The ERP vendors and consultants appear to have experienced their share of ERP failures in recent months. For example, as recently as August, we blogged about the failure at the State of Pennsylvania, which publicized a $40 million budgetary overrun with a project that took 42 months longer than expected. If you take a moment to Google “ERP Failures,” you will find many more case studies of every CIO’s worst nightmare.

More recently, the State of Massachusetts announced that it too has experienced an ERP failure of sorts. The state’s unemployment system project went over budget by $6 million and is allegedly unable to make proper payments to job seekers as a result. When judging the success of this project on three criteria – budget, time to implement and benefits realized – it is clear that the State of Massachusetts, their system integrator and internal project team all left much to be desired.

These two examples are two of many. Our 2013 ERP Report reveals that a majority of ERP implementations fail to implement on time or on budget and/or fail to deliver the expected business benefits. This being the case, what are some of the things that both public and commercial organizations can do to mitigate the risk of ERP failure and optimize the chances of success? Here are a few lessons that will help your organization achieve better results than those outlined here:

Set realistic implementation expectations. Most projects go over budget and take longer than expected largely because there were unrealistic expectations to begin with. For this reason, it is important to recognize that when an ERP vendor or system integrator is selling to you, their job is to close a deal rather than to set realistic expectations. Benchmarking to organizations similar to yours to see how long they actually took to implement (versus expected) can be a reliable data point. In addition, you’ll want to make sure that your implementation plan includes all the internal project responsibilities and other activities outside the scope of your technical implementer.

Begin with a solid implementation project plan. Similarly, a solid implementation project plan is a prerequisite to realistic expectations. During the planning phase of your project, meticulous attention should be paid to project assumptions, roles and responsibilities and scope to ensure your plan is a realistic representation of what is required to support the end solution you desire. As mentioned above, your technical system integrator is often going to provide an incomplete and myopic version of a project plan, which will need to be augmented with other critical project activities. For example, organizational change management, business process reengineering and project governance are three items that are commonly omitted from the scope of most system integrator and ERP consultant implementation plans.

Know when to pull the ripcord on your project, consultants or system integrator. ERP implementation failures do not happen overnight so most large-scale and highly publicized ERP failures did not properly recognize or respond to warning signs along the way. A good consultant or system integrator will help you recognize warning signs along the way but if they don’t, it’s just as important for you, the implementing organization, to make changes where needed. In some extreme cases, this may even mean pulling the plug on the project so you’re not putting good money after bad. One common mitigation strategy in this area is to hire a third-party independent verification and validation (IV&V) consultant to oversee your consulting firm, which will serve as another mechanism to recognize warning signs along the way.

The bottom line is that while ERP failures are more common than they should be, most can be avoided with the appropriate level of planning, expectation-setting and risk mitigation. Regardless of whether you are a government entity or commercial organization, simply employing the three tactics above will help dramatically increase your chances of success.

Learn more by downloading our free, on-demand webinar, Lessons Learned From Failed ERP Implementations.

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