It’s unfortunate that so many ERP implementations and digital transformation initiatives fail. The fear of failure is enough to give executives pause before giving the green light on a such an initiative.
The good news? When managed appropriately, this fear and resistance can be mitigated. In many cases, this fear can be used to increase your project’s chance of success.
Here are five common reasons why executives say “no” to ERP implementations – along with what to do about each one:
1. They are worried that the project will take too long and cost too much. Our annual ERP Report shows that most projects either take longer than expected and/or cost more than expected. This statistic is often what drives fear. However, implementing strong project controls and governance is one way to mitigate this risk. Another failsafe way to address this risk is to ensure that you have a comprehensive implementation project plan that includes many of the hidden costs of implementation that most ERP vendors and consultants fail to recognize. Panorama and its team of independent experts can help define a project plan and governance process that avoids these common issues.
2. They are afraid of the project disrupting their daily operations. Another startling statistic from our annual ERP Report: roughly 50% of projects experience some sort of operational disruption at the time of go-live. This is the last thing that most CIOs, CFOs and other executives want, so it’s important that the risk be mitigated. A key way around this is to incorporate a robust risk management and mitigation plan into your implementation. Another is to hire an independent third-party to oversee your implementation, identify risks that your team may not see and ensure that you have contingency plans built into your overall plan. Panorama can help your team complete any of these key activities.
3. Their own people are the real sources of resistance. Often times, executives aren’t the root source of resistance – their own employees are. For example, the CFO may have a controller or accounting clerk that doesn’t want the extra work associated with redefining the company’s chart of accounts, which may in turn cause the CFO to resist an initiative that may require that activity in question. Regardless of the cause, defining and executing an effective organizational change management plan is critical to overcoming this and any other sort of resistance.
4. They don’t have the budget to pay for the initiative. At the risk of stereotyping, most executives are financial-minded, dollars-and-cents type of people. They see enterprise systems as a cost and a risk – often without the corresponding potential for optimized business benefits. In order to overcome this challenge, you have to speak their language. Define a realistic business case that captures not only the project costs, but also the potential benefits that your company is currently missing out on.
5. They are concerned that the new ERP system will not improve their business. Executives generally only invest in things that will deliver a positive return on investment, but many ERP initiatives don’t deliver on this potential. In order to overcome this risk, it is important to clearly flesh out the business benefits aspect of your business case. Note: be sure that you are conservative in your estimates, but that you’re also using these numbers to aggressively drive the business benefits potential of your organization.
Following this advice may not completely eliminate your executive team’s potential resistance, but it will help mitigate project risks.