When it comes to implementing a new enterprise resource planning (ERP) system, the statistics of success paint a bleak picture. Up to 75% of ERP projects fail, with costs and timelines often running above initial estimates.
Although an ERP implementation can fail for many reasons, we have covered the 10 most common ones below.
10 Reasons Why ERP Implementations Fail
1. Failure to Define Goals
For an ERP implementation to be successful you must know what the goals of the project are. What is meant to change or be improved on? What does a good ROI look like? You need to have these types of goals clearly defined so you can measure what success looks like.
Having documentation of what you are trying to achieve will help get board level buy-in as well as help with prioritising needs and wants. Without these overarching goals it is too easy to get stuck in the day to day with short-term thinking that lowers the ROI of your project.
2. Failure to Commit by Key Stakeholders
Due to the size and often company-wide nature of an ERP implementation, the support of many key stakeholders is vital to the success of the project. Resources from different departments are required to work together, and have the time and funds necessary to make the project run smoothly. Failure to commit by key stakeholders can be a drag on the project.
Having leadership and board level buy-in can help steer the project during difficult times and provide oversight to help avoid problems before they arise.
3. Failure to Embrace Change
Companies around the world often find that convincing teams to embrace change can be a difficult task. People like working with what they already know, and many have seen failed business system projects before, making them hesitant to get involved with your current one. This leads to a lack of effort on the project and once the new system is in, people don’t use it.
To avoid this scenario, you need to be clear in your communication, laying out the expectations, benefits, and business case for the change. Make different departments part of discussions and workshops to show that their insight is valued and there will be tangible benefits to their working day.
4. Lack of Expertise on the Project Team
To avoid an ERP implementation failure, it is vital to have an experienced project manager with the right skillset. A good project manager can oversee progress and make sure things stay on track. They will ensure timelines are met and keep an eye on resource usage across the project. Ideally this should be a good communicator, able to take responsibility, and have the organisational skills required for a complex change project.
5. Failure to Communicate
With many departments and stakeholders involved, the value of good communication cannot be overstated. Unfortunately, many ERP implementations fail due to a lack of communication. Management fails to communicate their goals, employees fail to communicate their questions, and vendors fail to communicate potential issues arising.
To avoid this, you want to encourage open communication with tools in place for people to share information. Meetings and workshops can allow teams on the ground to share information regularly and frequent reports to project sponsors helps build trust and open dialogue across the project.
6. Failure to Share the Burden
Due to the nature of an ERP implementation the brunt of the work often falls on the IT department which leaves them burdened with a lot of extra work. Not only does this increase the pressure on the department, but it does not make sense as multiple other departments are often involved. For example, the IT department might do a lot of the heavy lifting, but they don’t own the HR department which has its own needs and specialised knowledge.
7. Failure to Train System Users
Implementing the ERP system is only part of the battle, and many firms don’t get the full benefit due to not training system users properly. You need to ensure each department has system experts who can answer questions and deliver training to other users.
8. Failure at Migrating Data
An often-overlooked area of an ERP implementation is the migration of data from the old system to the new one. A lot of preparation is required to ensure a smooth transition, with some data cleansing often required too. This area is often made worse by poor existing data practices which has led to poorly maintained data spread across multiple systems.
To avoid ERP implementation failure here it is vital to allocate adequate time and resources and expect to run into issues if you have had sloppy data practices for years.
9. Failure to Control Costs
Any ERP implementation is going to be expensive, and many will run over the initial budget. For some firms, extra costs can be swallowed but there are times where failure to control costs can become business critical. Timelines increase with more resources required which see costs accelerate upwards at an alarming rate. If things get too out of control it can see project sponsors pulling the plug, leaving an incomplete implementation or a lack of functionality and a failed project.
Therefore, it is vital to work with a strong project manager who knows how to keep things moving at pace to minimise the risk of costs spiralling out of control.
10. Failure at Accountability
From the start of the project, it needs to be clear who is responsible for different areas of the project. Having departments and teams understanding what they are responsible for avoids a blame game starting if things go off-track. You also ensure a clear line of communication for issues to be raised as well as having a final decision maker if an agreement cannot be reached.
Conclusion to 10 Reasons Why ERP Implementations Fail
Now that you have seen 10 reasons why ERP implementations fail you know what to look out for during your next ERP project. And if you would like some help and support in delivering your implementation then get in touch with us today to see what we can do.