How Business Automation Projects Fail, Part 1
12 March 2009
I’m starting a short series in How Business Automation Projects Fail. This is part 1, where I’ll cover the case of an apparently simple project to install a common software package. In part 2 I write about a much more complex and expensive project.
Business Processes
Businesses run by following well defined processes. Let’s look at a wholesale distribution business as an example. Here’s a grossly simplified version of the core processes at the heart of the business:
- An order comes in.
- The accounting department vets the payment, issues an invoice when necessary, records the transaction, and passes the order to fulfillment department.
- The fulfillment department picks, packs, and ships the merchandise, records the shipping transaction, and adjusts inventory quantities.
- The buying department reviews the revised inventory records and places replenishment orders when necessary.
Process Automation
In many cases, business processes can be made more efficient by letting computers do portions of them. Say you’re a small wholesaler with an overall selling process similar to what I’ve described. You know you want to automate many parts of the process. You’d like the computer to do the accounting, keep track of the inventory, alert you when customers haven’t paid and when inventory quantities are low.
So maybe you go to your accountant and ask for advice. The accountant says “Buy QuickBooks. I’ll help you set it up,” because that’s what the accountant is familiar with. So you do.
A month later you have the software installed and mostly configured, and you start to try running sample transactions through the system. You quickly discover that there’s a big problem. QuickBooks lacks the ability to manage multiple warehouse locations (this is a hypothetical example) and you need that badly. The entire automated system is useless to you without that feature.
Failed Project Postmortem
How did this happen? Your accountant recommended a capable and familiar software package without taking the time to define your requirements completely and to compare those with the software’s capabilities. The accountant was never trained in that discipline, and neither were you.
What’s the net result? You’ve lost a month of work setting up the software, and you have to start over from square one. You still have to find or commission the right software and get it set up.
Does this little story sound far-fetched? It’s not. It happens to small and medium businesses every day. This is exactly how software projects fail, how business automation projects fail – by failing to define the requirements formally and to make sure that they will be met by the proposed solution.
In this part I’ve told about one common way that a packaged software acquisition and installation project can fail. Stay tuned for part 2, where I’ll cover a more complex project where the business commissions a custom software solution.
I just wanted to take a moment and to welcome you to the Internet Marketing community here in Tucson.
I wish you the best. I see people come and go all the time. I hope to hear from you.
Thanks, Boris. I appreciate the thought.
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In my previous company, there was a lot of work that came down “from the top” in regards to automation and streamlining – it all failed, was not used.
Now I work on my own, I use programming to streamline everything and it has all worked.
So, I think the problem can be if you are getting instructions from someone who doesn’t know how to program and/or their ideas are not in line with the people who will be looking after the automated systems that it can fail.
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Good point, David. That’s exactly why I believe that the role of the business analyst or requirements analyst is so important. That’s a person who’s trained to uncover the real underlying business requirements by interviewing the users and executives in depth, and then to translate the business requirements into a practical specification for developers to use.
In most cases I’ve seen, this trained intermediary is needed because most businesspeople and most developers simply aren’t skilled at understanding each other.
I have worked as a contract programmer and business analyst for several large companies, and agree that requirements analysis is essential when starting a project.
However, in your example of what looks like a small business, even if you have the skills to create a requirements doc it is often difficult to find a good solution as you will be dealing with off-the-shelf solutions that might not be customisable enough to fit.
I think the example quoted applies to many purchasing decisions – even outside business automation. A lot of buying decisions are made on personal recommendation with no analytic approach applied at all.
In my experience of custom software development for business clients, the cause of many misunderstandings is that the customer can’t clearly describe the key points of their existing process – if one exists at all.
Automation isn’t that bad of a thing to do. I think the main problem a lot of people don’t realize is that things screw up and you’re probably not going to know about it.
If you outsource it to a third party, it’s not like they’ll tell you when things screw up. They typically deny it.
Very interesting article demonstrating the problems often arising when improper research identifies a potential solution to an issue. It is easy to see where the problems arose in the wholesaler situation you described.
Anytime you request a solution from an entity only familiar with a segment of the problem, the solution offered is likely only going to address a segment of the process (exactly what happened).
I also see where this can be extended to almost any situation in the business world or life in general. Too many times, people offer solutions to problems when they do not have the complete picture.
Ideally, both the person with a problem and the solutions provider should take the requisite time to properly research the problem fully and identify a real solution. Great insight, thanks for sharing …
Thanks for your comment, Jim. I was thinking primarily of the formal process of analyzing requirements in business situations, but you’re right, this could be extended to nearly any problem-solving situation in life.
Steve
these coming articles sound just the thing for someone like myself. it can be costly making a buying mistake not only in money but time and effort. I hope all your articles are just as good as this one.
That’s exactly why specialists are important. An accountant simply won’t be familiar with all the needs and solutions despite the financial background.
Reminds me of a story:
‘A washing machine repairman shows up at a call, and examines a non-working machine for a minute. Then he takes a rubber mallet and hits the side of the washer. The machine begins to work properly, and the repairman hands over a bill for $65 to the customer.
Of course the customer is outraged by the bill, and starts yelling, ranting, etc.about $65 for 1 minute of work being ridiculous.
The repair man writes a new itemized bill as follows
~Hitting machine with mallet ~$1
~Knowing where to hit it ~$64′
There’s a few versions of the story, and I can’t remember where I first heard it, just thought it’s a good example o specialist labor. I wouldn’t call my accountant to fix a washing machine, or to provide an automated business model.
Thanks for the comment, Mox. That story is a good one and very apropos.
In that instance, at least the customer knew enough to call a washing machine repairman. In business, often the owners and executives don’t even know what kind of specialist they ought to be consulting for this type of project. They don’t know that such a thing as a consulting business analyst or business process specialist or software requirements analyst even exists, so how can they be expected to call one?
I’m sort of trying to educate the world about this, one business owner at a time.
Steve
This article proves the importance of thoughtful preparation. Too often do people decide to launch an idea or open a business without taking the time to organize how it will run. They get so caught up in the innovation of their idea that they are unable to see past the developmental stages. The example given in this article of a business owner purchasing software incompatible to the design of his corporation is precisely what I am referring to. He was so excited about getting his idea off the ground that he eagerly swallowed the accountant’s advice without considering any other programs. If you are unsure about any part of the preparation for your business, take the time early on to seek expert advice and shop around for the best options. This will save you money, time, and headaches down the road.
That’s exactly why specialists are important. An accountant simply won’t be familiar with all the needs and solutions despite the financial background.
[...] tempts you to say, "Hey, that one looks good" too early in the process. In fact I wrote a blog post about this very point recently that you may find interesting. [...]
This is very true Steve, in fact I’ve been guilty of similar things in my own business career. It usually happens because not enough thought is put into the end result the business is trying to achieve and whether there is a better way of executing the process with more efficiency.
It also is often the case that the type of boss who tends to try and run everything just makes an instant decision about what is best with little regard for those who will be charged with carrying it out. Many times it pays to seek the advice of others who may already have carried out what you are attempting to learn from them about pitfalls they found so you can avoid making the same errors too. Where the process is involved it’s often a good idea to seek professional advice, yes it might cost more initially, however in the long run it will likely save a lot more than a seat of the pants approach.
Thanks for the comment, Duncan. You make a good point about the type of business owner who is prone to making snap decisions. I’ve met a number of those in my career. What they often don’t realize is that their intuition is great in areas that they’re very familiar with, but it may not be so great in technical areas where they’ve had little or no training. They get used to successful instant decisions in their areas of expertise, and they start to believe that they’re infallible in other areas. It doesn’t always work out well.
Steve
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