Where Requirements Gathering Goes Wrong
It’s no secret that it can cost businesses millions when their software has issues.
Ranpak, a packaging company based in the United States, learned this the hard way when implementing a new ERP system in 2022, after experiencing a substantial learning curve with their new Enterprise Resource Planning software resulting in them losing nearly $5 million in profits.
Similarly, a Netherlands-headquartered leasing company, LeasePlan, experienced issues with implementing a Contractor Logistics Support system (CLS) after realizing that it did not integrate well with some of the other assets within their technology stack such as their newly deployed ERP system.
LeasePlan’s misstep in requirements gathering caused them to have to write off €92 million ($100 million).
And these are not isolated incidents.
It’s a common statistic that you might hear from project managers, but 70% of IT projects fail.
Software Selections, also referred to as system selections, are a critical step in ensuring that an organization's technological infrastructure aligns with its operational needs and strategic objectives.
And where many companies go wrong is in the first step of the software selection process:
Defining Requirements
You can't talk about requirements gathering without firstly addressing what you need to gather.
At the heart of every successful software implementation lies a well-defined scope that outlines an organization's needs, objectives, and desired outcomes.
Often times, vendors push unnecessary modules or add-on features that can cause projects to get off track, causing many businesses to fall into the trap of embarking on software projects without a clear understanding of the scope.
Without a robust scope, businesses risk investing resources in software solutions that fail to address critical pain points or deliver tangible benefits.
Moreover, the absence of clear requirements leaves room for interpretation, increasing the likelihood of misunderstandings and misalignment between stakeholders.
Define what the goals, needs, and wants are, which can help keep the requirements as simple as possible.
For larger organizations, ensure that all affected people are considered (i.e., “how will this affect the day-to-day routines of all of the affected departments?” or “will the learning curve or usability be unfeasible for certain employees?”).
This ensures that the chosen software not only meets the organization's overarching goals but also integrates seamlessly into existing workflows and processes.
Moreover, the scope serves as a benchmark for assessing the relevance of proposed modules or add-on features.
With a well-defined scope, businesses can confidently evaluate vendor proposals, ensuring that selected software solutions address their core needs without unnecessary complexity.
Relying on Over-Customization
One of the most known examples of a software implementation gone awry due to over-customization involves Lidl, the German discount supermarket chain, and SAP, a leading enterprise software provider.
In an ambitious bid to modernize its IT infrastructure, Lidl embarked on a project to implement SAP's ERP system.
However, instead of leveraging SAP's out-of-the-box functionalities, Lidl opted for extensive customization to align the software with its unique business processes.
This decision proved disastrous, as the highly customized ERP system resulted in technical complexities, frequent glitches, and significant delays in operations.
After spending around $540 million, Lidl ended up cancelling the project.
What’s the lesson to be learned here?
Relying on over-customizing a software instead of refining business processes has lead countless companies down a path of headaches and unnecessary costs.
Biased Decisions
Biases will always exist subconsciously in some capacity.
Whether its the finance team wanting a software based on one functionality, a product champion who advocates for a product based on fancy marketing, or a software that’s being used by a friend or colleague at a different organization,
When one or more individuals advocate for a particular software based on personal preferences rather than holistic organizational requirements, it can lead to a whole headache of issues.
For example, in the early 2000s, Nike faced substantial backlash due to supply chain issues stemming from its failed implementation of an ambitious supply chain management software.
While the software appeared promising on paper, it failed to address the unique complexities of Nike's supply chain operations, resulting in inventory discrepancies and delivery delays.
Similarly, the US Air Force's attempt to implement an Enterprise Resource Planning (ERP) system serves as another cautionary tale.
Despite investing billions of dollars in a customized ERP solution, the project encountered numerous setbacks and ultimately failed to deliver the expected benefits.
The lack of alignment between the software's capabilities and the Air Force's operational requirements led to extensive delays and cost overruns.
Recognizing your own biases or consulting with an unbiased 3rd party can help ensure that technology adoption is as successful as possible.
The Key Takeaway
Talk to key stakeholders and keep them in the loop
Ensure you can differentiate between needs and wants
Do your due diligence for your technology stack and consider future-state integrations, data-flows, and overall feasibility of the software
Conducting a software selection requires an unbiased lens. Why not let experienced professionals handle it?
