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White Paper: Auditing makes for a Successful Implementation
Author: Sharhabeel Lone, Partner Global Business Strategy, SAKS ConsultingSubscribe
Auditing makes for a successful implementation
The art of technology implementations, as Sharhabeel Lone, Partner Global Business Strategy at SAKS Consulting explains, is like arranging a room; you can use feng shui to direct the energy
Over the last few years, tens of millions of dollars have been lost, directly or indirectly, during the introduction and installation of MRO enterprise wide technology implementations. Some of those direct losses can be attributed to a lack of proper due diligence in assessing what was being bought in terms of both software and services. Other losses have been down to poorly managed and skills deficient programs that have included a flawed thinking around the ability or sense for an MRO organization to outsource its fundamental problems to a software vendor or a system integrator (SI). Of the indirect losses, some can be identified within time and productivity issues realised as a direct result of unmitigated risks in areas of critical business disruption, and a lack of executive ability to make tough decisions, as well as the cleansing of data and heavy resistance to change. Most of these however could have been mitigated if not, in some instances, entirely avoided through a sensible independent audit program. The efficacy of this approach might be illustrated with reference to a traditional source of natural wisdom, feng shui.
Wikipedia defines feng shui or fung shui as a “Chinese system of geomancy”, a form of divination believed to use the laws of both Heaven (Chinese astronomy) and Earth to help one improve life by receiving positive ‘qi’ or energy. Traditional feng shui practice always requires an extremely accurate Chinese compass, or ‘luo pan’, in order to determine the directions when finding any auspicious sector in a desired location, and to ensure the most propitious alignment of and within a structure in order that positive qi can be received.
As with feng shui, colossal and complex MRO technology implementation programs require a particular setting and sequence of essential constituent parts in order for the MRO organisations in which they are applied to first gain the right qi or organisation life energy and then maintain it to successfully complete such programs. Sustaining the qi in an organisation is one of the fundamental challenges for those driving these often long drawn out and change intensive projects. Since the beginning of time successful programs have used their own luo pan or audit program to ensure a propitious alignment of elements in the program. Like a conventional compass, a luo pan is a direction finder. And the need for a luo pan or an audit program that enables program managers, project managers and steering committees to ensure that they are going in the right direction is critical to the success of such enterprise wide projects. It could be argued, from a western philosophical angle, that feng shui is an eastern practice devoid of any practical value and an unnecessary cost; a distraction from getting things done, maybe even an unwanted disruption. Yet in the culture of the East, to marginalise such a belief system is to ensure a non- sustainable business and a short life in that market. Also to pay only marginal or cursory attention to the belief, in an environment where organizations will pay whatever it takes to erect feng shui structures and adopt its methodologies, demonstrates culpability based on ineffectual understanding of the culture and process that must be followed for success.
Similarly, over almost two decades assisting failing enterprise wide MRO technology implementations, we have found many that have treated the audit program with similar contempt or cursory attention at best. For most people in commerce, the word ‘audit’ brings with it a resounding negativity and a stiffening of the spine. Yet those that embrace and effectively integrate their audit programs have learned over the years of not only the immense benefit but also the actual need for independent assessment at critical points, where often a small initial deviation can spell disaster down the road for the programs being implemented.
Our audit programs in the last five years alone have seen MRO implementation programs save between $500k to $18m. Hence, with that sort of saving potential, surely it must be regarded as a ‘no-brainer’. ‘Project management 101’ calls for such an audit function surely? Yet we constantly find MRO technology implementation program teams resisting accepting independent audit programs until an audit is often imposed on them by a C-level executive within the airline or MRO organization. Typically this happens when things have been off the rails for some time but where a key executive has only recently been made aware of any problems. Often, steering committees are puzzled when, almost overnight, the traffic light status indicators suddenly turn from all green to all red; the committee having previously been told that, bar a few minor challenges, everything else was going really well. The need for such critical programs to have realistic and honest communication channels from the project to the steering committee is one important reason for an effective independent audit program. Audit programs allow for reflection, while delivering sounding boards and executive coaching type advice at critical junctures.
During the implementation phase, regular audits, starting with one every month in the first quarter followed by quarterly audits, should be built into the project plan from the outset and costed for during the budgeting phase. Quarterly risk profiles that our teams provide on a quarterly basis include the answers to four key questions and are an important part of the assessment. Our ‘Risk Surety Profile’ (RSP) serves in every quarterly audit to answer the questions:
1) Are any timeline moves reasonable?
2) Are there opportunities to simplify the project?
3) Are there opportunities to limit the costs?
4) What is the potential for further risk?
Such RSPs serve to assure the steering committee and provide executive visibility plus real time answers to all officers accountable in the program. This reassurance at the executive level is crucial for a successful MRO implementation as it not only keeps key individuals informed but also ensures their support when times get tough, which they inevitably do.
