Ray Ryan from the Noledge Group explains why up to 75% of ERP implementations fail and what businesses can do about it.
In business, seamless operations can be compared to a beautifully orchestrated symphony. Just as one out-of-tune note can throw off a musical performance, a single mistake in implementing an Enterprise Resource Planning (ERP) system can throw a whole project into disarray, risking its success.
Whether in accounting and financial management, supply chain management, field service management or retail, these systems play a pivotal role in simplifying tasks and boosting efficiency, ultimately cutting costs, and enabling growth.
“By embracing a structured approach and addressing the issues that can cause ERP implementation failures, businesses can navigate the turbulent waters of implementation and chart a course toward success”
Yet, according to analyst firm Gartner, up to 75% of ERP implementations fail. The reality is that the deployment of these solutions needs to be carefully thought-out and implemented right the first time, otherwise businesses will fall behind.
Setting up an ERP system is complex, and failure can happen for various reasons. It requires meticulous planning, precise execution, and the seamless coordination of people, processes, and technology. Here are seven things that can go wrong and what to do about it.
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Setting expectations
ERP systems often fail due to ineffective planning. Before starting an ERP project, it’s essential to have a clear idea of the project’s objectives and map out the challenges the new ERP solution should solve.
Failure to do this can lead to problems after the system is launched. Reviewing agreements and the scope outlined in the supplier contract is equally important, as vague definitions and misunderstandings can lead to confusion and project complications.
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Planning
Another key cause of problems is failure to track progress to key milestones. To stay on course, it’s vital to consistently assess the project’s progress in relation to the initial plan. Are the project goals being met?
Is everyone fulfilling their responsibilities? Success hinges on having ample resources and fostering effective teamwork.
Maintaining an open and comprehensive record of the entire process is essential. This includes keeping meeting notes, updating project details, and recording other pertinent information.
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Resources
ERP projects are often challenged with lack of recognition of the true level of resources that need to be allocated to ensure seamless delivery. The presence of an in-house project sponsor or manager is crucial for steering the team towards success. Are you meeting the milestones set by the software vendor or partner? Do you have sufficient manpower and tools for the task at hand? Teamwork is pivotal, and if your team is grappling with extra responsibilities on top of their usual duties, that’s a warning sign. If they’re already overwhelmed with their day-to-day priorities, the ERP implementation project is likely to be sidelined and neglected.
Having a dedicated project team, an experienced project manager and the support of an expert third-party provider can significantly impact the outcome. Deploying your best people to the project can also make a significant difference, resulting in a higher probability of success.
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Timelines
Underestimating timescale is another key challenge. Establishing realistic timelines is crucial. Rushing any aspect of the ERP implementation can mean that critical elements are overlooked.
A good practice is to routinely review and adjust timelines, ensuring continuous alignment, assessing project progress, making necessary adjustments, and engaging with various teams. Internally, the implementation team must effectively communicate project goals and timelines to each department, enabling them to anticipate and adjust timelines accordingly.
This approach guarantees the project is executed on schedule and with efficiency.
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Trust
Unless everybody if working in a properly collaborative manner towards shared goals, challenges are bound to pop up. Trust is the glue that binds the project together. For example, if a specific team consistently falls short of meeting project commitments, addressing the issue is essential.
While a candid conversation can guide the project and team back on course, cracks will appear if there’s a lack of shared values.
Fostering better camaraderie within the team can be achieved through encouraging open communication, providing regular training, recognising good work, and engaging in team-building activities. These initiatives can contribute to creating a more cohesive and successful project environment.
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Test, test, and test
Those who fail to adequately test are risking major issues when the ERP system goes into full production as this phase can unveil serious problems. Given the extensive impacts associated with an ERP system, some may not become apparent until thorough testing is conducted.
Comprehensive testing is necessary right through any implementation, migration, or upgrade. This allows assessment of the system’s performance, security, and seamless integration with other components and business functions.
The main goal is to uncover and address any issues before users start relying on the system. If the software doesn’t meet expectations after implementation, a reassessment becomes imperative.
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Evaluating the right relationship
Sometimes, the problem comes down to the partner chosen for the implementation not having the right experience or competence. Cultural differences can also play a role.
It is crucial to have a good connection as you will be working closely with this partner and their team throughout the project and beyond. So, when picking a project partner, it’s not just about qualifications. If challenges persist, it may be time to consider switching partners.
The chosen ERP implementation partner should possess deep software expertise, understand the integration of the solution with other in-house systems, and ultimately be in a position to help streamline business operations.
Before settling on a partner, it’s crucial for a business to verify its track record in implementing systems within similar industries. Exploring alternative solution providers may introduce fresh perspectives and approaches, potentially transforming what initially seemed like a broken system into a fully functional solution.
Takeaway
As we look ahead to 2024 and beyond, it’s increasingly evident that the successful implementation of ERP systems will be a critical factor in maintaining a competitive edge.
By embracing a structured approach and addressing the issues that can cause ERP implementation failures, businesses can navigate the turbulent waters of implementation and chart a course toward success.
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