Monday, July 11, 2011

Why do so many ERP implementations fail?

Why do so many ERP implementations fail?

Pain, no matter what caused the failure, will be the end result of a failed Enterprise Resource Planning (ERP) system installation.   This kind of pain will leave an indelible mark.  I only ever remember touching a hot burner with my finger one time.  After that I knew to check for a hot surface.

Typical causes of failure include a bad fit between the organization’s challenges and the chosen solution.  Research, planning, and training are key ingredients.  Selecting a system should not be based on fancy presentations, features and benefits.  A need analysis, departmental review, and C-level buy-in should be included in the decision process.

Cost overruns are typical and also related to a rushed review and planning steps.  It is not uncommon to see budgeting of 50% on implementation, which will include training.  To gain a balance, some companies will choose time when they are tight on finances.  They will take more time to implement the system. The advantage here is the system is so well known at conversion time that the conversion is a non-event.  Yesterday the old system, tomorrow the new and operations are not impacted.  If time is the constraint, then sufficient monies must exist for training and conversion efforts.

If you do not have time or money, then your implementation is going to fail.  You need one or both of these resources to continue.

Employee acceptance is often taken for granted.  Hey, if the boss says this will work, the employees who are already overworked and underpaid from all the budget cutbacks will be happy to work double in the transition period.  I am sure you can envision how happy your employees would be to take extra time to learn yet another system.  All levels need buy-in.  They all need to “see” how this new system will make them more efficient. 

Other contributions to failure are the desire to overly customize the new system.  Some basic changes are common, but making extensive changes should be considered carefully.  Why are the changes being made?  Is it an attempt to build consensus among employees to “make it easier” or is the software not really a good fit?  What functionality exists in the new system that has not been discovered?  Every change introduces risk.  How well can the system be tested during the implementation phase to know no other problems are going to surface?

How much expertise do you have in-house to manage the conversion project?  Has your ERP provider assigned a dedicated project manager?  Haste makes waste.  Do the job right the first time.  Quality really does matter.  This is one area where you do not want to cut corners.  After all, your company’s future rests on the right solution, done right.

We cannot guarantee you will not have any problems, but we can help manage them.  Contact Dolvin to see how we can help you identify your challenge areas and possible solutions.

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