Our consulting teams are in the process of helping several companies across the country with their ERP selection and vendor contract negotiations. This is the point in an ERP software project where optimism runs high and the possibilities are endless: a new system to ease the difficult business processes in the current environment, tons of estimated business benefits, and a much stronger company. While this potential is all very real and very attainable, most companies fail to realize the blood, sweat and tears that go into a successful ERP implementation.

Although it’s not my destiny to be the king of pain, as Sting from the Police refers to himself, we end up playing that role when advising clients on their enterprise software initiatives. As we outline in more detail in our 2011 ERP Report, which was published last week, ERP projects are tough work and the software simply provides a tool for business improvements. We work with some companies that expect their ERP vendors to install and configure their software, flip the switch, and voila!, business benefits will appear. We have even worked with many companies over the years that wanted their software vendors to guarantee the expected business benefits in writing (not a single one of them did, by the way). What these and other companies fail to realize, however, is that the software will actually have relatively little to do with the ultimate return on investment that they end up achieving.

In our years of experience, there are three painful realities that companies often fail to consider when initiating an ERP project.

Three Painful Realities of ERP Software Implementations

1. Your ERP implementation will tax your already constrained internal resources. ERP systems are one of those things that you can’t completely outsource to another company or software vendor, no matter how good the software may be. We have seen companies find the ideal software for their business but fail miserably at their implementation and we’ve also seen companies with less than optimal software solutions realize huge business improvements – all because of how they implemented the software. At the end of the day, it’s your own people that determine the ultimate success and failure of the project, which requires considerable investments of their time. Your core team, subject matter experts, and stakeholders need to be heavily involved in business process design, conference room pilots, training and a host of other key ERP implementation activities.

2. Your ERP software is not a substitute for defining your business. We hear it all the time: let’s use best practices in the software, use the basic security profiles, and leverage generic training and help documentation in lieu of doing any business process re-engineering or tailored training. These are all big mistakes. While ERP systems generally do provide some level of business process workflows within the software, these are simply transactions that do not tell you how your business will operate, who will do what work within the company, or how the transactions fit in with the overall business processes within the company. It may sound good in theory, but ERP systems will not do the heavy lifting for you when it comes to business process design and organizational change management. This helps explain why most ERP projects fail to deliver expected business benefits (as outlined in our 2011 ERP Report).

3. There is no substitute for clear executive direction and vision. If I had to pick one thing – and one thing only – that could guarantee success for an ERP project, it would be effective executive buy-in and support. Only the CIO, COO, CFO, and other executive team members can clearly articulate why the company is implementing ERP, how it will help the company, and how they will realize the related business benefits. Without this level of direction and support, your ERP implementation is destined to become an expensive and chaotic mess that leaves you no better off than you were before. This level of executive sponsorship and alignment, which is a key component of an effective organizational change management program, will arguably have the single biggest impact on the success or failure of your ERP implementation.

While I don’t like to be the bearer of bad news, it is our job to help clients understand what it will really take to be successful rather than deliver an overly optimistic sales message. These messages are not necessarily what most CIOs and executive want to hear, but it’s the painful reality (though much less painful than an ERP implementation failure). If it helps companies avoid some of the mistakes of others, maybe it is my destiny to be the king of pain after all.

Learn more about some of the other challenges of ERP implementations by downloading our 2011 ERP Report.

Posts You May Like:

How to Avoid ERP Implementation Failure: 9 Tips

How to Avoid ERP Implementation Failure: 9 Tips

Enterprise resource planning (ERP) is used to manage and integrate functions like marketing, finance, human resources, and supply chain management. While ERP software is a transformative solution for many business owners, others are too concerned about project failure...