Why has your ERP implementation failed?
An ERP solution helps businesses to transform their operations and encourages future business growth. It unifies business functions into one complete system to streamline processes and information that improves collaboration, workflows and business efficiency.
Yet, despite the important role of an ERP system, businesses can find their ERP implementation to be unsuccessful.
Industry analysts found that at least 29% of all ERP implementations end up failing because it does not achieve the benefits that were claimed by the system. Added to this an ERP project failure can have an adverse impact to a business, such as incurring exceedingly high costs and losing customers.
So, how do you tell if your ERP implementation has failed?
Here are some of the signs for a failed implementation so you can avoid them:
- Poorly Defined Goals
One of the prominent reasons why an ERP implementation fails is that goals for the ERP Software have not been clearly defined by the vendor and customer. Typically, these goals may include meeting one or more of the following:
- On-time implementation
- On- or under-budget implementation costs
- Minimal disruption to business operations
- Improved organisational efficiency
- Reduced operating costs
- Increased sales or revenue
Without the right metrics to measure success, it is extremely difficult to achieve the successful outcome that is expected. You need a strategic plan to guide you and that means to define and agree on things such as important business processes, financial benefits, KPIs and deadlines. Otherwise, you lose track of your project plan and result in minor setbacks.
- Lack of Management Commitment
Another major risk factor for ERP projects is the lack of senior management commitment. Without full commitment the ERP implementation is less likely to be effective as the company may not take the project seriously. When having an initial conversations you should have a discovery call involving the senior management team and find out what their goals are. The senior management team should have a project manager. Project managers must be ready and willing to kick-off the project and ensure the overall success of the implementation.
- Inexperienced Project Team
ERP implementation should be a systematic approach and recruiting the suitable team for the responsibility can make or break the success of the procedure. A lack of ERP knowledge in the team can create inefficiencies in the completion of a project.The project manager should have the right knowledge and expertise to carry out the project as they will be heavily involved in the implementation process. They need to be a leader.
A good team will involve a combination of department managers, domain experts, key executives, intended users, and outside ERP consultants with expertise in your specific industry so that arising problems are resolved and enable the implementation goes forward.
- Poor Communication
The easiest and critical way that ERP implementation contributes to a negative impact to a successful project execution is by having a poor communication strategy.
Senior management are sometimes not great at communication. Management need to identify a team and when a problem arises the team can solve the problem. By having a communication strategy, problems can be resolved quicker and easier as users are aware of who can assist them.
- No Change Management
Implementing an ERP solution involves changes and can result in some resistance and fear. This is because job roles change as they need to learn a new system.Because of this, not all employees are enthusiastic about the ERP implementation.
Managers need to clearly communicate with users on how adopting the system will impact staff’s core responsibilities.
The company should provide training and workshops to help employees to familiarise themselves with this new software so that they can become more comfortable with the ERP system.
- Insufficient testing
System and software testing is imperative to not only identify any defects with the system, but also ensure that the system meets your business goals.You also want to ensure that the ERP system is not missing important functions or not be well accepted by end users.
ERP implementation is complex as the entire process requires the careful coordination of your systems, processes, and people and therefore, challenges should not be underestimated.
Understanding some of these common mistakes can be the difference between ERP success and ERP failure.
To speak to an expert, get in touch.