Factors that stand out in 75% of failed ERP implementations

Posted On June 4, 2021


by admnorthfield

Change is constant; as dry, overused and overheard as it is, it’s a saying that not a single individual would dare to deny. Often, change is associated with leaving the comfort zone and entering an alien zone. With change comes curiosity, intrigue and the most pronounced of all emotions, fear.

When organizations make decisions involving high risk, the awareness that the decision can either reward or backfire, is a calculation made well in advance. This is the only way organizations achieve greater feat and reach their true potential.

Despite decision makers in organizations being accustomed to frequent process changes, financial model changes, human resource restructuring and more, to this day organizations fear implementing a competent ERP software due to the large-scale modifications that it enforces within the organization.

Over 75% of ERP implementations in both large- and small-scale organizations are known to fail, a huge metric for a process that is adopted with the intention to proliferate growth and performance in organizations.

Why do ERP implementations fail when businesses can reap immense benefits from them? You’ll find out more than one reason as you read on –

1. Human factors:

In order to implement an ERP successfully across different hierarchies, a green signal from the executive board will not prove sufficient. Multiple stakeholders with multiple interests and responsibilities express rigidity while cooperating with ERP implementation managers, contributing to project inefficiencies and delays. It is crucial to align senior managers with the purpose of the implementation, encourage them to foster cooperation and response to authority among the other internal stakeholders.

In some other cases, the flaws may reside in the ERP project planning itself. The failure to factor in crucial elements while designing a project plan may massively affect and decide whether the plan will come to fruition or not.

What is important to notice is that very seldom do technical or technological factors cause failure in most ERP implementations. Where technical errors such as inefficient budget decisions, improper pre-runs have caused failures, the underlying reasons have still been leadership flaws, inability to place organizational interests over petty politics or inharmonious attitude towards change management practices.

2. Choice of ERP:

Many organizations fail to comprehend that ERP is not a “one size fits all “. Business processes and project purposes are not always the same and the entire success of ERP begins with selecting the right ERP for a business or project.

A seasoned ERP consultant will be able to direct organizations in choosing an ERP that best agrees with the purpose of the project and more importantly, has a proven record of yielding effective results for projects of similar nature. Smart ERP choices are sure to make implementation a lot systematic as the usability and applications of the ERP are pre-determined.

3. Untimed modifications:

Not all plans are made fool-proof and efficient at their inception. However, frequent modifications to ERP implementation plans can hamper the projected efficacy, derail the organization from the initial plan and cause further cost implications due to new changes to the plan. Once the plan is set in motion, to introduce new elements into the plan, the changes must be decided well in advance and executed in stages to minimize potential damage to the ongoing ERP implementation.

The modifications, if extremely necessary, must be closely analyzed from all standpoints to evaluate the best and the least risky method of implementing the necessary changes.

4. Unrealistic expectation setting:

A partially executed implementation does not equate to “something is better than nothing”, in fact, it can injure the organization’s long-term efficiency, performance and growth. The expectation for executing the ERP project must be clear and realistic from the get-go, for the plan to be devoid of any hiccups along the way. Establishing unrealistic timelines and results without performing the required analysis of the case prior to the implementation will surely result in a failure.

The focus must be set on executing an ERP project that, irrespective of whether it is conservative or ambitious, furnishes realistic expectations to the stakeholders of the organization and prepares them to bear in mind the pre-determined goals.

5. Inadequate training to end-users:

The true success metrics of ERP implementation can be gathered by understanding how effectively the end-users are able to apply the software into business processes, projects and for the overall functioning of the organization. For this to happen, the end-users must be adequately trained, tested on their acquired knowledge, and given appropriate measures of correction to instill a sense of confidence to use complex ERP tools.

Without a training program that touches upon all key operations of an ERP and makes all applications clear, project managers must not give a go-ahead to operate the tools. This puts the entire ERP implementation and its efficacy at jeopardy.

ERP project planning and implementation works best when skilled specialists are brought on-board to steer the wheel in the right direction, provide sound recommendations and adhere to calculated, practical timelines. At ADM Northfield, our panel of ERP specialists and professionals are experienced in handling projects to maximize efficiency and mitigate failure by abetting in well-planned implementation of ERP.

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