If there’s one topic that I tire of writing about, it’s the volume of ERP failures in the marketplace. Even with dozens of high-visibility ERP failures to point to over the last ten years, I don’t remember a time in my career where the failure rate was quite as pronounced as what we’ve seen in recent months. Earlier this year, it was Marin County and just last week, it was Lumber Liquidators. Now we can add Dorset County in the UK to the list, which reported today that it spent 16 million pounds on a system that has made people’s jobs more difficult, less efficient, and has produced low satisfaction rates.
As you read that last sentence, keep in mind an August, 2008 article by Computerworld UK article that quoted Elaine Taylor, director of corporate resources at Dorset. She said:
“The ERP system is the backbone of our change and efficiency programme and will drive us to improve how we work.”
Obviously Dorset County’s ERP implementation did not goes as Ms. Taylor and her team expected. The interesting thing about these recent failures is that they tend to point to some common themes. Perhaps there are some lessons to help executives and project managers not repeat the same mistakes?
Three Common Elements of Recent ERP Failures
1. Where are the business benefits? Organizations like Dorset County, Lumber Liquidators, and others get to the end of an ERP implementation and ask themselves what they have to show for their multi-million dollar investments. In these cases, jobs have gotten less (not more) efficient, sales have decreased (not increased), and business processes now take longer than before (not less). This is unacceptable and is enough to make any CFO nauseous after such large capital outlays. However, the problem is usually not because the software doesn’t work, which leads us to #2 below.
2. What about the people? At the end of the day, ERP systems are just tools to get a job done, but it’s the people that actual deliver the business processes and business benefits. In the case of Dorset County, the organization claims that processes that took one minute now take one hour and employees are so stressed out as a result that they are forced to take time off sick. I don’t believe we’ve ever included “employees getting sick” as one of the line items in our total cost of ownership estimates, so I don’t imagine that Dorset County did either.
3. Training is a key ERP failure point. In every failure and ERP lawsuit that we’ve been hired to clean up, poor training is probably the single most recurring theme. Dorset County is no different, with 58% of employees expressing negative feelings about training, usability, and support. Even several months after go-live, 55% still express negative feelings about the system in general. Clearly, something went wrong in the training and user support provided by the organization. As we’ve outlined in several other blogs and reports, generic, transaction-based system training is woefully inadequate – organizations need more comprehensive organizational change management plans to ensure users accept the new system.
These three lessons may seem like common sense, but consider how many times these same mistakes have been repeated over the last 10 to 20 years. As we look to the future, I expect that the “just slam it in, flip the switch, and voila!” style of ERP sales messages will lead to more ERP failures in coming years as companies begin to realize that even SaaS ERP or Tier II ERP systems require fundamental changes to their businesses, which is indeed hard work and needs to be planned accordingly. There is no “easy button” for changing your business, even if the software itself is becoming easier.
The other thing to note is that these lessons become obvious only in the massive failures like the ones publicized at Dorset County, Marin County, Waste Management, and countless other high-profile lawsuits. For every instance like these, there are hundreds, if not thousands, of more moderate failures that repeat the same mistakes but don’t quite reach the disaster or lawsuit phase.
How Can You Avoid these Same ERP Implementation Mistakes?
Take back control of your ERP implementation by educating yourself before the failures begin. Learn more about how you can avoid these problems and position your ERP implementation for success by attending our 3-day ERP Boot Camp in December. Our team of independent ERP experts can help ensure that you effectively address organizational change management, implementation project management, and other ERP system success factors.