There are many things that can go wrong in an ERP implementation or undermine the effectiveness of existing ERP systems. Lack of organizational change management, poor fit with business requirements, scope creep, poor project governance and controls – these are just a few variables that make routine appearances on “Top 10 reasons for ERP failure” lists, including our own.

As if there weren’t enough things to worry about with your ERP system, there is another and lesser discussed killer of ERP initiatives: Microsoft Excel spreadsheets. Yes, that simple tool that everyone knows, loves, and is so comfortable with could actually be silently killing your ERP system. It’s a slow, subtle, and often overlooked reason for failure, which is why we don’t often hear about it.

Here’s the reason why: while most ERP systems are implemented with the notion that the software will centralize data and business processes, those pesky little spreadsheets are running counter to the goals you’re trying to accomplish with your ERP software. The beauty of Excel is that anyone can use it to manipulate and manage data any way they would like, but that is also its downfall when it comes to ERP. Throw in the fact that people fear change and will stick to what they know (e.g. Microsoft Excel), and changing people’s mindsets can be very challenging.

This issue is further magnified by the gaps in your ERP system’s functional capabilities or your employees’ lack of understanding of how to use the system. Employees are generally intelligent and want to do what’s right for the company, but when push comes to shove, they’re going to do what they need to do to get their job done. So if the report they want or need doesn’t exist, they will create it in Excel. If they can’t or don’t know how to find data in the system, they will track it themselves in Microsoft Excel. Multiply these small examples by however many employees you have in your company, and it’s easy to see why hundreds or thousands of Excel spreadsheets may be proliferating through your organization. This is a slippery slope – now you have silos of data that your ERP system was intended to eliminate or consolidate.

So what’s one to do? Banning spreadsheets altogether probably isn’t a viable option, so that’s out. And even if it were an option, most people are resourceful enough to find another way to address the challenges that Excel helps them solve.

The real solution lies in understanding the underlying root causes of the problem. Microsoft Excel isn’t the problem, but lack of ERP training, software functionality, or defined business processes are the more likely culprits. Start with those root causes, implement solutions to address them, and you’re likely to see decreased usage of these “black market” workarounds outside the ERP system. And if you haven’t yet implemented your ERP system, address these potential challenges early via a well-designed system that addresses key business requirements, clearly defined business processes, and effective organizational change management and training. These are the only ways to truly disarm the silent killer of ERP systems.

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