Please help me to answer this question from this case study below:

What leadership skills did the CFO lack? If you were in charge of the ERP project, what would you do differently to make the project a success?

In 1996, the CEO of Natural Springs had grown bored with hands-on management. He was more interested in formulating new strategies, developing new products, and working the financial markets. At the end of 1996, the CEO announced his intention to soon resign as CEO and to assume the new title of Chairman. In that role he intended to play an advisor-like role. The COO saw himself as the obvious heir to the throne. The COO was born in Brazil to a Russian migr family fleeing the Russian Revolution of 1917. Eventually he made his way to Canada, where he worked in a variety of engineering and managerial capacities. Shortly after the collapse of the Soviet Union, the COO, who spoke fluent Russian, relocated to Russia where he eventually joined the Natural Springs start-up and was charged with building

The name of the company, geographical names, as well as certain facts have been altered in order to hide identity of people involved in the case and operating the factory. Because of his traditional upbringing, the COO enjoyed undisputed power and respect among the parochial factory workers in Krivogda. His successful tenure with the company had also earned him the unconditional trust of the CEO. Moreover, as a devout Orthodox Christian (common among migrs but rare among Russians born under communism), he was on good terms with the Landlord, another devout Orthodox Christian. The CFO was the second legitimate contender. A Russian national, he spoke fluent English and held an MBA from an American university. His previous experience involved several years in the CFO role of a regional office of a prominent American consumer goods company. He was credited with building Natural Springs financial and administrative controlscontrols that were essential for attracting venture capital and building the foundation for an IPO. The CMO was the third contender for the CEO position. He was young, British, and graduated with a degree in Marketing and Russian from a top school in the UK. He was a rising star; under his watch and via his marketing programs Natural Springs had enjoyed spectacular sales growth. Moreover, as a UK national, fluent in both English and Russian, he enjoyed the confidence of British investors.

Despite its early success, Natural Springs faced significant challenges, though they were similar to those of other firms operating in the emerging free markets of the former Soviet Union. The Russian banking system was slow and unreliable. Telecommunications, while tolerable in St. Petersburg, were unavailable, unacceptably slow, or unreliable in provincial cities, including Krivogda. The postal system was generally agreed to be all but useless for business purposes such as mailing invoices. Further problems involved poor road infrastructure, crime (organized and otherwise), a repressive and confiscatory tax regime, and widespread corruption. Furthermore, as a company experiencing rapid growth, Natural Springs needed to hire more employees, but qualified people were hard to find. The company wanted employees unencumbered by the deeply ingrained Soviet ways of management. Usually, this meant hiring young people without much experience and training them on the job. Internal controls, something that the CEO viewed as being essential for Natural Springs success in the chaos of the emerging market, still lagged behind sales growth. With still more growth predicted, and greater competition, rapidly emerging controls had to be further strengthened if costs were to be kept in line. In the beginning of 1995, the CEO asked the CFO to move to Krivogda to strengthen the controls at the factory. While the CFO actively resisted the move away from St. Petersburg, the COO, who was located in Krovogda, viewed the CFOs move to the factory town as a turf invasion.

Near the end of 1995, and after a few months at the factory, the CFO pitched to the CEO the idea of implementing an Enterprise Resource Planning (ERP) system. The CFO felt an ERP system would help the company in several areas and laid out the justifications for the CEO. The CEO of Natural Springs was convinced and approved the project in early 1996. The CFO was charged with responsibility for selecting and implementing the system. The company selected a British ERP systemSun Systems (marketed by the Systems Union). The system was popular in Britain and the Commonwealth Nations and was gaining popularity in Russia. Before joining Natural Springs, the CFO had worked for a Russian subsidiary of a prominent American consumer goods company. The subsidiary reported to the European headquarters in London. When the CFO joined the subsidiary, he was directed to implement Sun Systems, which the company had already implemented in other Eastern European subsidiaries. The system worked fine for such applications as inventory and sales management, International Accounting Standards based financial accounting, Western standard human resources management, etc. But, he had initially found the system to be poorly suited for Russian Accounting Standards, Russian human resource management requirements, etc. His previous employer brushed the CFOs concerns aside. In time, the CFO developed significant expertise and increased his confidence in the system. His conversion from resistor to champion had been facilitated when the local partner of the Systems Union developed makeshift ways of producing Russian accounting statements using the Sun Systems output. Thus, when he arrived at Natural Springs and needed an ERP, Sun Systems seemed the easy choice. No other ERP system was seriously considered.

