Any system change or improvement project that requires an investment of capital, time or other resources must be approved by senior management and perhaps by the board of directors before the project can be authorized and started. And that can sometimes be a problem. A return-on-investment (ROI) or cost-benefit analysis is often used to “make the case” and get approval.

It’s always better if the project is initiated or sponsored by senior executives, but if that is not the case, those executives must be brought in as supporters of the project not only to get it funded but also to keep it moving toward completion and success. Lack of executive sponsorship and commitment is one of the most common reasons for project failure. When the project hits a snag, or there are conflicting interests or contention for resources, senior executives make the ultimate decisions about whether to continue the project or put it on the back burner in favor of other priorities.

The best tool for gaining that executive commitment is to “sell” the project in terms that are meaningful to that particular executive. Everyone—executive or clerk, engineer or machinist, buyer or salesman—will respond to the “what’s in it for me?” factor. They have to see the benefit of the investment to their own interests.

This is not to say that people are self-centered or shallow; the argument must relate to their own role within the company and their corporate responsibilities. If the executive is responsible for overall company performance, justify the investment in terms of increased sales or profits, better customer service and market response, or cost savings, for example. If the executive is more involved in the sales side of the business, focus on how the project will help improve product availability, response to customer demands, or competitive advantage. Financial executives will be most interested in cost reduction opportunities. Production / operations executives will respond to improvements in efficiency, reduction of disruption in the plant, and better use of people and equipment.

The cost-benefit analysis should touch all of these areas, if possible, but discussions with individual executives, aimed at gaining their support and involvement, should be structured to appeal to their “hot buttons.”

Executive commitment and involvement are critical to project success. Do you have at least one senior executive as the champion for your improvement project? If you are thinking about a new project, is there an executive sponsor working with you on the ROI analysis and cost justification process?

 

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Forterro is a federation of ERP software and services companies serving small to midmarket companies around the globe. 


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