ERP failures and ERP lawsuits are becoming increasingly common. ERP implementation failures almost always follow predictable patterns. In the cases we litigate we often see divergent expectations and inaccurate estimates of both the time and effort to make the ERP implementation successful – let alone on time and on budget. Below are three lessons from ERP implementation failures:
- Unrealistic Estimates: With a desire to sell software and make sales quotas, ERP salespeople often provide inaccurate estimates of the time and cost to implement a software system. Sometimes ERP salespeople will simply provide a wild guess that has no basis. More common, though, they provide estimates without fully understanding a customer’s business requirements. It is incumbent on both parties to verify and ensure: (i) that any unique functionality has been accounted for; (ii) that the ERP system can incorporate or address the customer’s business processes and business requirements; and (iii) and any modifications or customizations are included in any estimate.
- Divergent Expectations: ERP customers sometimes have unrealistic expectations regarding an ERP system. ERP vendors often promote their software as containing out-of-the-box solutions, industry best practices and industry pre-configurations. In addition, ERP vendors are sometimes more focused on implementing the technical components of their software instead on configuring or customizing the software to address business processes or on organizing the implementation project. It is critical for both parties to understand key business requirements and functionality and make sure that the ERP software can accommodate those requirements.
- Time Commitment: ERP vendors are fond of saying that an implementation is a two-way street. If your expectation is that the ERP vendor will implement the software with little to no customer involvement, you need to reconsider. ERP vendors often require the customer to have a team that mirrors the ERP vendor’s implementation team. Successful customers devote significant internal resources to implementation. They form steering committees with executive sponsors and utilize their own project managers, “champions” and subject matter experts to drive success.
We have the experience to help our clients draft, negotiate and enforce ERP contracts that minimize risk. If you have any questions regarding ERP contracts or ERP litigation, please give our office a call.