The initial implementation in 1996 was limited to the St. Petersburg office and included only the sales and financial accounting modules. Before the implementation, the CFO recruited an experienced accounts receivable clerk from his former employer as well as a bright young systems consultant who previously had worked for the Russian partner of the Systems Union. The duo proved invaluable in solving the technical problems related to the system implementation. All users of the new system in St. Petersburg reported to the CFO who had personally hired and trained them. They were predominantly young with little previous experience. The St. Petersburg implementation went relatively smoothly and encountered little resistance. While everybody agreed that a factory system was necessary, there were two areas of concern: the network connection between the two offices and system selection for the factory.

The ideal solution to the connection problem was to install a high speed Internet connection at the factory and link it to a wide area network (WAN) within the factory. Another possibility was to acquire a private line between St. Petersburg and the factory and implement an intranet over it. Many other possibilities were discussed, but the telecommunications infrastructure in and to the factory town was so poor that a real-time WAN proved infeasible. Thus, the initial plan of having a centralized ERP system accessed in real-time from both the headquarters in St. Petersburg and the factory town in Krivogda was abandoned. The company had to settle for two systemsone run on a server in St. Petersburg, another on a server at the factory. These systems would be synchronized daily using elaborate algorithms and batch transmissions at the close of business each day. The other problem area was the choice of the system for the factory. The CFO naturally wanted to implement the Sun Systems ERP. He demonstrated the system to the factory bookkeeping staff. Having spent literally decades working with Soviet and then similar Russian accounting standards and often lacking basic IT literacy, the factory bookkeeping staff did not want to learn the system. Instead, they wanted to purchase a Russian ERP package called 1C with locally available support. This package was tailored to produce statutory accounts. It also had human resources, inventory, manufacturing, and other modules conforming to the all too numerous Russian regulations. This package was poorly suited for producing IAS or GAAP accounts, but this was of no concern to the factory staffIAS and GAAP accounts were produced in St. Petersburg by the CFO. The COO supported his staff and opposed the package favored by the CFO. The CEO, loath to arbitrate between the COO and CFO, compromised. The factory had to implement the Sun Systems. However, the CEO allowed the COO to purchase the Russian ERP system to meet Russian statutory needs. The factory would run parallel systems.

Since the existing factory staff claimed to be too busy to run both systems, an additional clerk was hired to run the Sun Systems at the factory. The factory IT manager was trained to support the Sun Systems and shown how to carry out the synchronization data transmission and procedures. To begin to quickly capture some of the promised benefits of the ERP, the executive team decided to speed up the transfer of the back office functions to the factory. The invoicing responsibility would be transferred immediately. Henceforth, invoices would be issued at the factory and distributed to the truckers in sealed envelopes. The St. Petersburg office still retained the accounts receivable responsibility. From then on, it would get invoice information from the factory via the daily batched synchronization transmissions. At the start of the factory implementation, CFO spent almost all of his time at the factory. Everything went smoothly. The local IT manager fulfilled his responsibilities quite well. The factory Sun Systems clerk was a bright and hard working individual who quickly demonstrated a good grasp of the system. Two weeks after the factory implementation started, the CFO went on a previously scheduled two-week family vacation to California. With high international telephone charges and no Internet connection, he was essentially unreachable. The CFO returned to find the St. Petersburg office in disarray. The accounts receivable system was a disaster. The factory had failed to follow the data transfer protocol. A variety of technical reasons were given, but the bottom line was that St. Petersburg did not have invoice information and, therefore, could not verify the accounts receivable. Moreover, with no invoice information, sales reps could not provide order status updates to inquiring clients: they did not know when the order was shipped (if at all) and could not estimate delivery time. The CMO and sales reps were now under pressure from customers and had to scramble to prevent several of the companys major clients from deserting Natural Springs. The CFO tried a number of ways to resolve the situation, including a visit to the factory. The factory visit produced little results. The factory staff (including the factory IT manager and Sun Systems clerk) did little to help resolve the problem. They cited such reasons as technical and functional inadequacy of the system, lack of technical knowledge, and time constraints due to them being occupied with their immediate job responsibilities. Having received no cooperation from the factory staff, the CFO eventually decided to pull the plug; the company returned to the previous manual system for handling invoices. The factory meanwhile continued to run the Russian ERP system. The data provided by it were manually translated by the CFO to prepare GAAP and IAS accounts.

The implementation failure left the CFO deeply disillusioned and upset at the obstinacy and incompetence of the factory staff. His stature within the company was badly shaken. The failure also badly reflected on the COO who was now perceived to be parochial and uncooperative. A few months after the implementation failure the COO left the company, citing reasons unrelated to the ERP project. The CMO, who was largely untouched by this imbroglio, was promoted as the new CEO of Natural Springs. While continuing to work for the company, the CFO saw his authority gradually chipped away by the new CEO. The CFO was quietly ousted in the beginning of 1999. Natural Springs was sold to a leading multinational food and beverages company in 2002 for an undisclosed amount.