We’ve all heard the horror stories of enterprise transformations gone wrong. You know the drill: companies filing lawsuits, massive organizational issues along with other massive challenges, but we rarely discuss the common pitfalls and how to avoid them.
There are five primary ways that enterprise software initiatives can hurt your organization. The good news is that there are easy ways to mitigate each one. Here they are:
1. Lost time and money. Inefficient implementations, project management and controls can cost a company millions of dollars in cost overruns and lost time. According to our 2016 ERP Report, a majority of organizations face this challenge. In order to be successful, organizations need to more carefully manage their implementations. In addition, they must ensure they don’t over-customize or get too caught up in the technical aspects of their implementations, butinstead focus on the highest value project activates. Mitigation Tip: Build a strong project management and core team consisting of both internal and external resources and then develop a strong project governance framework to support them.
2. Inability to ship product or deliver services. The “Hail Mary” go-live – one that involves a decision to prematurely go-live in the hopes that things turn out okay – can be one of the most damaging things you can do to your company. Too often, companies trip over dollars to get pennies with a hell-bent intention of going live on time and on budget, which typically leads to exponentially higher costs in the long-term. Case in point: a recent client insisted on going live before it was time. They shaved 30 days and $100k off their implementation costs, but they lost over $1 million in cancelled orders when they couldn’t ship product in the weeks following go-live. Mitigation Tip: Conduct an independent go-live readiness assessment to uncover short-term and long-term risks before making that final decision.
3. Organizational change fatigue. Most of our clients run lean and are short-staffed to begin with, which is only exasperated by an intense ERP implementation. The massive amounts of change involved in an enterprise software initiative can cause employees to reach a tipping point of frustration and fatigue, underscoring the need for a strong organizational change management and workforce transition Mitigation tip: Assume that your organizational transformation will be harder than you think and err on the side of over-investing in comprehensive organizational change. (View our on-demand webinar regarding an effective organizational change program here.)
4. No material improvement to business processes. Some organizations intend for their initiatives to be broad-based, strategic, digital transformations that lead to quantum leap improvements to their operations and business models. However, many of these organizations instead run their projects to deliver minor, incremental process improvements instead. If you’re going to invest the time, money and heartburn associated with an ERP implementation, than you might as well go the distance by taking the time to do it right. Mitigation tip: Take your time to invest heavily in business process reengineering early in your project. Also make sure to get an objective assessment of the potential technologies available to you in the market.
5. Poor return on investment. The above items all undermine your return on investment in some way. Your intended costs and business benefits will never materialize if the above risks aren’t somehow mitigated. Mitigation tip: Hire an independent team of ERP software selection and implementation specialists who can focus on the critical success factors of an ERP implementation, such as program management, organizational change and business process reengineering, among other things.
ERP software initiatives have the potential to deliver huge benefits, but only if some of the above pitfalls are mitigated. Download our white paper, Ten Tips for a Successful ERP Implementation to learn more.