7 Reasons Why ERP Implementations Fail, and 11 Steps to Ensure they Succeed
In the current economic climate, fear is a very real emotion felt by many business owners. Particularly when that fear is based on a bad experience in the past or even just hearsay. This is true for enterprise resource planning (ERP) implementation projects. Every CIO, CFO, and business owner has read horror stories of stalled deployments, ERP implementations that failed, and overrun budgets that grounded projects for years.
It is understandable that many consider staving off the benefits that ERP implementations bring for as long as possible, as it could be a career-altering, budget-breaking decision. Additionally, decision-makers – particularly SMEs – worry that they may not have the right skills, financial support and patience to reach deployment. So, they continue with the burden of multiple spreadsheets, manual paperwork, no clarity and human error rather than face the fear.
The Era of Postmodern ERP
Thankfully, digital disruption is here to stay, and it brings with it a fresh approach to dealing with fears from the old world of ERP implementations. Gartner stated that by 2018, organisations will insist on postmodern ERP implementations that are proven to deliver value within two years.
Carol Hardcastle, former vice president at Gartner, recently said, “It really is time that the significant investments enterprises make in ERP solutions reap real benefits. ERP vendors and SIs must raise their game on implementation approaches, renovating and revisiting their own implementation methodologies for speed and with greater emphasis on the benefits realization activities.”
In my 20 years of experience in ERP, businesses are already expecting ERP deployments to match the speed and ease of the technology they are adopting.
The new breed of cloud-based ERP solutions, such as BOS ERP, are designed to meet these deployment expectations. That lifecycle starts the moment a contract is signed. At QuickEasy Software – a homegrown, locally developed ERP software provider – we know that, no matter how streamlined the software is, it only delivers value when it is being used. This is why we are proud to say that we have customers that still use our BOS ERP software after 20 years!
7 Reasons Why ERP Implementations Fail
Without a clear plan, the right tools, the right ERP solution, the right people, and the right set of goals and information, even big-brand, internationally-sourced ERP companies could find themselves struggling to achieve a successful ERP implementation.
There are three quick reasons why an ERP project may fail. Scale – typically ERP implementations can be 2 – 10 times larger than any previous project. People – ERP implementation projects are transformational: everyone in the business is impacted. Disruption – ERP implementation projects are generational: very often an organisation may not have done anything like this in the last 10 to 15 years.
No two ERP implementations fail for the same set of reasons. However, here are some of the more common reasons I have found ERP implementations to fail.
1. Inflexible, off-the-shelf ERP systems just don’t cut it anymore
Choosing the right ERP system can make or break your ERP implementation project. Personalised systems are the expected norm. When organisations invest in ERP software, their expectation is that it can morph to accommodate the unique requirements of their operation. Failure and disappointment come when they find the off-the-shelf ERP system insists on their organisation bending the knee to the software, rather than the other way around.
Unlike static, modular ERP systems, modern cloud-based ERP is flexible enough to meet the varying demands of a growing, competitive business, and rightly so. Consider your own company – each department has its own unique requirements, process flows, outcomes and information modelling. For ERP implementation success, the software needs to match the business.
2. Lack of business needs analysis
Before starting any project – including an ERP implementation project – a clear, documented outline of what the business needs is required. This includes insight into available resources, current processes and tools, and desired outcomes. When businesses miss this step, their ERP projects may never experience the satisfaction of launching.
3. Conflicting goals
When a project has conflicting goals – such as budget vs functionality vs convenience vs outcomes – finding the right system and deploying it successfully is highly unlikely. Be clear and realistic about what exactly you need the ERP to accomplish.
4. No dedicated implementation team
Due to the integrated nature of an ERP system, where an entire business’s data and transactions are unified in one system, a business must be highly strategic when it comes to the selection of the implementation team.
Ideally, it should include representatives from each major department to facilitate clear project communication, software customisation, and user acceptance testing. When there is no clear team, or a single person is chosen to represent an entire company’s requirements and customisations, delays and frustrations are the order of the day.
5. Poor communication with your ERP vendor
The success of your ERP project is not only dependent on how capable the software is, rather it rises and falls on how clearly and frequently you communicate your needs and requirements to your ERP provider. Failure to make iterative adjustments, attend meetings, provide business data, or even make use of available training and upgrades after go-live will ensure your ERP implementation grinds to a halt. This leaves your team struggling to do business as usual while trying to learn a new, incomplete system.
In my experience, your ERP vendor is a partner for life. Investment in ERP can be an expensive undertaking, so ensure you find an ERP partner who not only is an expert in your industry but is also nice to work with.
6. No consideration of gaining team buy-in
The biggest disruption of a new ERP system is felt at the coal face. It changes the way every member of staff works on a daily basis, and for a very long time. The importance of engaging with your employees, educating them on the massive benefits ERP systems bring to their daily tasks, and ensuring their buy-in, cannot be stressed enough. This ensures that when you push the “on” button during rollout, your entire organisation launches into a competitive growth trajectory, rather than plunging into utter chaos.
7. Hiring the wrong skill set for the job
Your business may have a highly skilled IT department, gifted project manager, or efficient finance team in its ranks. However, they are unlikely to have customised and deployed an ERP system in their lifetime. So, when it comes to ERP customisation, implementation, and deployment you need people who have done this several times over and are experts. Ensure your ERP vendor provides everything you need under one roof.
11 Steps to ERP Implementation Heaven
In my experience, the temporary pain of ERP implementation can be shortened by a structured and disciplined approach.
Here are the 11 steps we use at Quickeasy Software towards a successful ERP implementation:
- Plan well. This is where we define test cases, map business processes, identify IT tech specs, and announce the project to the business. Start with the end in mind to succeed.
- Introduction to the system. We allow the business to view the full scope and functionality of the ERP system, work through test cases, and allow super users to become familiar with the system’s capabilities.
- Configuration. This is where we seek out in-depth information about business requirements and start to configure and design the system to meet your needs.
- Data conversion. Business data is translated and transferred into the new ERP system.
- Well-documented. Because modern ERP systems like BOS Enterprise are highly customised, it is important to create and provide you with your own customised documentation on how end-users can use the system.
- Review. The implementation team reviews the prototype ERP system.
- Conference Room Pilots (CRP). You should go through several CRPs as the various test cases are worked through. The final CRP simulates ‘go-live’.
- User Acceptance Testing (UAT). This is a thorough testing of the system by every relevant business unit. Functionality should match the original scope identified in step 1.
- Clearly defined cut-over activities. This is planned by the implementation team and includes scheduled training sessions, readiness certificate, data conversion, final close off, sign off and balance take-on of the new system.
- After go-live support. The real value of an ERP system is after implementation. It is important that you have ongoing support, training, customisation, upgrades, and documentation as needed.
- Project post mortem. Once the implementation is complete, a final check list is worked through ensuring all aspects of the project are signed off and complete.
The implementation of an ERP system will change your whole company, that is a certainty. How it affects your company depends largely on how well it is implemented. It is better to partner with an ERP company that is invested in your success, is local and can support you in local time and understands the demands of South African businesses, and has an outstanding track record.
