It’s no secret that modern Enterprise Resource Planning (ERP) systems have become an essential part of the success of today’s manufacturers, helping to position them for success by boosting productivity, streamlining operational workflows, and improving data-driven decision making. Through varied functionality encompassing HR, supply chain and inventory management, accounting and customer service, these systems integrate legacy systems into one integrated platform to manage core processes. But for all their advantages, ERP implementation is challenging, and ERP failure is an all-to-often occurrence.
The Basics of ERP Implementation Rescue
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Why Do ERP Implementations Fail?
There are any number of reasons why ERP implementations fail. Problems can arise from data migration issues, poor planning processes lacking in clear objectives, or stem from end user engagement issues resulting from insufficient training processes, or resistance to change. Regardless of the reason, a failed ERP implementation has serious ramifications for the business, wasting time and money invested in the project, lowering morale of the staff, lost sales, and even effecting production and operations. In this blog, we’ll outline some basic steps to evaluate ERP failures and ways to get started on the road to recovery.
- Assessment
- Diagnosis
- Stakeholder Engagement
- Define Goals
- Revival Planning
- Change Management
Steps to Rescuing ERP Implementation Failure
Step 1: Assess the Current Situation
When faced with an ERP implementation failure, it’s critical to regroup and evaluate the state of the project before rushing in to make changes. Get stakeholders on the same page to evaluate the current standing and scope of the issues and help identify areas for improvement. Review the project’s documentation, timeline and budget to evaluate any needed adjustments.
Be sure to engage key stakeholders across departments to discover what’s working and what’s not. Some key questions might include:
- What pain points are we experiencing with the system?
- What resources are we lacking?
- What feedback are you hearing from end user groups?
Step 2: Diagnose the Issues
After you’ve assessed the current situation, you can move on to evaluating the issues that led to the ERP failure. One effective technique for identifying the root causes is known as the “5 Whys” analysis. Popularized in the 1970s, companies like Toyota still use this process to understand root causes when a problem occurs.
Essentially, to find the cause, you ask “Why?” five times. Each answer leads to the next questions, diving deeper into the underlying issue. This method sparks discussion beyond the surface-level symptoms and examine the reasons behind the ERP failure.
For example, if an ERP system failed due to poor user adoption, the first “Why” could be, “Why did users resist using the system?” The subsequent questions might reveal insufficient training, unclear communication of benefits, or even a misalignment with user needs.
Finding a “countermeasure” is essential in this process. A countermeasure goes deeper than simply a solution to the result (symptom) of a problem. Rather, a countermeasure addresses the root cause of the problem and prevents it from happening again.
Taking the next step to implement the countermeasures often involves changes to the business process, creating ongoing support or training programs, or comprehensive planning to boost stakeholder engagement. By taking a systematic approach to addressing root causes, your company can build a more resilient strategy to avoid ERP implementation failure in the future.
Step 3: Engage Stakeholders
An often-overlooked factor for ERP software implementation success is communication and stakeholder engagement. From leadership to end users, engagement fosters buy-in and collaboration across the company. Involving stakeholders helps align the team with strategic objectives and project goals, along with identifying potential roadblocks and objectives which could affect your recovery efforts.
Some strategies for re-engaging your key stakeholders in the project include:
Project workshops – Discuss the project’s status, invite feedback and reset enthusiasm focusing on the advantages of the ERP system for the company, each department and individual users.
Regular communications – Celebrate small wins from ERP project milestones and share updates to build excitement. Providing a way for stakeholders to submit feedback is also important.
Find project champions – Enthusiastic team members can advocate for the implementation process and help motivate peers.
Step 4: Redefine Project Goals
With an understanding of where you are now, where mistakes were made and a plan to gather the support of your team, it’s time to regroup around the goals for your ERP implementation project. Review the initial goals of your new ERP system and ensure that they still align with your overall business goals.
Be sure to prioritize features and functionality that will provide the greatest ROI and value to your company. Enlisting the input from stakeholders during this stage can establish a sense of ownership in the ERP project. Define what success looks like, framed by measurable criteria for keeping the project on track.
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Step 5: Create a Revival Plan
Perhaps the most important step of your ERP failure is developing a well thought out recovery strategy. Building this framework will act as a roadmap to getting your ERP project back on track.
Key components should include clear business objectives indicating what your ERP implementation aims to achieve. These measurable objectives should be aligned to the overall goals of your company to ensure that the ERP system adds real value. Specific action items should outline which tasks are required to meet your objectives; prioritizing tasks based on their immediate value to the organization.
Finally, a revised timeline is necessary to set expectations and track progress. and assign responsibilities to appropriate team members. Keep in mind any lessons learned from the initial ERP failure as well as potential challenges that might arise during the recovery phase. In addition, it’s important to assign responsibilities to the implementation team. Schedule regular check-ins and updates to help keep the project on track. Remember to keep stakeholders engaged throughout the process.
Step 6: Implement Change Management
An often-missed key to overcoming ERP implementation failure is change management. Organizational change management (OCM) plays a pivotal role in maximizing return on ERP system investment by providing a structured approach to “the people side of change”.
ERP implementation projects can entail a seismic shift in everyday operations. End users, used to a legacy system, may require additional training to transition to new ERP software or have anxiety about what the new processes mean for their roles.
Develop a change management strategy outlining how upcoming changes will be communicated to the team. Encourage opportunities for feedback from across the organization. Offer a range of training formats like videos, in-person sessions, or written documentation to ensure the team is comfortable with the new ERP system and provide ongoing support.
Step 7: Monitor Progress and Adjust
Once you’ve started the process to recover your ERP solution, it’s important to track success through key performance indicators (KPIs) based on the established project goals. Common KPIs may include:
- User Adoption Rate
- System Uptime
- Data Accuracy
- Process / Operational Efficiency
- Cost Reduction
- Customer Satisfaction
- Inventory Turn Rate
- Financial Reporting Accuracy and Speed
- Return on Investment (ROI)
Frequent evaluation can help identify areas for improvement and facilitate quick adjustments to avoid ERP implementation that fails to meet the project’s goals.
Conclusion
Recovering from ERP implementation failure may seem daunting, but it is possible to get the implementation process back on track with a strategic approach. By performing an honest evaluation of the current state, identifying the reasons for the botched implementation, engaging the implementation team and end users, defining the project goals and charting a clear path forward, your company can complete a successful implementation.
The Ultra Consultants team can help guide your company through an ERP implementation recovery with our proven methodology for success. We excel in transforming ERP failures into victories with our post-implementation expertise, ongoing improvements, and focused training. Let’s get your ERP software implementation back on track. Reach out today for your free discovery call to get started.
