybe than they need to be? I'll tell you this. This story is interesting. So we had a client not not too long ago that they just would not make the decision to upgrade and change the way they're doing their core processes internally. And they were to the point where they're they were the opposite. Right. Their processes had matured internally to the place where everything was manual. Like it became this this quagmire of spreadsheets and databases sitting underneath people's desks. And like it was just a bad a bad environment. They were getting work done, but they just didn't have the maturity. And we came in and said, look, this is you need to move. This is an ERP CRM strategy. The next two or three years you do shorter rollouts. You can get to a maturity level. But they they decided not to do it. But here's the reason why they decided not to do it. Private equity was going to be coming in and they were going to plan to sell sell out to a PE firm within the next 18 months. And their decision was we didn't want to be in the middle of a software implementation. Whenever PE comes in to try to buy us. So like that, that's not the right business decision. I think even even everyone in that conference room would have agreed like they needed to get mature with their systems. But they their decision process was skewed because of some outside effect that may or may never happen. And so they just become paralyzed in their decision making process. And I think that happens with a lot of especially SMB organizations. They just get paralyzed in when is the right time. Now is not the right time. We should we should do this. We shouldn't do this. Like there's this constant decision making waffling that happens whenever we're starting to talk about these kind of systems. Yeah, I've seen that a lot to both sides of it, where sometimes like you say, like they they don't want to spend the money because for the right they want to, you know, the bottom line is more important or whatever it is. And they're scared of the price. But then there's the other side where they're, you know, they're scared of not doing something. And so they're trying to figure out it's it's on both ends of it and trying to get some sort of balance to say, look, it's just like if you go into it with your eyes open and plan it out, like you said, if you've got good processes, you'll be able to like find a way to do it. If you don't know what your processes are or you've got bad processes, this is just going to highlight them, which is I would I would hazard a guess that the ones that have like put the the companies on life support because of bad, you know, bad projects gone bad. I wonder how much of that was actually the business was already there. They just didn't realize it. And then just this just sort of like hastened their demise, for lack of a better term. Yeah, it becomes this magnifying glass to the parts of the organization that are broken. I mean, things that things that are working well are going to keep working well because you have smart people in the warehouse and they know how to run a forklift and put things in boxes and put labels on them and get them out the door. They didn't need a system to be able to do that to begin with, like they would have found a way because they they knew their job and they knew how to get work done. But people who are unsure about what the process is, like sales processes, as you know, are just atrocious. I mean, every seller sells different in most organizations. They all have their own way of doing things and they all say they're using the organization sales process. And so when you go in and start talking to them, it's it's OK, tell me what you do. And you start doing these interviews and case studies. Everybody's doing it different. And and then you go interview senior leaders and you ask them if they have a sales process. Of course, like we have a sales process. Everyone's following it. You know, everything's great. And then you go talk to the individual sellers and they're like, yeah, no, I'm writing it down on a piece of paper and it's sitting in my desk somewhere like that. That's the reality of processes is if you're not engaging with the people that are actually doing the work every day, you don't really know whether the processes are to the level that the organization says that they are. You know, it's funny talking about these processes and like these systems. It makes me think about accounting systems. You know, a lot of companies hire accountants, they hire CPAs. But if you look at like the evolution of accounting software, like in the old days, we just had like QuickBooks, like QuickBooks Express, a very easy Excel kind of spreadsheet. You do your text. Now you have QuickBooks Pro and you have like the online and every CPA I talk to is like, well, we don't like the online one at all because it doesn't do things the way CPAs are used to doing. Is it more the fact that the software is cut up to the process in that sense where it understands the individuals don't have these processes in place? So the software itself is doing it for them so that they are still doing the accounting correctly, but it's in a different way than what most traditional CPAs are used to. So with these CPAs, or sorry, the CERMs and the ERPs like Salesforce, since they have such a high failure rate, is it necessarily all on the businesses because they don't have the right processes? Or is it on the software more