15 Causes of ERP Project Failure
A modern ERP solution can enable extraordinary new efficiencies, provide valuable new capabilities, deliver critical insight and, ultimately, supercharge your organization. But it is one of the most complex, time-consuming and high-risk projects your organization will ever undertake. And it’s easy to make mistakes – like these – that will result in failure.
1. The project is not the top priority
When the new ERP is not the clear No. 1 priority for the organization, the project likely is doomed. Because users perceive the project as something that is not important, and users and managers do not buy in and will not invest the time and resources necessary for success.
2. The project is viewed as an IT project
An ERP project is not just IT project. It is a business project that requires the best resources from across the organization – and the expertise of a project team that knows the functions and processes that will be affected.
3. Inadequate internal support
Too often, organizations focus only on C-suite sign-off. But to persevere through the long process and to reach the desired future state, everyone at the company must understand the case for change. Key stakeholders from all levels of the organization must be involved, and management must be committed to providing the time, resources and budget required.
4. The project is rushed
When you speed through or gloss-over the business process improvement and software selection phases, it’s easy to make bad choices – mistakes that will negatively affect the way you do business for years to come.
5. Failure to assess the current state
Before any real change can be made, and before goals can be set, it is critical to know and understand the current state of the business. This involves gathering key performance metrics, then mapping business processes to identify where improvements will make a significant difference.
6. Insufficient research and education
To effectively chart a course toward an optimized future state, the project teams need to know the capabilities of modern ERP solutions and have a comprehensive understanding of today’s best practices.
7. Less-than-thorough requirements gathering and definition
It makes no sense to implement a solution that simply automates existing processes. Sure, it’s easier to take that approach, but automating a bad process just makes the bad process faster. When the effort is made to analyze current core processes, identify pain points and problems, determine specific needs and business goals, and to clearly define a future state, the return on investment (ROI) is better and time-to-transformation shorter. Learn the 5 best practices for ERP vendor selection.
8. Excluding critical users and managers from the process
Failing to involve the right people can have a huge downside. Technology-only decisions that ignore the human element often result in the selection of an unsuitable solution, poor user buy-in, resistance to change, misdirected efforts and costly rework. And the implementation of a solution that fixes little, breaks proven processes and creates new operational complications can have a devastating impact on an organization.
9. Incorrect, incomplete or inaccurate requirements
Bad requirements inevitably lead to faulty priorities – and the wrong software choice. The key to success is to determine the desired future state, and then develop a focused list of requirements that will achieve the future state.
10. Flawed software selection
Buyer’s remorse is a thing in ERP. Some experts say that perhaps 40% of companies regret their software purchase because it doesn’t align with their business processes or can’t scale to meet their needs. It’s important to do thorough research to determine which solutions suit your industry, organization and processes. It’s essential to involve key stakeholders, users and managers. And it’s critical to require potential vendors to demonstrate how their software addresses your unique requirements, support business drivers and enable your future state. Learn the 5 mistakes that derail the ERP software selection process.
11. Not considering the user experience
Lack of attention to the user interface can result in under-utilization of the solution. A poorly designed, difficult-to-use interface can be a productivity-killer. And when you force people to conform to technology, the result is diminished buy-in, reduced compliance and heightened resistance to change.
12. Change management was neglected
Of all the possible errors, poorly executed change management (or none) is perhaps the most avoidable cause of project problems and failure. Resistance to change, even positive change, is normal and expected human behavior – and plans must be made to minimize its impact. Learn 6 critical change management strategies.
13. Lack of focus on critical technical areas
It’s important to focus on data cleanup/conversion, integrations and reporting from Day One of the project. Many projects don’t focus on these areas until it’s too late. Data cleanup/conversion often is a major challenge, but incomplete, incorrect and incoherent and duplicate data will result in bad information and poor insight. Integrations must be considered early in the project – they often are the biggest roadblock to success. Reporting, too, must be dealt with at the beginning, because the reports required will drive configuration decisions.
14. Inadequate project communications
A new ERP must be positioned properly: As a productivity improvement investment that will make the company more competitive, profitable and successful. It should be communicated throughout the organization that the ERP project is as important as a new plant or a new product line.
15. Poor implementation planning
It’s not possible to overstate how essential proper project planning is to success. And most organizations significantly underestimate the time and resources required to plan methodically and comprehensively. For a complex project like an ERP implementation, lack of process knowledge, forgetting a critical task or overlooking a key decision point can cause frustrating delays, time-burning rework, expensive fixes and failure. Learn more about our ERP Implementation services.
Learn More From Our Experts
Implementing a new ERP solution is a complex project – and not one that companies do often. What are the keys to effectively managing this big, business-critical initiative? Get the answers when you download “7 Essential Strategies for a Successful ERP Project.”