ERP system implementation are costly and time consuming projects, and therefore should not be taken upon without planning and diligence. Unfortunately, many companies approach ERP implementations with a “shoot first, ask later” attitude, which results in failed projects that cost millions of dollars or, in worse case, bankruptcy.
An ERP implementation seldom fails due to only one reason, but there are some mistakes that many companies make in the beginning or prior to their ERP implementation that eventually lead to unsuccessful projects. Below are the three most common situations to watch out for.
Your company is not in need of an ERP system
An ERP system can have a lot of benefits in terms of structuring your business processes and increasing efficiency within your organization. However, if your business processes or your organizational structure are outdated, an ERP system will be of little help. In the worst-case scenario, an ERP system can make driving organizational change harder. Therefore, before looking for an ERP system, check if your business processes could be reengineered to contribute more to the bottom line, or you could improve your organizational structure, role and responsibilities.
If you find out that a system upgrade is really what you need, consider leveraging several systems instead of just one. Thanks to today’s technological improvements there are a lot of different options on the market, and there is no need to commit to one high-cost, high-risk solution for your whole organization.
Ultimately, the solutions you choose should serve your overall long term strategy – not the other way around. If one solution does not satisfy all your needs, don’t feel obligated to commit to it and hope for customization. That might only add to the total cost of the project. Always get an objective opinion of a third party that is not affiliated with one specific vendor.
If you already have an ERP system in place, but you are not completely happy with its performance, consider doing a reimplementation of the same software. It will cost only a fraction of the price of a new implementation, and your current system will be better tuned to the changes that have happened in your organization since the original implementation. A complete reimplementation might not even be necessary – a simple add-on application can be enough.
Not everyone is on board
It is important that everyone effected by the implementation is on board with it. The success of the project relies on full participation of everyone involved because every single department is affected. This is especially important when it comes to employee training, as it is one of the crucial to get right in an ERP implementation process. You can lose out on a lot of productivity improvements if your employees or the management does not fully utilize the ERP system or continue to use legacy applications.
You should make sure the employees fully understand the need for the implementation and get them enthusiastic about the change. If they can’t fully see how the new system will benefit their work on the day-to-day basis, you might get some resistance down the line. In a lot of cases, a failed implementation is caused by the lack of willingness to participate in the project.
There is no proper planning
Prior to starting an implementation project, you need a detailed and realistic plan. It should identify all the requirements, milestones, goals, and timelines for the project. A good plan starts with a clear definition of success that is shared by every stakeholder.
Underestimating the resources required to execute the project is one of the most common mistakes done prior to an ERP implementation. You should have a solid understanding of internal and external needs, and bring in temporary resources if needed. This can usually be done by an experienced project manager who has been a part of similar projects in the past.
Allocating a full-time project manager in advance is also crucial to the success of the implementation. Asking someone to manage such complicated project and do their main job at the same time will only result in both jobs being done poorly. A project manager should focus fully on promoting accountability, transparency, and decisiveness without the distractions of their main tasks.