ERP is an acronym for Enterprise Resource Planning or in more simple terms integrated business management system.
Why do they fail?
There are many publications on the reasons why ERP implementations fail, I have listed mine based on my experiences and some solutions I have used to overcome them.
1: Failure of the business owners and executive to understand the many complexities within an ERP implementation.
Solution: Develop a detailed Project Charter which documents and tracks the necessary information required by decision makers to better understand and approve the project. It includes the needs, scope, justification, and resource commitment as well as the project’s sponsor(s) and decision by the CEO/Board to proceed or not with the project.
The intended audience of the ERP Business System project charter is the board of directors and CEO and senior management.
This document needs to be read and signed by the key stakeholders of the business.
Attached is a draft template which can be downloaded for free and modify to suit your needs.
2: The Business treating the ERP Project as an IT or Accounting project, even though IT and Finance play an important role an ERP is a business project.
Often a business management software project can be interpreted by others as just an IT or accounting project, particularly if a person with an IT or accounting background is the Project manager/Leader. The project involves and affects the entire business and is a business project and even though IT and Finance play an important role this is not just an IT or Accounting project. The outcome will often be a finance or IT implementation and not have a key front end focus on sales and customers
Solution: The project manager/leader should be high up in the organisation chain – understanding how the business operates and where the business is heading.
3: The Internal resource impact is often dismissed and often grossly underestimated by the business resulting in the project stalling and becoming disjointed due to the lack of commitment and resource availability.
Solution: With the chosen vendor develop a resource impact and cost statement based on the vendors experience in dealing with similar companies and discuss this with the senior management and obtain their buy in to ensure resources are available and the internal resource cost is fully understood.
4: Final solution is not what we envisaged and does not meet the business requirements.
Solution: Undertake a series of detailed discovery and requirements gathering workshops across the business detailing all key workflows including Quote to Cash and Purchase to Pay and take into account the current and future required state of the business (eg. what will the business look like and how will it operate 5 years from now). Ensure the subject matter experts in your business and the vendor signs off on the requirements. (note; the vendor should not lead the discovery or requirements gathering exercise.
5: Minimise customisations as program update costs will increase exponentially the more customisations you implement into the application.
Solution: Strive for vanilla and zero customisations by resisting the push for out of scope inclusions and trying to replicate functionality in the old system. Modify existing processes where possible rather than opting for customisations.
6: Well into the implementation it is discovered that the The ERP vendor solution doesn't have the features stated by the vendor or their interpretation of your requirements was incorrect.
Solution: Once the internal functional requirements gathering workshops are complete, a set of "Day in the Life" demonstrations should be provided by the shortlisted vendors to demonstrate their ability to meet the functional requirements. Day in the life scripts are developed internally to allow the vendor to demonstration a walk through of the proposed system solution based on these. The DITL demonstration should include from start of day to end of day and cover all key areas of the business including Quote to Cash and Purchase to Pay along with key weekly monthly and yearly activities.
A score card system should be developed and each vendor demonstration viewed and scored by the project team and subject matter experts of the business to ensure the vendor solution and requirements are aligned and understood by both the business and the vendor.
7: Failure to undertake in-depth and detailed Data Cleansing (rubbish in and rubbish out).
Solution: Commence data cleansing activates as soon as possible to ensure the data uploads that go into the new system consist of only clean and accurate data.
8: The new ERP has gone live but support are inundated by support calls from users.
Solution: Undertake end user training as early as possible, training training training.
9: Timelines keep getting pushed out and a blame culture is building.
Solution: Implement a RACI overlay across the project tasks, RACI is an accountability and communication tool and ensures everyone has clarity across their role and responsibility within the project including the vendor. You can download the RACI Excel template below.
Summary
There are various factors that determine the success and failure of ERP systems. ERP implementations can be painful. You can use RACI across your project plans to ensure everyone knew the role they and their teams played in the implementation.