that they aren't able to adapt to these companies having different sales processes, different processes in place or no processes in place? You know, it almost feels like there's a missing piece to this transition when these companies come in, especially now that they're marketing to more, you know, more people, even these smaller companies. It's like there needs to be that filter, that thing in place that maybe transitions them in or walks them in, or maybe, I hate to say it for lack of terms, but dumb it down for the user if you're going to expand your user base. Well, you've seen Microsoft, Oracle, Salesforce and SAP's market cap, right? Like they know how to sell software. That's for sure. And I think I read a statistic the other day that said, you know, if Microsoft and their surrounding partner network, if that group was a country, it would be the third largest GDP in the world. So like they know how to sell software and they know how to deliver new features and they know how to roll out things that people are going to buy. But they don't. These companies all struggle with actually understanding how adoption of those features and the software actually works in the real world. I mean, the copilot statistics, if you've seen any of those from Microsoft lately, like they rolled out copilot as this, you know, it's great. It's the Microsoft's AI flavor. It can read all of your emails and your team's messages and all of your documents. And it can use chat GPT style LLMs to be able to generate cool things like proposals and answer questions about your business. Well, everyone is buying it. No one is using it. And so like it's amazing. I mean, even internally as a consulting firm, we're not that that large of a company, but we've got several hundred users that are that are on copilot internally. And we're a Microsoft consulting firm. Our adoption rates are through the floor. I mean, no one they all go to chat GPT and upload, upload the company documents there and use it or Claude or something else. No one is adopting copilot. And I don't even think that's necessarily a technology problem, although it is slow and there's some there's some reasons not to do it. But I think that's just purely human habits. Like you, you the copilot was the first thing we all started using. Right. I mean, unless you're super into AI, you probably copilot was your first experience with an LLM. Like, you know, write me a poem, like whatever the first, you know, tell me the greatest recipe for soup. You know, all of the the silly things that copilot was asked to do. I'm sorry that chat GPT was asked to do at the beginning. I mean, that is a perfect example of the human condition as it relates to software. I mean, we we didn't ask it to go invent a new business model and help us scale our organizations. We asked it for, you know, recipes that that is in a nutshell, the reason why you can get such huge software revenue from these companies and such low adoption rates from individuals and businesses, because there's just this this void that happens there. And we we like to think about it as really a four pronged problem. Surveillance, performance, excellence and automation. And it's all about like judging where you're at in your process and where you're expecting to get to. If you don't even have surveillance today, in other words, you can't see the data about your business. You you don't know what your metrics are. You can't tell me how many orders you've had this month. You can't tell me how much you've shipped this month. If you don't even know the numbers, how in the world are you going to get to the place where you're ready to use copilot to drive to drive some new automation? So it's a journey, right? Surveillance, the data performance. OK, we have the data. Do we actually know what good looks like? What are what are the metrics we're measuring ourselves on and are we hitting them? And then there's excellence, excellent processes like we do everything the same way across the entire company, every person the same way every time. Only if you have surveillance, performance and excellence, should you even be thinking about automation. And so this journey from surveillance to automation, I think, is the biggest reason why software companies love to release features that have to do with excellence and automation. We're going to allow make it easier for you to have excellent processes and we're going to automate those processes once you have them. But organizations are most of the time over in the surveillance and performance. They may have data, they're not confident in it. They they start to look across their organization and people question the report that's on the screen like, oh, that can't be right. And so they're not even in surveillance and performance. But yet software companies, especially, you know, Microsoft is is such a broad company, right. And the things that they offer, they're trying to push everybody into the excellence and automation category. Most organizations need help with surveillance and performance. Do you think some of that might also have to do with, like, boards of directors, like financing and things of that nature, because I've noticed that some of the larger corporations I've worked for where like they had to do the same thing. They had to do their board books, they had to put the proposals together for things. It always seemed to be like a one, two week process. And it always seemed like