The era of digital transformation has arrived, and companies across Canada are looking for ERP solutions that will create, amplify, and future-proof their competitive advantages. As an ERP consultant, one of the questions I'm often asked is: “What can we do to make sure that our ERP implementation doesn't fail?” To which I say: “Pull up a chair. That's a long and important discussion.” Here's eight typical causes I see of why ERP projects fail.
Why ERP Projects Fail
ERP implementation failure is an unfortunate and very expensive possibility, and there are statistics kicking around the Internet that paint a grim picture of its frequency. Many Canadians still remember the story of Target
's ill-fated attempt to expand into Canada. Target is not alone. Over the years, companies as eminent as Hershey
and Hewlett Packard
have all sunk millions into failed implementations. I encourage my clients to read these stories, but not to be paralyzed by them. With proper preparation and attitude, the risk of failure can be very much minimized. There are, sadly, no slick, simplified answers to avoiding failure. Successful implementations that realize significant ROI are hard work. I have a checklist that I like to run through with my clients. It may be a little longer and more involved than “4 Easy Steps to a Successful ERP Implementation” - but in my opinion, it's better to strain your eyes a little than to set off on the ERP journey without proper preparation. The following is a list of problems that I encounter – and attempt to correct – on a regular basis.
Lack of C-Suite Engagement & Support
Lack of executive engagement is an absolute killer. ERP implementation may be the most important thing your company does this year, and top management needs to be very much involved. An ERP implementation creates profound changes to your company, and hundreds of important decisions need to be made along the way. Those decisions require vision and authority – who better to make them than your company execs?
Poor Choice of Project Manager
Again – the project manager should have C-Suite vision and authority – or, if vendor selected, work in concert with someone who does. Your CIO may be smarter than Albert Einstein, but that doesn't mean that he or she sees your company from the necessary perspective, including your long-term objectives and goals. And if your project manager needs to pass everything by a higher authority (especially one who is constantly travelling or in meetings), your implementation timetable can be significantly slowed.
Choosing the Wrong Solution
This may seem obvious, but it happens. Forming an appropriate selection committee with the knowledge and foresight to choose the right ERP for your company can make-or-break your project. Size, complexity, scalability and price are obvious parameters for your committee to think about, but another very important consideration is whether or not the software is “industry-built”. Industry-built applications are designed for the business you're in. In general, they will mirror more of your business processes “out-of-the-box” than other ERP packages, and require less customization. This is, of course, just the tip of the iceberg when it comes to choosing the right ERP, but it certainly helps to narrow the field.
Defining what is in and out of scope for your ERP implementation is critical. What you want to create is a highly-focused team working towards well-defined goals. Without a scope statement, your team's focus will wander, your goals may not be met, and your ERP may not fully support your business.
Weak Implementation Strategy
Forming an appropriate implementation strategy for data migration, system implementation and user training is (like many of these headings) worthy of its own blog. In fact, most of what I'm talking about, such as scope definition, will become part of your implementation strategy. There are many considerations that fall under this heading, such as platform choice (Cloud, on-premise or hybrid), documentation of user procedures, choosing between single-step or phased roll-out, temporary maintenance of legacy systems, customization options, mobile adoption – and on and on. An appropriate, well-constructed strategy will guide your implementation to success.
Lack of Business Process Re-engineering
Occasionally, a company decides that an ERP implementation should precisely match their existing business processes. Sure – we can do that...but why on earth would you want to? This is exactly the right time to improve your company's agility, flexibility, productivity and profit by re-aligning business processes to match changes in market conditions, advances in technological capability, and the expectations of your suppliers and customers. Don't just think of your ERP implementation as a challenge – it's also an enormous opportunity.
Testing Plan too Short and not Comprehensive
The importance of comprehensive testing can be difficult to communicate to busy executives, some of whom, unfortunately, find out the hard way that testing is an absolutely essential part of the implementation process. Sufficient time needs to be made for several types of testing, some of which is manual and some of which can be automated. How does your new system handle a high number of transactions (performance testing)? Are all the system's features working correctly – including software and hardware (functional testing)? Do your new software modules work together to deliver the expected results in a simulated business scenario (integration testing)? Without thorough and systematic testing, something could go wrong after go-live, affecting your productivity, profits and reputation.
Insufficient Change Management
Without a strong change-management plan your entire implementation could amount to nothing more than a waste of time and money. Employees often feel threatened by change – especially when it's all taking place behind closed doors. To avoid the perils of “application erosion” (when employees revert to pre-implementation “legacy” practices) it's crucial to bring the entire company onboard. It is generally considered counter-productive to leave user involvement to the last moment. Having a communications and training strategy in place from the beginning will help ensure a smooth transition to your newly-implemented ERP system.
ERP implementation does contain some degree of risk, but when the hazards are clearly identified the path forward can be cleared of obstacles. Given the highly-competitive ecosystem that Canadian manufacturers exist in, not bringing business systems up-to-date can be the riskiest decision of all. If you would like to talk to someone about how we can help reduce your risk, and achieve better business results with ERP, please contact us