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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.

616 Comments to “How Business Automation Projects Fail, Part 1”

  1. Scott says:

    This incident is a sign of the times as it relates to technology. As the first decade of the twenty-first century drew to a close, the hype surrounding software as a service and cloud computing had become almost deafening. But although it’s great for exposure and recognition, hype can also be a detriment to successful adoption of a solution or a technologypaired as it often is with inflated expectations, misunderstandings, and even disillusionment.

  2. Nicholas says:

    One aspect of software acquisition that is of major concern to companies is security. And former secretary of Homeland Security, says companies should resist the temptation of hitting back against cyber attackers because of the risk they could bring down servers that, in addition to hosting those attacks, are used by innocent entities such as hospitals. There are serious questions about what we can do to defend ourselves and how far we can go in what they call active defense.

  3. Peter says:

    If you ask me, I think the software market is getting more complicated. Like the universe, the enterprise software marketplace is expanding rapidly. More and more vendors are entering the market, often with a growing range of solutions to create a confusing array of purchase options for corporate buyers. And it’s not about to get any easier for those tasked with purchasing enterprise software systems, with reports that spending on ERP solutions are going sky high and will continue beyond 2015.

  4. Larry says:

    Obviously, buying software is a complicated, time consuming task. I guess that’s why they say that once you have documented your product feature requirements, share them with a preliminary list of vendors. Share the most complex “must have” requirements first. This will help you eliminate vendors and save time. Saving time and narrowing your list is your top priority. Engaging with vendors is very time consuming; and the more vendors you engage with, the more your daily productivity will decrease

  5. Monty says:

    Why is it that they make software upgrade so easy to mess up and then tell you that it is easy to do yourself? I have enjoyed your post and didn’t you have one other one about this same subject on a different level before? I am always looking for new advice on my system and how to make it the best but this I have to admit has me a little scared.

  6. obat kuat alami says:

    Upgrading to a new operating system – whether it’s one personal computer at home or an office full of work stations – can be a stressful experience. You do it to take advantage of new features or to be able to run new applications, but you approach it with some trepidation because you know there are always things that can go wrong. I’m not quite sure if this was the problem with this incident, but it sounds related.
    obat kuat alami’s last blog post … not found

  7. I agree with all the steps. Business owners should read this to further their knowledge on handling their business.

  8. allen border says:

    Today, the aim of a growing and flourishing business is to maximize the process automation rather than re-engineer it. Advancements in the technology and the revolution of cloud computing have stimulated the development of business processes from ’re-engineering’ to ‘automation’.
    But why the automated business processing is preferred? What are the real benefits of automated business processes?
    As the businesses grow, the demand increases for businesses to perform highly complex and labor-intensive tasks. The goal to achieve is, to automate as many manual business processes as possible. Here we have discussed the benefits of automating the manual business processes.

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