even if the data wasn't right or the data was missing, they would have to do something to fudge the numbers. There always seemed to be more complexity with getting the data, figuring out how the data is read before it gets passed up. Is that like you said, you know, maybe they don't have the surveillance on that, but is that just more an inherent issue still in the business sector versus, hey, we have these tools now, let's apply them. Is it just a lack of education on what's now available or just kind of also being stuck in that legacy mindset? No, I think it is legacy mindset for the most part. I mean, I think every organization has, you know, the creative troublemaker that is doing things their own way. You know, we start digging into a lot of organizations. We do something called an as is whenever we began with a company that is looking to take an initiative like this. And it quite literally is a bunch of word documents. This sounds archaic, but a bunch of word documents that click by click everything that a person does in order to do every one of their business process. And we document exactly what's happening today. And it's shocking for senior leadership to see how that report to your point, Michael, like, how does that report actually get generated every quarter before the board meeting? Well, you know, it's Mary in accounting and the Excel spreadsheet that she's got on her desktop, right? That's not backed up and not secured. That is driving all of the analytics behind the board report. And this is we were talking about Fortune 1000 companies are doing this kind of stuff. This is not an epidemic of the small. It's an epidemic of humans and really getting to the point where they just don't want to change the way that they're doing things. I think also we think about like generally, it's the IT departments that are selecting and being in charge of implementation of the software products. And, you know, like it or not, there's always been this, well, you're with the business. Well, you're with IT like this this wall that happens between people who use the software and those that actually are responsible for making sure it's running and they selected and and help with those things. The truth is people select software and it's bias always. And so if you're going to be biased, I would much rather be biased towards the people who are going to use it. So that way, your adoption rates would go up rather than letting IT departments make the decision as to how how software gets selected. I mean, if you think about most ERP and CRM projects, they're governed and run by an IT department. And then those same team members may never log in to the system that they help select and implement. It is wild. And so it's just a it's a it's a challenge. But I think organizations are really to put this on a positive note. There are a lot of organizations that are beginning to adopt things like a center of excellence or a training program inside of their organization to help upskill your business users into a better understanding of these technology products. And I think tools like chat, GPT and co-pilot and some of the other AI tools are helping those that are hungry for knowledge to be able to learn faster than they ever have. And I'm interested to see if we don't see like a flip between the excellence and the automation where people start moving automation before they have processes now, because, you know, LLMs are creating new processes for people or documenting ones that may have never existed before. It's an interesting time. And I think those that are really hungry for that kind of change are going to see a lot of improvement in their own personal skills and businesses across the world. SMBs are going to start moving into that mid-market category as long as they're hungry for this kind of new technology adoption that's happening right now. And that is where we're going to pause. But don't worry, we are not done with Dustin yet. He's got plenty more to come. Yes, we'll talk about AI. I know we always have to talk about AI and we do. But it's actually a really good conversation. Yet again, it's one of those that he is a little what we're talking about is a little bigger, I think, than some of us deal with because if you're side hustling, you don't need a probably you don't even need a full blown CRM. You just need like a spreadsheet. You don't need that much. You definitely aren't going to need an ERP, I would think. But your business might. And I think there's a lot of key things that we touch on here that are really valuable to all of us because it really comes back to understanding your business, understanding your why, understanding the problem you're solving. And we talk a lot about this, but this episode of next one with Dustin about overdoing it basically is it like you don't always need every single feature. And think about that while you're building whatever solution is you're building, because sometimes we have a tendency to just add too much to try to make it better. And more does not always equal better. That being said, it's time for us to wrap this one up. So go out there and have yourself a great day, a great week, and we will talk to you next time. So drop a note to info at the Be sure to subscribe on Apple Podcasts, YouTube, or wherever you listen. And remember, a little bit of effort every day adds up to a great success. Keep learning, keep growing, and we'll see you in the next episode.