Audit programs incorporate ‘ramp ups’ and ‘ramp downs’ of frequency along the life cycle of an implementation. Towards the end of each critical phase, audits tend to ramp up in frequency. There is no sense in moving to the next phase when there are items still outstanding from the current phase with the promise that they will be completed at some time in the future. A key lesson learned from global MRO technology implementations is the need to close off issues in a timely way at milestone checkpoints, even if it means slipping project timelines. Our experience clearly shows that the slippages at milestones to close off unfinished items are much smaller than accumulated and resultant delays further down the line. Furthermore by not closing off essential items in a timely manner due to the excuse of meeting ‘stringent’ timelines, those implementing these complex projects find themselves suffering further unforeseen problems later as a direct result. This is particularly common when items that are considered not ‘sexy’ are omitted and forgotten until it is too late, causing frantic back peddling and playing ‘catch up’; also dealing severe body blows to most business cases.
Often, the complexity and challenges are difficult for internal teams to communicate to steering committees. When things go wrong these large projects are often found to be rudderless. In such situations it is not uncommon to find program and project managers playing political games designed to keep a lid on accurate information being fed up to the steering committee. This is mainly due to fear amongst the senior program leadership and directly impacts morale on the project team, causing immense frustration, leading to further dismay and confusion on the project, and often resulting in the loss of good quality key individuals. If properly designed, audit programs allow for these mega implementations to pause and be redirected without ringing unnecessary alarm bells that suggest impending cuts or permanent closure.
One common misunderstanding is that internal organizational audit teams are sufficiently involved. A question that we frequently ask is; ‘What, specifically, is the experience they have of such implementations?’ as most internal audit teams that we have come across rarely possess any experience in such a far reaching and in depth program. Hence what we typically find is a traditional check box audit, generic in its performance and of limited value in its result.
Another common feature that our audits uncover is the failure to appreciate that using contracted vendors/SIs as independent auditors is akin to ‘putting the fox in charge of the hen house’. In our experience, we have found that when things start to deviate from the expected path, sometimes as a result of vendor/SI inadequacies, that is not always clearly earmarked in their audit reports. A good example would be the churn of consultants on these implementation programs. It is not uncommon to see very experienced consultants allocated at the beginning of a project only, with the passage of time and due to pressures on the SI from other clients, for them to be replaced by less experienced consultants. Further problems include vendors/SIs being reluctant to tell the client of failings on the client’s own team as this can create two problems. The first problem being the relationship between the SI and the client; the other sometimes being an unscrupulous and ultimately self-defeating strategy of using that client weakness as a revenue generator. Experienced independent auditors look at risks with both clients and their consultants on the team as well as the support services they offer.
The benefits of an audit program start at the selection phase. From ensuring the MRO business requirements are covered (including assessing whether there is an unrealistic wish list) to ensuring transparency and inclusivity of the selection process; the audit program begins to offer results right from the beginning of such enterprise wide projects.
Typically, airlines’ or pure play MRO organisations’ procurement divisions will lack knowledge of and experience in dealing with enterprise MRO technology vendors. Ensuring that the right type of Service Level Agreements (SLAs) have been agreed and not just standard ‘vendor/SI proposed’ ones, as well as road testing implementation plans to assess the proposed legitimacy of timelines and resource requirements is an essential part of the up-front need to get things right.
A common reason cited for the absence of independent audit programs from project teams, is that they weren’t costed into the initial business case. Hence, we’re told, no-one can really justify their inclusion afterwards. So in essence they would rather be penny rich and pound poor. Such blatant excuses for the waste of millions of dollars on some programs coupled with severe business disruption and delays that can often be measured in months and more often in years is, in our view, a shocking display of fiduciary irresponsibility.
Effective independent audit programs ensure that a realistic scope has been set at the outset. From our experience, it is at the very beginning of global implementations that projects are sometimes set up to derail at a later stage. Often there are unclear benefits and no serious consideration has been given to alternative scenarios. Ensuring the mantra of ‘manageable business change’ has been addressed is part of the fundamental on-going assessment that audit programs deliver.
Difficult executive decisions that are often avoided have been responsible for countless delays, impacting time and cost over the years. Effective audit programs ensure that all levels of the organization are held accountable and that any bottlenecks are cleared. Independent audit teams are able to rise above the often entangled politics that can play a crippling role on such enterprise wide programs.
From selection to implementation and from post-implementation to upgrades, independent audit programs have been found to play an essential part in substantially reducing the total cost of ownership of MRO enterprise wide technology implementations. In our niche MRO world, where it is only in the last few years that organizations have been willing to make the necessary investments into their technology backbones, the need for putting in place a best practice implementation program cannot be over emphasized. Ensuring that such a program is set up and maintained is critical to a successful and meaningful implementation that must be guided towards leveraging best practice and not just replacing legacy. In a world where compliance drives everything, the need to embrace the requirement for a luo pan will only ensure that the right qi drives prosperity and growth in an ever changing and competitive world.