ERP projects fail at an astounding rate. Fortunately, most can be recovered before litigation becomes necessary. We sat down with Richard Armitage, Manager of Client and Expert Services at Panorama, to hear some stories about his recent project recovery experiences.
While every ERP project is different in terms of technology, duration and cost, Richard noticed some commonalities between the two recovery projects with which he was engaged: unexplained delays and executives experiencing a gut feeling that something wasn’t quite right. As with all ERP projects and digital transformations, the client, vendor and implementer are each responsible for a successful implementation.
Case Study #1: One of our project recovery clients had given their implementer a clear set of requirements. Since the implementer never addressed these requirements, the municipality halted the project in order to confront the implementer and get the project back on track.
Case Study #2: Another project recovery client encountered issues with their implementer when the implementer – midway through implementation – suggested choosing a different ERP system. Instead of seeking third-party guidance before moving forward with the implementer’s suggestion, they conducted an evaluation internally. Ultimately, the organization experienced ERP failure.
In both projects, the client could have saved time and money if they had sought external guidance sooner rather than later.
The Importance of External Guidance
A third-party can independently monitor a project using independent validation and verification. This involves an assessment of the project’s adherence to project plans and compliance with business requirements. Such assessments must be independent. Problems occur when organizations too heavily rely on internal resources.
Lessons Learned From ERP Failures
The two projects above are not the only examples we have learned from. All of our project recovery and ERP expert witness projects throughout the years add up to a plethora of lessons learned:
- Define clear goals
- Identify and quantify opportunities for improvement
- Don’t be afraid to say no to ERP
- Clearly define business requirements in detail
- Should be completed prior to software selection
- Focus on current processes and identify opportunities to improve
- Prioritize requirements that are core competencies
- Choose the right software
- Differentiate between vendor sales hype and the system’s ability to meet business requirements
- Avoid choosing an ERP system based on competitor or software bandwagons
- Set realistic expectations
- Benchmark to other projects to define a realistic implementation plan and budget
- Budget for non-technical needs, such as organizational change management
- Involve employees and key users
- ERP affects an entire organization and should consider input from those that know the business best
- Develop thorough business processes and workflows
- Don’t assume the software can handle everything off-the-shelf
- Identify the human aspects of how jobs and business processes will change
- Diligently manage scope and cost
- Carefully manage the software vendor
- Prioritize and manage software customizations