A robust and detailed ERP is the backbone of critical business operations. This is because an ERP system provides end-to-end business process management and organizational efficiency, while saving time and expenditure.
However, implementing an ERP is a very crucial measure - requiring a lot of planning, thorough expertise and understanding of the specific requirements of the client organization.
ERP failure is the biggest worry of organizations that deter them from actually deciding on and implementing an ERP software. Most organizations feel that an ERP is the white elephant, which would eventually suck out huge amount of money and resources over a long period without any concrete results. Some feel that ERPs will complicate ease of operation and business transactions and eventually lead to a failed ERP implementation.
At a superficial level, it is difficult to decipher why ERPs fail. When it comes to ERP failure, many factors come into play and not just the incompatibility between the ERP vendor and the organization. The primary reason is the failure of the project execution. Let’s have a look at some of the most common reasons for an ERP failure.
1. Misdirected Focus
If the focus of the organization is on the technology part and not on the overall business impact, then implementations might suffer. The focus must be on holistic business process improvement and not just improvement of technology and frameworks. The most successful organizations view their ERP implementations as business transformations rather than technology projects. They understand that a new ERP system has much more impact on the business than a Windows upgrade.
2. Unrealistic Expectations
Starting with an ERP implementation with unrealistic expectations is often the beginning of ERP implementation failure. The implementation cost, time and effort should be well documented and presented to the client organization so that they have a clear picture of the whole process. Project plans should be realistic and not too aggressive.
How can you tell if your plan is realistic? Start by determining the critical success factors that will make or break your project.
Ask yourself and your team these questions - What has worked for other organizations of similar size and industry? Which challenges do organizations usually face?
3. Lack of Executive Level Involvement
The involvement of the executive team is very important for a successful ERP implementation. The executive team may have approved the project budget, but their job is far from over. They need to form an executive steering committee to clarify the overall digital strategy and make decisions about resource allocation, timeline, budget, and the likes of it. Executive involvement ensures that ERP implementation doesn’t become a technology project but fits into the organization’s business strategy. Organizations that use ERP software to enable a long-term digital strategy are more likely to realize the benefits, such as improved customer service and sustainable competitive advantage.
4. Lack of Change Management
If there’s one thing which is sure to prevent ERP failure, it is - organizational change management. Investing in organizational assessments, employee communication and customized training, to ensure that the employees effectively use the new ERP software and follow new processes and procedures, is very important. You can’t force employees to embrace change; it’s their choice and they may choose to resist it. Usually, this is subtle and non-malicious, but it can still undermine your ERP implementation.
5. Software Customization
It is a common factor that most organizations need some amount of moderate customization. While some customization is always necessary, customization gets dangerous when you change functionality that should be standardized. Too many customizations may ruin the overall impact of the ERP platform and can lead to a massive implementation failure.
EPPS ERP understands the importance of correct implementation processes and techniques and makes sure that our clients experience a smooth implementation process.
To know more about how we can help your organization, click here.