Many CPAs have mid-sized clients who have purchased a good quality EDP system from a reputable and competent vendor, only to have the implementation phase of the project go up in a puff of smoke. Most often, the implementation project is at least partially successful, usually with the implementation of the accounting system. But the portion of the system that supports operations--the strategic applications that make operations more efficient and provide competitive advantages in the marketplace--are often never implemented.

Mid-sized companies, just like large companies, often require complex systems to support their operations. But, unlike their larger cousins, they approach the implementation with little in the way of a trained, in-house data processing staff. As a result, they are vulnerable to systems implementation failures even after successfully completing the design and acquisition stages. They tend to inadequately fund the implementation project. As a result some companies are often not staffed, managed, or properly prepared for the changes they face.

Our experiences led us to believe that by identifying factors that occur, we could help overcome these implementation failures. Our research focused on the typical mid-sized, closely-held manufacturer and distributor with minimal in-house data processing capability. Using a questionnaire as a guide, we interviewed 15 software and hardware companies, as well as technical personnel in user organizations and implementation consultants.

We identified seven Critical Services Factors (CSFs) on which companies can focus to ensure successful implementation of systems projects. CPAs wishing to assist or be part of the team in an implementation project should take note of these CSFs.

Critical Success Factors:

* Project Staffing

* Project Organization Structure

* Project Timing

* Project Control Approach

* Project Communication

* Vendor Relationship

* Training

These factors are also the identified areas in which problems frequently occur. Before discussing the CSFs, let's consider the single most important finding of the study--management's tendency to avoid "ownership" of the project.

Words of Caution

Management's failure to accept responsibility for the system installation is the primary reason cited which allowed the various critical factors to become problems. The interviewees identified two extremes of management style, both of which lead to abrogation of responsibility. The skeptic, on the one hand, tends to be overly conservative, questioning each decision and step along the way. The skeptic often appears to be resistant to the project. By virtue of his/her confrontational style, the skeptic causes employees to become distrustful and vendors to become defensive, and thus, poisons the atmosphere for success for both organizations.

At the other extreme, the optimist is even more frightening. The optimist says, in effect, "I'll bet my company on your ability to install the system." As a result, he or she disregards the whole process and hopes for the best. The optimist is usually the busy CEO who is active in sales or business operations, and simply ignores the EDP implementation project.

The optimist causes even greater problems for the systems implementors than does the skeptic, because vendors need someone high up in the user organization to inform them of how things are done in the company. Often this interaction provides information about informal structures and procedures that must be integrated into the system. If a customer "rolls over" and ignores the responsibility for defining requirements, the vendor is almost certain of not getting it right the first time around.

Both extremes have one thing in common. They place the responsibility for success in the lap of the system vendor rather than with top management. This approach is only rarely successful because outside vendors do not have the necessary authority or the detailed familiarity with the user organization to "make it happen." Clearly, a careful delineation of responsibilities between the vendor and the user is very important.

The CPA can often provide a valuable service to his or her client in the area of project management by establishing a good relationship with the vendor and being a source of information. Frank communication about the company is essential.

With this overview in mind let's examine the key management issues related to the CSFs previously listed.

Project Staffing

Competence of Individuals. The competence of personnel assigned to the project is critical, especially the project leader. The project leader is the employee of the user organization that is assigned the responsibility of coordinating vendor activities and user departments. This assignment is a major key to successful implementation. The project leader must be a person who can work comfortably with top management and has sufficient stature within the organization to motivate all personnel involved in the project. Assigning someone with less stature sends the wrong message about the importance of the project and the commitment of management to all employees in the company.

One of the vendors we interviewed reported that the owner of a company gave project management responsibility to the receptionist! Needless to say, the project never got off the ground until a qualified project manager was identified.

Vendor Relationship. If management has any doubts about whom to select as project manager, the vendor should be consulted. By the time a contract is signed the vendor has developed a good understanding of the capabilities of company personnel. The vendor knows the importance of this assignment. The vendor's reputation depends on having a successful installation. Getting the right person will simplify the vendor's task of providing training and support. Therefore, the vendor is going to recommend the most qualified person to lead the project, or the vendor may recommend that you hire a person with the experience required, or possibly engage an implementation consultant.

Project Organization Structure

The key issue here is that the project leader must report to a top- level manager who has clout. The project leader must have direct access to someone who has the authority to alter and reorder work assignments in order to keep the project on track, on time, and on budget.

Staffing a project is always a problem in systems implementation projects. Typical mid-sized companies are barely staffed to handle the current workload. A new system creates an interim demand on staffing for such tasks as training time, setting up files, and parallel testing. Hiring part time help can be solution but frequently causes more problems than are solved. Part timers need training and supervision that must be provided by the staff they are hired to free up. For many projects a strong case can be made for the regular employees to "gut it out" and do their regular work as well as get ready for conversion to the new system. This alternative usually results in some concentrated overtime work, but, in the end, the employee is better trained and more knowledgeable about the new system.

