18 Jan Identifying and Overcoming the Top 5 Reasons for ERP Implementation Failures
It is no secret that an ERP implementation is a formidable undertaking. According to Gartner, up to 75% of all ERP projects fail to meet their objectives. The rate of failure increases with cloud-based ERP implementations, where Gartner reports an almost 100% failure rate. These startling numbers indicate a very disturbing trend when it comes to ERP: Businesses are severely missing the mark in identifying and planning for ERP implementations. So how do you avoid the ranks of these failed projects?
While the reasons behind the widespread ERP implementation failures are many, there are a handful of key items that we see consistently in our engagements. These all stem from missing certain levels of perspective when taking a look at business processes and procedures, especially in terms of achieving needed compliance and building the framework. By drawing back and looking at the points below, you will position yourself to be better prepared for your ERP implementation.
Insufficient Due Diligence in Choosing A Well-Qualified Implementation Partner
Choosing the wrong partner for any project will have serious repercussions on what you are trying to accomplish. The costs associated with selecting a wrong partner for an ERP implementation project can quickly spiral out of control. When selecting an ERP partner for your project, there are some questions you can ask to ensure that you are properly aligned with what the partner is offering to bring to the table.
- Does the partner have a specific focus, or are they a generalist?
- Engaging with a partner that has a specialty can work wonders for your project—if their areas of expertise line up with your ERP project goals.
- What is the level of expertise and experience that the individual consultants will bring to the table?
- This will include a mix of experience and implementation track record. Pay close attention and ask if they have had successful ERP implementations within environments that resemble your own.
- Can they provide any references?
- Better yet, will the potential partner let you interview any of the references they provide? This lets you ask their clients very specific questions related to your requirements.
While this in of itself is a large undertaking, the dividends in the end will far outweigh the resources expended. You will have an implementation partner that is perfectly suited for your ERP implementation.
Implementation Partner’s Failure to Understand the Unique Aspects of Your Business
A large contributor to ERP implementation failures is that the implementation partner does not understand the client’s business needs. Furthermore, an implementation partner’s inability to translate business requirements to system requirements, is a recipe for failure. This is why the partner you bring in is going to need to understand the particulars of your business operations better than you. They will need this level of understanding to build a solution that suits your project plan and to introducbetter ways to run business processes.
You should seek out a partner that will invest the time to understand the complexities of your current business processes, including looking for undocumented isolated or manual processes. Though this does involve some detective work, conducting this research prior to proposing an implementation plan will save you on cost overruns and potential failure points. This also gives your project plan a clarity which will prevent unrealistic expectations.
Unrealistic Expectations Are Not Identified and Corrected
ERP implementations are extremely complex undertakings, and not managing expectations is another key reason for failure. When business stakeholders start to develop their own expectations outside of the project, things can easily spiral out of control. This creates more business demands and creates unrealistic expectations. The resulting frustrations and inefficient use of resources eventually will cause delays.
Finding an implementation partner that has a keen sense for when expectations are getting out of hand is a key aspect to a successful implementation. Seek a partner with the integrity to advise you of when expectations are getting out of hand. In this way, they can work to reduce or adjust the project scope, re-prioritize implementation schedules, or recommend alternative implementation strategies. This ensures that only your business process needs are in scope while meeting your compliance requirements.
Failure to Incorporate Compliance Requirements
Aurum Terra has been brought in to fix ERP implementations that did not address all of the customer’s compliance requirements. A valued partner must understand the importance of compliance and advise you on the requirements for your particular business and industry needs. They will be fully aware and engaged in planning for all of your current compliance requirements while providing a foundation for future growth and compliance changes, both locally and globally. All of this should and must be provided to you in a detailed implementation plan. This gives them accountability and creates a document trail for appropriate stakeholder sign-offs.
Mishandling of Project Handoff/Signoff
Communication and documentation of ERP project plans and workflows simplifies things from start to finish. Too often, though, there is a breakdown in these areas, leading to missed deadlines and various project unknowns. Projects end up failing partially or entirely because goals and timelines fall short. Without the proper sign-off, there will be no understanding around what objectives were actually achieved or if the employees are working at a functional level of competency.
To ensure that your potential partner has a properly aligned sign-off process, you should ask them these questions:
- Was the newly-implemented ERP functionality tested to confirm it meets implementation objectives?
- This includes checking for software and process bugs while ensuring that there are no performance issues.
- Did the consultant provide detailed documentation regarding integration/implementation of functionality?
- Documentation is the key, as it creates a process trail of what was done, what needs to be done, and is required to keep your project running smoothly.
- Have system administrators and end-users been properly trained to understand the new functionality, competently use the software, and achieve the desired business goals?
- Your support teams, integration teams, and end users must understand how to maintain, use, and support the new software solution. This again points to maintaining a clear and concise documentation and sign-off process.
- Is the ERP partner working with your SME’s throughout the project, rather than working independently?
- Keeping your SME’s engaged with the partner’s implementation team means your staff stays involved. You gain a higher level of transparency through fluid communications while your partner stays aligned with your business.
For proper sign-off to occur, all aspects of the project must be documented and tested by both your project team and your user base. Ultimately, your ERP implementation partner should regard adoption by employees, as the well as employee morale, as ultimate confirmations of a successful implementation.
Overcoming ERP Implementation Odds with a Valued Partner
The deck is stacked against your efforts to avoid ERP implementation failures. This is why it is crucial to understand why ERP projects fail, and why it is even more critical to have an experienced, valued partner to walk this path with you. You want to avoid the mismanagement that comes with missing, or not looking at, GRC and GTS that your business needs to stay in peak compliance. This valued partner will learn your business, and architect a framework that is built solely for your unique business needs.