Why ERP Implementations Fail

Frustrated with bad decisions?

worried man about ERP Software Failure

Bottom line is that bad decisions and poor planning costs your company money and the confidence of your employees, shareholders and customers.

A good plan is essential. Following through with that plan is paramount to the success of the project.

Most Common ERP Implementation Mistakes:

1. Wrong person (people) choosing the ERP Package – Just because your competitor uses it, or you know someone that uses a particular software, does not mean that it will work for your company, or that it is the best choice. Fully evaluate the software- as well as competitor software- before pulling the trigger. Be sure you have qualified decision makers evaluating the software. Just because you are the President or CEO of a company, doesn’t mean you are going to make the best choice of software. Let the users evaluate the software, choose a third party consulting firm to evaluate your business processes or have key personnel involved in a full evaluation – NOT JUST A SALES DEMO.

2. Thinking your cousin’s son – who is good with computers – is the right person to head up the ‘Computer’ project – You need a qualified project manager with ERP Implementation experience helping to develop a plan, and seeing it through. Don’t put the project at risk by not managing it correctly.

3. Don’t have an unrealistic budget – Chances are that you will need new hardware (computers, servers, switches and possibly wiring). Most companies have outdated equipment and will need to upgrade. The cost of the ERP software is generally only about half of the direct cost of the project. You don’t pay a construction contractor to buy materials and think the building is going to build itself. Don’t think you can buy software and it will just work.

4. Give your employees incentive  – This is effective on so many levels! An employee that takes ownership of their contribution to the project is more likely to make sure it succeeds. If they are only doing it because ‘management decided we needed new software’, it is doomed to have more challenges. Give your employees a bonus for doing their regular job, and making time to ready data, test, document, and test some more. They are working harder, reward them for it.

5. Test, Test, Test- We like to load data multiple times into Syspro during the implementation. From master data to transactional data, we want to make sure there are no surprises when the ‘go live’ date comes. A CRP (Conference Room Pilot) doesn’t just have to (and shouldn’t) occur a few days prior to go live. We generally have 3-4 CRPs before the go live date. This gives employees a chance to make sure data is being converted correctly and that they can perform their jobs when that switch is flipped.

Invest the time and money early in the project, and you will be rewarded in the end.

WHY DO ERP IMPLEMENTATIONS FAIL?

Although most ERP implementations are successful, they are usually not without challenges.

  • Details were overlooked during the planning stage
  • Insufficient Budget
  • Undocumented Requirements
  • Personnel Issues
  • Unrealistic Goals
  • Inexperienced Project Lead
  • Lack of Managerial Support
  • Insufficient Resources
  • Wrong Software
  • Unrealistic Timelines
  • Insufficient Testing

Any successful implementation may run into any of the above issues, but most can be overcome. How?

  • Reassess the implementation plan and address the (potential) failures or shortcomings.
  • Manage phases of the project rather than having everything hinge upon a single hurdle
  • Create realistic goals and timelines
  • Identify the actual issues and address them accordingly
  • Realize that without 100% support (starting from the top), phases of the project are likely to fail.
  • Make sure you have the right people in place to make the plan a success.
  • Accurately analyze your business processes to be sure you are getting what you need.
  • Refine business processes or customize the software to adapt to transactions that just don’t fit into the selected software.
  • Test all transactions and test again.

If your implementation runs into any hurdles along the way, analyze them immediately and come up with a plan. Most conceived hurdles are not addressed by ignoring them. If your CSR agent tells you during the discovery phase that he cannot perform his job without specific data being captured (and reported on), and the software does not address this need – raise the red flag early. Address the issue and determine whether this is critical. Make a plan to address the issue early. Doing it later may be disastrous to the project plan.

Analyze the plan on a regular basis. Don’t assume that everyone is doing what is expected. Employees are generally caught up with their daily routine and can’t justify taking additional time and pressure of working on (what they consider) a side project. Some may get defensive when a consultant or manager asks them a hundred questions about their job responsibilities. Some may even hide details for fear of job security. Address the issues and analyze the plan and progress regularly (we like weekly progress meetings).

HOW TO AVOID GOING OVER BUDGET

Most ERP Implementations are doomed to go over budget from the start. Unrealistic initial budgets, poor plans and a poor foundation generally contribute to the project going over budget.

  1. The budget must be realistic to start with. Just because you think you can do it cheaper, doesn’t mean that you can. Be realistic and evaluate the budget in an educated manner. You can’t just decide that you aren’t going to pay ‘x’ amount of dollars for a phase of the project, and expect it to be done correctly.
  2.  Spend the money and time at the beginning of the project to put together a good plan.
  3. Have realistic expectations of timeline and resources. This is a big undertaking. The success of your company can depend on its success. Give the project the attention, time and resources it needs to succeed.
  4. Document your current procedures and processes before looking for new software. Decide what you want to change and do differently. This helps in the selection process of new software as well.
  5. Plan on your employees being overworked and frustrated. Know that this is going to happen, and you could keep your project on time and on budget.
    1. Bring in temps to assist with data entry
    2. Give your employees incentives to stay longer and help more
    3. Find out how much your consultants can automate
    4. Working lunches and dinner discussions carry value with employees.
  6. Stay on task – If you committed to having your new GL Structure ready on 7/1, have it ready. Most projects go over budget because deadlines are not met. Create realistic deadlines and stick to them.

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