Project Timing

Unrealistic expectations. It is typical for companies to start the project too late, e.g., to meet a year-end deadline, and to be too optimistic regarding the effort required. New systems often change the way a company does business. Such major changes require careful planning, set-up, and execution. A recommended approach is to ask the two finalist vendors in the presale period to work individually with the user staff to develop a realistic implementation plan. If a company has a weak data processing staff it will want to use the capabilities of the vendors to assist in developing a plan. Each vendor will have a slightly different perspective, offer different ideas, and will emphasize different aspects of the project. A healthy discussion of the number and type of user personnel that should be assigned to each phase of the project will help ensure realistic expectations.

Managing the Vendor's Time. The vendor's time costs money. But companies often fail to properly manage the vendor's time. Many of our interviewees suggested that the project leader control the vendor's on- site support time. More importantly, the project team should evaluate which tasks the vendor can do most effectively, and those that should be done in-house. Because vendor's charges are usually based on time spent, another important responsibility is to see that vendor time is used well. For instance, suppose the vendor plans to meet with the controller to discuss the design of the chart of accounts. The project leader should encourage the controller to prepare a draft chart of accounts before the vendor arrives. Taking this initiative to work on the task first will ensure that the vendor's contribution is maximized.

Software sales contracts often include a fixed number of hours of training and/or support. These hours should be treated like gold. The project leader should ensure that the company uses these hours effectively. Most interviewees commented that these support hours were frequently not well used. Their customers often did not free up their schedules to allow for focused time with the vendor. They reported frequent interruptions by managers or from telephone calls when on-site training was conducted. This is an obvious waste of valuable vendor time. In addition, employees may be seriously undertrained for their jobs. If focused time cannot be assured in the company's office, consider conducting the training at the vendor's facilities or possibly in a nearby hotel.

Momentum is an important aspect of project time that is often overlooked. Companies usually lose momentum after the first application is implemented. Lame excuses are offered for delaying pieces of the project, frequently for no better reason than taking a "breather." The interviewees stressed the importance of keeping the project alive and overcoming the natural resistance to start the next application project.

The software industry is replete with examples of installations where after the accounting applications got implemented, momentum died, and by the end of the systems life cycle, the remaining applications

were still gathering dust on the shelf. Delays can keep a company from getting the very benefits of the system that were used to justify making the expenditure.

Project Control

A project control approach may consist of a project management system (there are several microcomputer-based packages that do a good job), or may simply consist of task lists or Gantt charts. Regardless of the system used to track progress, a healty project control environment will include: periodic project status meetings involvement, top management involvement, and recognition for a job well done.

Periodic meetings in which the project leader presents the project status to the managers of departments impacted by the system are essential. Small awards, such as tickets to events for a department or group that has done well, demonstrate top management's recognition and appreciation for a job well done. This can also motivate others in the company to higher levels of commitment to the project.

Too much involvement on the part of top management can be just as bad as too little. Getting involved in technical details such as part numbering schemes or screen designs can lead to employee frustration, inappropriate decisions, and generally bog down the process of implementation. The employee is the expert regarding the details of his or her job, and should be given latitude when dealing with these details. This philosopy also reinforces the employee's sense of ownership in the project.

Project Communication

Project communication between members of the project team and users of the system is essential to the successful implementation of a system. Just as important is the level of communication between the vendor and the project team. In some projects a brief daily meeting of the project team may be necessary to keep members informed as to status and to coordinate their activities. Inviting vendors to key milestone meetings is an excellent idea. It gives the vendor a better understanding of the context in which implementation decisions are made and gives the vendor a chance to voice any concerns to the whole group. In addition, the vendor needs a forum in which to react to sometimes lame excuses for delaying portions of the project. It's typical for users to invent excuses for delaying the project, but an outsider can often view these excuses more objectively than can the in-house project leader.

Vendor Relationship

The attitudes developed during the presale process establish the relationship and the climate within which personnel from both organizations must work. The goal should be to establish a relationship with the vendor that is more like a partnership than the traditional supplier/vendor relationship. The vendor should be viewed as a consultant, not just a supplier.

If the system selection process has been handled properly, in almost every case an experienced vendor has been selected--one who has helped implement tens if not hundreds of similar systems in similar organizations. This experience provides a useful reservoir of ideas, and solutions to problems, that should be tapped by the user.

Training

Training is an obvious CSF but the interviews brought out several points that are not so obvious. For example, many companies cut back on expenditures for training too soon. The result, oftentimes, is a rocky implementation with a high level of employee dissatisfaction. Timing of training was also seen as important. A time lapse of more than a week or two between training and implementation can cause a significant lapse in employee performance.

Final Note

The CPA can help clients recognize the need to establish partnership with their software vendors, especially where the in-house data processing staff is weak. The CPA can serve as an advisor to the vendor as well as serving in the traditional role of advisor to the client. The vendor should take advantage of the CPA's relationship with the client, especially when politically sensitive issues develop.

By Glen Beckley, Management Consultant--Computer Systems and Michael R. Gaines, CPA, Professor of Accounting Information Services, Portland State University