Now that the New Year is upon us, many of our clients and industry peers are beginning to consider what they can do to make their ERP implementations more successful in 2014 and beyond. While many prefer to analyze case studies of successful ERP software initiatives, it is also helpful to learn from ERP failures as well.
Unfortunately, or fortunately, depending on how you look at it, there are plenty of ERP system failures to consider when looking for lessons from the field. Our 2013 ERP Report, for example, shows that a majority of ERP implementations take longer than expected, cost more than expected and fail to deliver expected business benefits. This is no surprise since many of the same ERP consultants that were contributing to failures ten or twenty years ago haven’t necessarily changed and are still making the same mistakes – just for different project teams at different companies. Further, we have seen several high-profile failures over the last year, including botched ERP implementations at organizations such as U.S. Steel, the State of Massachusetts and the State of Florida.
If we look under the hood of some of these failures, there are several lessons that can be learned from others’ misfortunes. This is perhaps the silver lining of failure: there are plenty of lessons to be learned. Below are three lessons we can draw from ERP failures:
1. ERP failures can be a good reminder that implementing is difficult. For implementing companies – and, in many cases, their ERP consultants – ERP failures can be a humbling reminder that ERP implementations are difficult. Too often, ERP vendors and consultants oversimplify and downplay the risks and complexities of ERP system initiatives. When an ERP initiative led by a high-profile and well-respected ERP implementer occurs – as is the case in most high-profile failures – it proves the humbling facts that ERP implementations are by nature difficult. Anyone who suggests otherwise is either in denial or doesn’t know what they are doing. Even with our experience applying our proprietary PERFECT Fit methodology to over 100 ERP implementations across the globe, the Panorama Consulting team is always in character about the fact that each ERP implementation is going to have its own difficulties and challenges.
2. CIOs and CFOs are generally more educated now than they were before. The proliferation of ERP failures has also helped CIOs, CFOs, project managers and other ERP project team members be more sophisticated in their understanding of ERP software risks and challenges. After all, just as open heart surgery has plenty of examples of patients that haven’t made it through alive, so too is the case with ERP implementations. (By the way, implementing new ERP systems is very similar to open heart surgery, in that it involves ripping out and replacing the “guts” of an organization.) Fortunately, many organizations are able to embark on enterprise software initiatives with their eyes wide open as opposed to naively failing to recognize or address the various complexities and risks.
3. Failure helps good ERP consultants be better. Good ERP consultants may be few and far between but those that are good at what they do are able to learn from their own mistakes and failures. For example, when hiring new consultants at Panorama, we prefer hiring those that have struggled, tripped up and recovered from past ERP implementations. Those that don’t have a few battle wounds under the belt are oftentimes dangerously naïve, which is the case with many of our competitors. Another example is the continuous feedback loop of our ERP implementation methodology: each year, we apply the collective experience and lessons of our dozens of ERP implementations and ERP expert witness cases over the past year to make the methodology even better than it was before. Just as ERP systems are constantly evolving, so too should the methodology deployed by your ERP consultants and internal team members.
These are just a few examples of the silver lining offered by ERP failures. If it wasn’t for Hershey, Waste Management, Lumber Liquidators, U.S. Steel and dozens of other publicized ERP failures and lawsuits each year, we wouldn’t be able to learn from the mistakes of others – and we would probably all be over-confident in our abilities at the same time. Indeed, our ERP expert witness practice helps the Panorama team be aware of the blind spots and risks associated with ERP implementations. It is these lessons that can make your ERP implementation more successful in 2014 and beyond.
Learn more by downloading our white paper, Lessons Learned From a Government ERP Failure.