For organizations thinking of upgrading a legacy ERP software system or implementing one for the first time, it is always useful to take a detailed, analytical look at what is happening in the world of digital transformation – both qualitatively and quantitively.
As an attorney who negotiates and drafts ERP contracts and represents clients in ERP software lawsuits, I found the survey released recently by noted consultant Eric Kimberling to be a fascinating look at how and why things go right and wrong with ERP software systems, and what trends he sees emerging.
Kimberling just published his 2019 Digital Transformation and ERP Report (PDF, reg. reqd.), a statistical examination of companies small and large, and their experience with implementation over the past 20 years. The key findings are revealing, thought-provoking and indicative of how and why problems arise for companies and their integrators.
An old saying goes that success has many fathers but failure always is an orphan. What the new survey reveals is that many of the ERP software implementation failures occur because there was a lack of accountability and responsibility.
On the user side, it’s often because the C-Suite did not take ownership of the project and pay close enough attention to ensure that the ERP software was designed to align with the company’s broader business objectives.
On the integrator side, it happens because of what Kimberling calls a user being “Accentured,” which means the large integrators may not know the nuances of a business but are very good at upselling services to keep independent advisors out of the process. As a result, there is no accountability when things go wrong because nobody is looking over the shoulders of the integrator.
More specifically, the study uncovered five reasons why users encounter problems with their implementation:
- Ignoring the people part of the ERP implementation, essentially not including change management so that employees understand the purpose and need for the transformation.
- Not aligning the software implementation project with corporate goals so it didn’t meet broader strategic objectives.
- Companies that were “Accentured” and turned the entire project over to an integrator found that they had difficulty raising deficiencies with the integrator, and the integrator dodged taking responsibility for problems.
- Users that didn’t clarify their business process before acquiring an ERP software system had much more trouble than users who took the time to do this first.
- Data that was not cleaned and purged before moving it from a legacy software system to the new one faced a challenge in their transformation.
The survey’s data reveals 10 trends that users need to keep in mind as they look at acquiring an upgraded or new ERP software system. These are some of the key things that are likely to change during 2019.
A major shakeup in ERP software vendors – For instance, Oracle did not even make the list of top ERP vendors while Microsoft moved up, indicating a shifting market.
ERP software systems are evolving rapidly – Forward-thinking organizations are abandoning the traditional approach to ERP implementation and adopting a more broadly-based digital transformation.
There will be a multi-tiered approach to ERP – While a parent company may adopt a standard back office system, operating divisions will implement customer-focused systems that are more closely aligned with both their internal culture and customer needs.
Users will create implementation plans first – This is because multiple technologies are being deployed as opposed to a one size fits all traditional approach. So, businesses will start with an ERP implementation readiness program first so that there is a foundation for success.
ERP failures will grow in number – This is happening because customers are being forced off of their legacy systems but vendors and implementation teams focus on the technology rather than smoothing the migration.
Integrators will be held more accountable – As organizations learn how to avoid ERP train wrecks, they will hold integrators accountable by leveraging tightly written contracts up-front and third parties to manage integrators.
My reading of the Kimberling survey tells me that the nature of the ERP world is undergoing a significant shift.
First, users will need to be more assertive in managing vendors and integrators in order to maximize the likelihood of success. Fewer users will be willing to merely sign template software licensing and implementation contracts and think all’s well with the world.
Second, integrators will need to be more responsive to questions and concerns raised by their clients or more of them will find themselves in court.
Third, independent consultants will take on a more prominent role as an ERP software system is customized and implemented.
Finally, users will be more aware of the company-wide impact of ERP and start by making sure that the organization is ready for what transformation will mean.