Top 10 reasons for ERP failure (and how to avoid it)
Few people in an organization ever understand how difficult an ERP implementation is, and how a few key elements can be the difference between ERP success and ERP failure. Listed below are some of the common mistakes that, if avoided, can greatly improve your probability of success.
The causes of ERP failure include
- Poor software fit /inaccurate requirements
- Business leadership is not committed to the implementation
- Insufficient team resources
- Lack of accountability to make timely, high quality decisions
- Lack of investment in change management
- Insufficient training/support
- Insufficient funding
- Insufficient data cleansing
- Insistence on making ERP look like legacy
- Lack of testing
1. Poor software fit /inaccurate requirements
Have a highly detailed and accurate inventory of system requirements in hand before you begin shopping for an ERP system. Be relentless with questions; ERP vendors will be overly optimistic about their product’s fit to your problems. Never choose bells and whistles over nuts and bolts.
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2. Business leadership is not committed to the implementation
Without this commitment, no one else in the organization will be committed either. Recommend postponement of the ERP project rather than gamble leadership attitudes will somehow “come around”.
3. Insufficient team resources
This can be the number of resources, but it is even more important to get the right resources in to your ERP team in terms of talent and experience.
4. Lack of accountability to make timely, high quality decisions
Establish early on who is responsible for what level of decision making. Late, ambiguous, or poor quality decisions can doom your project to ERP failure.
5. Lack of investment in change management
No matter what the business case says, the rank and file will not be looking forward to ERP. The only intelligent course is to over communicate and over prepare.
6. Insufficient training /support
An ERP implementation requires trained users. Any users not trained in advance will be siphoning off resources from the implementation support team. As the available support resources diminish, the ability to resolve go-live problems decreases, and the implementation implodes.
7. Insufficient funding
ERP implementations are expensive, and you should always be conscientious about not wasting money. However, the cost of an ERP failure makes the implementation cost seems like pocket change. Make your best estimate of cost and increase that estimate by 25% when you ask for a budget.
8. Insufficient data cleansing
Data cleansing and preparation is an enormous Catch-22, and requires patience and persistence. The Catch-22 is that the correct format and choices for data cannot occur without understanding how the system works, but the system won’t work without correctly formatted data. The system build and data cleansing must occur in tandem.
9. Insistence on making ERP look like legacy
Over-customization increases every other cost and risk, it makes upgrading and testing more difficult, and it reduces ERP functionality
10. Lack of testing
Without serious and repeated testing, building from a single test of every business critical process and progressing though volume tests and a mock go-live requiring practice at synching up the old systems to the new, the shock and surprise of problem volume at ERP go-live will collapse the implementation effort.
There are other pitfalls, obviously, but if you can do a good job of avoiding these ten, your odds of avoiding an ERP failure will improve dramatically.
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