Why Do ERP Implementations Fail
Simplified processes, visibility, improved traceability and accountability, increased efficiency, reduced costs! The benefits of a new ERP system are plentiful, so why wouldn’t you want them now? However rushing your way through an implementation will actually provide more detriment than benefit. ERP is the brain of a many businesses, and brain surgery should not be rushed! It’s much better to take a step back, plan meticulously, and make sure every member of your implementation team is clear in their role. Don’t cut corners for the sake of going live early. Set a realistic time, that can be met without risking the day to day operations of your business.
Your ERP project needs to be driven by the business strategy. If the project isn’t going to add value to your business, then you shouldn’t be doing it. Given that the project has such strategic value, it needs to be sponsored from the top, otherwise people within the business won’t believe in the vision. This could lead to far too much reliance on your ERP vendor, or a solution that doesn’t adequately meet your business objectives.
The vendor will have a team of skilled and experienced project managers, business consultants and technical consultants to assist you through your implementation with minimal fuss, but no-one knows your business like you.
In order to create that realistic stake, you need a scope and you need to stick to it. Scope is all about understanding the scale of the project you are about to undertake. Understanding what is achievable, in which time-frames, and managing expectation accordingly. The larger the implementation, the longer the implementation – so it’s easy to lose track. A clear scope of delivery keeps the project on the straight and narrow. You know what should be achieved, by when, and by whom – so will never fall behind. Splitting the scope into manageable phases, each one delivering value, is often the key to balancing momentum and complexity.
ERP is only as good as the data you put into it, and collecting the data needed from the previous system(s) is arguably the most time consuming part of an implementation. To help with this, your vendor will be able to provide you with a database schema, which is the structure needed for the ERP to function. This acts as a guide so you know which data is needed, but unfortunately not where that data is stored. Upgrading or moving from one ERP to another means the relevant data should be easily found within the current system.
If however, the data is being extracted from several disparate sources such as excel, accounting software and CRM software, the data needs to found before it can be extracted and inputted into the new system. These disparate systems will most likely create files in different formats which will need to be converted for the ERP, or entered manually. Either way, this is a mammoth task that requires a lot of time and effort.
Just because ERP involves computers, doesn’t mean the implementation belongs solely to the IT department. Granted, they will play a pivotal role during implementation, but a system used companywide, requires companywide co-operation. Even if your IT department are a super talented bunch – with all the required skills – insight from all departments is vital for a well-rounded ERP solution. Who will use the ERP? Will it be the IT department? Shop floor staff? The board? The chances are, every department in the business will have some contact with the ERP so it’s in their interest to be part of the implementation. Understanding how the business will react to change, and preparing them for it, is a crucial part of an ERP project. Central to this is having a clear, strategically focused scope and strong ownership of the project, driven from the top.
There’s a lot resting on an ERP system, so it makes sense to test it thoroughly. However testing often not given the attention it deserves. Testing shouldn’t be treated as dummy run or going through the motions, it should be treated like the genuine process that has immediate effect upon business – because it does. Failing to test correctly and thoroughly will leave you with an inaccurate idea of how well the ERP works and which areas need improvement. This means investing sufficient time into mapping and cleansing your test data, and practicing the processes. Even if there’s a process your business undertakes only very occasionally (annually, every six months, or maybe completely irregularly), these processes also need testing. It could be the occasional process that puts the ERP, and subsequently your business, out of action six months after go-live. Juggling in-depth testing with the running of a business is less than ideal, but the gain will out-weigh the pain.
It’s over. Your implementation is tested, doubled tested, signed off and live. But it’s not over yet. The implementation can only truly be considered as a success if the success is continuous! If you trade in your bicycle for a car, but don’t know how to drive it, then you’re left walking. The same applies with ERP. Over time your business changes, processes change, people change, customer change, technology changes. In order to remain competitive you have to keep your ERP system aligned so that it continues to meet business objectives. Investing in an annual health check to ensure processes and systems remain aligning, creating a training plan for new starters, and taking advantages of ERP system vendor upgrades and enhancements are all vital to keep your ERP system adding value.
Resource management is key to a successful implementation. Many people dramatically under estimate the level of commitment needed from all levels of staff to implement ERP successfully. For every one day the vendor spend on the implementation, there should be three days from the customer. This is only a guide but does accurately put into perspective the resources needed to implement successfully. If you have a go-live date in mind, you can work backwards to the present day to work out first of all; if the go-live is possible and secondly; the amount of hours needed from both the vendor and the customer to make it happen.
Where are those hours coming from? Are the implementation team offloading some of their work to others or are they able to juggle both?
Running the business will always come first so knowing where you can squeeze, shift and juggle resources around implementation is a huge step toward success.