Life as an ERP expert witness has its pros and cons. While it’s discouraging to see the magnitude of failure that many organizations face when trying to implement new enterprise software, there are plenty of lessons learned from ERP failure that help project team members avoid the same mistakes in the future.
Our ERP expert witness and project recovery practice is often tasked with the need to identify who is at fault in a failed ERP implementation. This is never an easy question to answer, as a host of stakeholders contribute to the success or failure of a project. Depending on the unique situation, the implementing organization’s team, executives and front-line employees may all be at least partially to blame. Even the company’s ERP consultants or system integrator could be at fault. In some cases, it’s a combination of both.
Regardless of who is at fault in an ERP implementation, there are a number of key lessons that we have learned from helping with ERP lawsuits and project recoveries:
Technical projects typically don’t succeed, but business transformations do. Unfortunately, most CIOs are more comfortable with technology than they are business. The most successful ones, however, treat their ERP implementations as business transformations rather than technical installations. After all, implementing new ERP software is much more complex and has more impact on the business than say, a Windows upgrade or antivirus software rollout. When compared to a more basic technical installation, ERP implementations have a bigger impact on employees, business processes and the overall strategy of your company. Be sure to plan and execute your project accordingly.
Taking time to reengineer your business processes prior to implementing the software will reduce time, minimize costs and maximize business benefits. ERP vendors love to sell the proposition that you do not need to worry about your business processes because implementing their software “will solve all of your problems.” Industry best practices, pre-configured solutions and out-of-the-box silver bullets should be taken with a grain of salt, because they typically don’t have material relevance to how you will run your business. ERP systems are too flexible and robust to define your business processes out of the box. Because of this, it is critical to define your future state business process reengineering prior to implementing your new system.
The “people” side of the project will make or break your project. If I had to pick one thing most likely to determine ERP success or failure, my hands-down choice would be change management. It’s the most important aspect of an implementation, yet too many organizations fail miserably in this area. In fact, of the 30+ lawsuits that I have either testified and/or written expert reports for, organizational change management and ERP training was a key failure point in each and every one. Investments in training, employee communications and other organizational change activities will yield exponential returns relative to the investment.
Unrealistic expectations from ERP vendors and sales reps can kill your chances of success before the project begins. Starting a project with unrealistic expectations is often the first domino to fall in an ERP failure. When an ERP vendor or sales rep lowballs the implementation cost or duration, it leads to a host of bad decisions later. Corners will need to be cut, additional money and time will be requested and key employees will most likely be fired. It is critical to start the project with a realistic implementation plan and budget (read: not overly aggressive). Remember that it is not the job of ERP vendors to manage your expectations – it is your job to understand what it will really take to get the job done right.
When you are investigating an ERP failure, it’s not about pointing fingers. It’s about getting it right.