Organizations typically implement ERP systems to help improve business operations, whether it be to increase efficiencies, streamline business processes, or increase revenues. However, our research shows that a full 54-percent of companies have a high level of business risk at the time of going live with their new ERP software. By “high level of business risk,” we mean a material operational disruption, such as not being able to ship product or close the books at the end of the month. Granted, some disruptions are more significant than others, but bringing a company to its knees isn’t exactly a reason most organizations implement enterprise software.
While just over half of companies experience this type of problem, an even greater number have more moderate difficulties. Employee resistance to new processes, unclear business processes, working outside the system, and corrupt data are other issues that may not necessarily bring a company to its knees, but certainly don’t make life any easier for anyone involved. It can be amazing to see how companies go from high expectations during the software selection process to merely hoping that the go-live doesn’t fail as the implementation proceeds.
So what’s the problem — why do ERP implementations so frequently bring organizations to their knees? More often than not, it boils down to three key problems:
1. Poorly defined business processes. ERP systems are very flexible and typically involve significant operational change, so it’s critical to clearly define how business processes are going to look in the new “to-be” environment. Even the most flawlessly designed software can result in failure if processes aren’t clearly defined and communicated to employees. And by business processes, we mean end-to-end business processes, not transactions in the system, which ERP vendors are more opt to focus on.
2. Ineffective organizational change management. Speaking of business processes changes, employees need to fully understand these changes in order for the business to function going forward. Software vendors are typically well-versed in training on how to perform transactions in their system, but they are not versed in facilitating a robust organizational change management program that helps employees understand what the specific differences are between the as-is and to-be business models, how it affects their specific jobs, and how the end-to-end business processes will look in the new environment. All of these areas should be addressed via an effective organizational change plan, and they should happen in addition to and well before end-user training.
3. Unrealistic expectations. One of the more overlooked ERP failure points is unrealistic expectations. You may have experienced the consequences of unrealistic expectations in the past – your ERP vendor tells you their software can be implemented in 90 days or less, then you budget and resource accordingly only to quickly find that you have severely underestimated the time and money required, thus requiring you to cut corners where no one in their right mind would. This is an all-too-common root cause of implementation failure and can quickly bring a company to its knees because it is forced to implement poorly, which is worse than not implementing at all.
By avoiding these three pitfalls, you and your project team will go a long way toward not only ensuring your implementation doesn’t fail, but more importantly, that it delivers measurable business value to your organization.
Learn more about how you can make your ERP implementation more successful by attending our ERP Boot Camp on September 21, 22 and 23 in Denver.