I’m a big fan of horror movies, and Halloween is one of my favorite holidays. It’s the time of year where many of us (or our kids) dress up like scary characters and watch scary movies. As much as I love Halloween, slasher movies, and a good scary mask in my spare time, I’m not as much of a fan of horror when it comes to ERP implementations.
Unfortunately, however, too many ERP implementations play out like a bad scary movie. For example, in the movie “Saw,” the creepy guy with the weird voice and disturbing mask kidnaps a bunch of characters and asks them to fight for their lives by performing a series of seemingly impossible tasks. Whether it’s running through a room of razor wire or sawing off a leg to break free from being locked in a room with toxic fumes, the odds clearly aren’t in favor of the characters in this movie.
Project managers and executive sponsors of ERP implementations often feel the same way. Not understanding how ERP systems work, how they can be completed on time and on budget, or how to get the business to adopt the new system can make it feel as if you’re trying to navigate the impossible.
Unfortunately, many ERP project team leaders and core team members make decisions that make an already difficult situation close to impossible and set their initiatives up for failure. We’ve seen many of these mistakes time and time again when we’ve helped companies recover their projects and when we’ve provided expert witness and testimony in ERP lawsuits. Below are five common mistakes that will put you in a bind that you may not be able to escape if you don’t avoid them.
Five Common and Avoidable ERP Mistakes
- Business requirements free for all. Business requirements definition by committee generally doesn’t work, and I wouldn’t be going out on a limb to say it has never worked for anyone. Because modern ERP systems are so robust and flexible with countless potential business process variations, there needs to be some control, rationalization, and business justification for defining business processes and requirements. You want to gather input from key stakeholders and business process owners, but you don’t want everyone to have an equal say in what the system will or won’t do. Failure in this area is a sure-fire recipe for a very long and costly implementation.
- Cutting project costs to save a buck. In today’s economy, cost cutting is the name of the game. Long gone are the days of ERP projects that cost tens of millions of dollars with no results to show. However, some companies go too far and throw the baby out with the bathwater. Cutting project line items like organizational change management and outside project management support may look good on paper, but I have yet to see a situation where these cuts save money in the long-term. More often than not, cutting project costs too close to the bone will cost your company multiple times that when the go-live doesn’t go well.
- Just get it done quickly. Even though our research shows that the average company requires 18 months to implement their ERP solution, companies are often lured in by the false impression that ERP implementations can be completed quickly and relatively effortlessly. Executives with little ERP experience are notorious for buying into these unrealistic expectations, which jeopardizes the whole project. ERP software can usually be implemented in a single day (literally), but getting it to work the way you want it to for your business is an entirely different story. If you don’t spend the time to address all the business aspects of an ERP initiative, it’s going to cost you a lot of time and money to fix the resulting problems.
- The hail mary go-live. Our research shows that just over 50% of all go-lives involve some type of material operational disruption to the company, so why increase those odds by going live when you’re not ready? Even if you’re behind schedule or over budget, it’s important to understand that going live before the business is ready can cost you millions. For example, we recently worked with a company that decided to go-live before they were ready. Although we advised them to wait 30 days to finalize key project activities, they decided to go forward anyway with the notion that they would save roughly $100,000 in additional project costs. At the end of the day, they estimated that they lost over $2 million in cancelled shipments because they couldn’t get them out to their customers in time, all because key order entry processes were not yet ready for prime time.
- Our customers and shipments will be fine, even if the go-live isn’t smooth. The above illustration provides one example of the cost-benefit tradeoffs of cutting corners, but hindsight is 20/20. How would you quantify the cost of cancelled shipments or lower customer satisfaction, all because you didn’t implement smoothly? How would you quantify the cost of the system not supporting key processes required to service your customers because you didn’t define or test them well enough? Those are the questions you need to ask yourself when determining the pros, cons, and risks of cutting corners on an ERP project.
These mistakes may sound like plots from horror movies, but unfortunately they are not. We’ve seen companies repeat these mistakes over time, primarily because executives and team members don’t know any better or don’t have the level of ERP expertise required to make their projects successful.
How can you ensure your ERP implementation is successful? One key way is to leverage Panorama’s team of ERP implementation and organizational change management experts. We can help you do one or more of the following:
- Develop an ERP implementation or recovery plan
- Provide project management and oversight
- Manage your ERP vendor’s technical activities
- Create and execute an organizational change management, training, and communications plan
- Conduct on-site training for your project team to help them through the implementation
- Custom on-site workshops and hourly consulting services
- Project team and staff augmentation of ERP experts
- Provide expert witness and testimony services (if things have gotten really bad)
These are just some of the services we can provide to help your ERP implementation. Learn more about our full suite of ERP services or contact us to find out more.