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“Why Do ERP Implementations fail – How Can You Steer Clear of These Failure Stories?”
ERP implementations are no longer luxurious bonuses you add to your enterprise wish list. It’s more a necessity if you really want to reach your business goals. But most ERP implementation stories are long-drawn emotional soap operas ridden with delays, errors, and unanticipated challenges. Why is ERP implementation such a scary ride? After all the whole aim of the exercise is to streamline, standardize, and integrate all your business processes. The goal of this elaborate technology transformation is to bring in operational efficiency, real-time and automated process management, centralized data management, seamless flow of information across teams, and effortless integration across all the key organizational process (from inventory management to HCM).
However, this exercise at building efficiency and increasing agility to enable smooth and accurate decision-making often leads to colossal failures at the implementation stage, failing to deliver the intended business value. Why do these failures happen? Is there any way we can avoid ERP implementation failures? Let’s see if we can learn from some examples.
ERP implementation failures – some documented examples
Many reports have reviewed the relevance of ERP in today’s business landscape and ERP implantation–related customer satisfaction percentages. One study indicated that while almost 80% of surveyed candidates acknowledged the importance of ERP solutions in streamlining their operations, only 50% of these candidates were actually satisfied with the ERP solution they were currently using. Another study also reported similar findings, with just over 50% of respondents indicating that their ERP implementation was successful.
Many examples from the business landscape, across verticals, also prove these findings to be true. Avon, the make-up mammoths of the cosmetic landscape, faced quite a challenge when their ERP transformation failed because the brand new technology added to their sales staff’s workload rather than simplifying their tasks. Hence they met with serious failure at the implementation stage, when their staff was reluctant to adapt to the new technology and was even willing to quit rather than adopt the new technology, leading to serious loss. Another example was when Target Canada was faced with a huge challenge of data import from its legacy system to the brand new format. They assumed that the transition was smooth, until after launch they realized that they transferred data entries had many errors, including serious mistakes in prices, names of manufacturers, and product descriptions.
These are well-document cases from the giants of the industry. But there are many more undocumented stories that SMEs go through, but they apply desperate quick-fixes in the hope of setting things right “for now.” All of know how long these “Band-Aids” are going to last. But is it just data entry or inefficient adoption that leads to such common failures. What are the reasons why many ERP implementations fail? Let’s find out.
Some of the critical reasons why ERP implementation fails
Smart change management forms a critical definer of success in every ERP implementation. But what are the important hurdles that derail a successful implementation?
In most cases, the seeds of failure are sowed right at the planning stage. If your vision while building your ERP implementation strategies is shallow or overly aerial, your chances of understanding the ground reality and what your organization really needs from this exercise is minimal. Without including every stakeholder on board, from the management to representatives from each function, you will not entirely comprehend the ground reality of what the ERP transformation will bring. Inefficient planning will also mean unrealistic wish lists, unexpected expenses, and sudden implementation challenges. In addition, without planning a phased transition and the order of transition of functions, you’ll definitely be inviting unnecessary confusion and frustration during implementation.
Improper testing approach
Testing is often the most underrated step in ERP implementation; however, ignoring the relevance of this step will lead to disaster. Hence plan your testing protocols with the same focus as creating the initial requirement and roadmap.
Lack of attention during adoption
Immaterial of the brilliance of your ERP solution, inefficiency in communicating the benefits of the new system to your team and in delivering the required training, skill sets, and know-how will lead to non-compliance and incomplete usage of the system. The result with be a spectacular failure in applying the best of solutions across the organization.
Lacklustre project management
Project management plays a key role in the success of any ERP implementation project. Inefficient requirements study, scheduling, resource allocation, vendor management, risk assessment and mitigation, and communication can destroy and brilliant ERP initiative. All these issues are exponentially affected by scope creep and poor budgeting, leading to failures during implementation.
Quick and accurate decision making defines the efficiency of any ERP implementation, not just at the strategizing stages but also during the entire implementation process. Latency in taking critical decisions is as damaging as delays in identifying potential issues.
Too many features on your plate
Any ERP implementation can be quite an exciting proposition at the initial stages. Hence, any organization’s wish list is super long. But force-feeding your ERP implementation process with innumerable features and functionalities can choke the operational pipeline and collapse your entire organizational functioning. The main culprits are over-customization and creating too many exceptions. Not delivering a scalable and flexible framework that can easily be adopted for future requirements is another critical culprit that catalyzes ERP implementation failures.
Pointers to avoid common implementation failures
Now that you know what you need to be careful about right from the planning stages of your ERP implementation, let’s now look at some approaches you can use to avoid implementation failures.
In-depth requirements assessment
Ensure that you include all functional stakeholders, right from the planning stage and all through every implementation stage and milestone. Every decision, from selection of cloud-based or on-premises ERP up to the customized features to be included, should include all the representatives.
Do not release every feature all at once
Always plan your implementation stepwise because it is not practical to plan your end-to-end ERP implementation all at one go. Include every element of implementation in the plan right up to testing, user training, and adoption.
Meticulous data migration
One of the biggest hurdles of ERP implementation is an error-prone data management approach. Always ensure that you perform a preliminary data cleanup before to transition data from any legacy system or while entering fresh data.
Transitioning into an organized and ERP-driven environment is the perfect opportunity for you to document your processes up to microsteps. This supports logical automation of every operational step. This also helps in continuity of the implementation process even if there is any change in leadership or an essential shift in the direction of implementation.
Encouraging adoption of ERP across the organization
Ensure that you have smart champions across every operational node so they can communicate the advantages of this exercise to their respective teams, creating awareness and providing accurate information. Plan for batched and smart training modules that support every performer to understand and adopt new tasks and responsibilities easily. Create easy-to-access learning materials, preferably as micro-learning modules, which simplify the learning process. Create a round-the-clock support system of tech staff and mentors who can immediately attend to any performer concerns.
Effective change management
ERP implementation is not just the responsibility of the IT department of your organization. It requires a comprehensive change management initiative across all your teams. Include all your stakeholders at the managerial and performer levels so the intended business transformation happens at a granular level – across processes, technology, and people. Also review your current team structure to make the necessary changes in terms of resource reallocation and addition ensure that you are ready for the post-ERP implementation scenario.
Focus on project management
Effective project management forms the fulcrum of any smart ERP implementation initiative. Provide the best of resources for efficient project management of the entire initiative – from requirement assessment, budgeting, resourcing, and scheduling to effective monitoring, risk management, communication, and reporting.
Use a framework-based approach
While any ERP implementation requires a certain percentage of customization, it’s always better to avoid extensive hardcoded customization, which makes scaling up, upgrades, or making future changes extremely difficult. Given the ever-changing business ecosystem, the only way of retaining a viable ERP solution is to use a goal-specific flexible framework approach right from the blueprint stage, which not only controls costs and speeds up development time, but also considers easy compatibility with and adoption of future revisions. With a comprehensive framework like Altascio’s Altabiz, you can derive a zero-compromise, secure, and completely compatible ready-to-use tools and applications across all your business processes.
Thus smart data management, clear requirements assessment, agile project management, framework-driven development, granular change management, and focused adoption of the solution can make any ERP implementation quite a success with minimum scope for errors, delays, and expenditure leakage. So assess your ERP implementation approach today and make the required changes before it’s too late.
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Thanks & Credits to Altascio