4 Reasons Why ERP Implementations Fail and How to Overcome Them
When considering implementing a new ERP solution, people often think of the positives it will bring to their business. While we absolutely agree that a high-quality ERP solution can bring significant benefit to a business, it is also important to consider the risks involved, before embarking on a major project such as an ERP implementation.
You may have heard of some of the more highly publicised ERP failures, such as Hershey’s in 1999 or the reporting difficulties faced by Woolworths, or Nike’s slowed supply chain. In this article we discuss 4 main reasons why ERP implementations fail, and how you can ensure that you avoid or overcome these obstacles.
More and more companies depend upon the benefits of technology to assist them in almost every aspect of their business practices. Some software companies sell how their ERP solution is the answer to every company’s prayers. However, even with the best software solution, implementation is still a critical factor influencing the success or failure of a major IT change. Regardless of which ERP solution a business decides to use, some common denominators play a significant factor in ERP implementation failure.
A failed ERP implementation could result in;
- A solution that doesn’t meet the needs of your business
- A loss of investment (negative ROI)
- The business could be worse off after the project
- Low staff adoption of the new solution
- Reduction in staff morale
In this article, we will explore 4 common reasons for ERP implementation failure and how to overcome them.
1. Project Management
Implementing a company-wide ERP solution is not just upgrading a software application here and there on a handful of computers. Forbes suggests that timing is everything when it comes to a major change inside a business. Realistic timetables and a phased approach to implementation should consider key factors such as departmental deadlines, maintaining customer satisfaction levels, and upholding production levels – all of which are critical for continued business success.
Project management buy-in from both the customer and the implementer is critical for a successful project. Both have a role to play to ensure the project is delivered on time and on budget. If either party neglects its responsibility in this area, it is highly likely that the project will run into difficulties.
You may also feel the temptation to over involve your in-house project management team in the implementation process because they have a proven track record in other projects. This can prove challenging when your staff do not have the necessary skills to handle the task of deploying ERP. Both the customer and the implementer need clearly defined project management roles, so the mark is not overstepped and you have the right people investing their efforts on the right tasks.
2. Lack of Internal Support and Planning
A change in technology such as ERP affects many stakeholders in an organisation. It is therefore important to gain the support of everyone affected by the major change in technology. This means those planning the implementation need to reach out and ensure everyone is on board with the significant ERP change. The stakeholders that should be consulted with include, executives, managers, and frontline employees. With the proper internal support, planning for a major change becomes a part of everyone’s agenda. If your stakeholders support and plan for the ERP transition, it is more likely to be a success.
3. Unrealistic Expectations
When implementing a new ERP, it is important to keep an open mind around changing some of your current procedures. It is a false assumption that replicating your current procedures will result in efficiency, accuracy, and profitability, after acquiring new ERP. You will need a degree of flexibility in this area and it may be an opportunity to align your processes with established best practices included with your new ERP solution.
Scoping must be a part of your project. This is where you define what is included and what is excluded from the project. There will always be limitations to each project and it is unrealistic for the project to solve problems outside the scope. This may sound like common sense, but it is important for the success of the project to not get side-tracked with out-of-scope tasks that will consume time and budget. It is the job of the project manager to keep everyone on task.
4. Selecting the right ERP Partner
One of the most important factors in the success or failure of an ERP implementation is selecting the right ERP partner. A good ERP partner understands that a company still has business operations to conduct, even throughout major IT changes. An experienced ERP partner also knows they need to garner support for their proposed implementation from every level of an organisation. The right ERP partner offers a comprehensive plan from the beginning to the end of an implementation using a proven methodology. You will also want to confirm that your ERP has the necessary experience to complete the implementation, so it is worth checking their track record. Finally, you will want to ensure that your partner can provide post-installation support and training to ensure everything continues to run smoothly after the project is completed.
If you want to know more about how to ensure a successful ERP implementation in your organisation? Contact FUJIFILM MicroChannel, we help select and implement ERP solutions that suit your business needs and requirements.
SAP Business One is an affordable Enterprise Resource Planning (ERP) software designed for small to midsize businesses. As a business management solution, SAP B1 streamlines business processes, provides real-time information, and help boost overall business performance. The solution covers finance, sales, customer relationship, purchasing, procurement, inventory and manufacturing in one centralised system, enabling accurate and precise information retrieval that assist in reporting, forecasting and analysis.