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Symptoms of a failed ERP implementation

(Image credit: Image source: Shutterstock/Mikko Lemola)

The life expectancy for many Enterprise Resource Planning (ERP) solutions implemented in the last 20 years is rapidly approaching for many business enterprises, if it hasn’t already arrived. New ERP solutions offer a great deal more functionality than earlier versions to help take advantage of valuable tools like business intelligence, analytics, mobile device access, cloud-based hosting, IoT, M2M and other technology advances.

The opportunity to improve operational efficiency, reduce waste and have real-time access to actionable data is a tempting prospect for CIOs, CTOs and other C-level executives. Not to mention the promise of a rapid return on the investment in technology. However, the transition from a legacy ERP solution to a newer option does not always result in a leap in productivity, an increase in quality or the reduction of waste. Some companies start the selection and implementation of new ERP solutions without paying attention to the due diligence that is required for a successful project.

In fact, some industry analysts estimate that 20 percent of ERP implementations could be considered failures as they don’t accomplish the benefits envisioned for the project. The reasons for a failed implementation are varied and the consequences can be severe.

The prospect of a failed ERP project is a troublesome and potentially career-ending nightmare scenario for enterprise technology decision-makers. Fear of failure can lead to continuing to rely on inefficient, outmoded technology and missing out on the efficiencies that a new solution can provide.

Our experience with involvement in hundreds of client interactions in the past 20+ years has helped us know what the symptoms of a failed ERP implementation look like – and how to recover from the missteps that led to a potential disaster.

Three symptoms of a misguided ERP implementation

A lack of a future state vision

If a company has not defined what the ultimate successful outcome of a new solution is, there is a tendency for staff to never change necessary workflow processes and revert to the way they have always approached work tasks. Staying with the tried and true “old ways” eliminates the opportunity to take advantage of the benefits and efficiencies of any new solution. ROI in a new system will be further delayed unless there is a commitment to a thorough analysis of the existing processes and a commitment to a business transformation process that is part of the implementation project. Organizational change includes leveraging internal communications, user training and clearly communicating the rationale for change to all staff, executives and other stakeholders.

A team without the necessary resources to succeed

A warning sign for any implementation project is when teams don’t have the resources to devote as much attention to the project as is required for a successful outcome. This dysfunction is often accompanied by shifting objectives which compound the problem and delay the eventual deployment. Properly structuring the implementation team and providing it the necessary time and resources are critical elements in a successful project. Managing multiple responsibilities in addition to tasking team members with implementing the technology solution further delays the completion of the project.

Fuzzy approach to data management

Companies go down the wrong path without the ownership of data clearly defined prior to embarking on the transition to a new ERP solution. Eliminating duplicated data sets and ensuring data is in a common file format should be an initial consideration and receive consensus from all concerned parties before starting. This helps eliminate data silos, increases transparency into the entire enterprise and ultimately enables company leadership to make faster, well-informed decisions.

How to recover from a failed ERP project

A company may select the right technology solution for its enterprise but still find that the results don’t justify the investment. We are often tasked to help companies that find themselves in that disappointing situation. 

We tackle failed ERP projects with a careful analysis of several key areas:

  • Determine why the initial effort fell short
  • Analyze the structure of the project team
  • Review scope of work, budget and timeline
  • Assess whether key categories (for example, software capabilities, functional design, technology integration, infrastructure, information management, etc.) have been adequately addressed
  • Solicit team member feedback to determine if a business case for change was clearly defined and communicated

Education and information sharing ensure a successful project

Sharing the desired future state with all process owners is the first step in developing a positive momentum within the team. Explaining reasonable and achievable expectations regarding reducing waste, improving productivity and quantifying other benefits helps get buy-in from team members and the support of management.

A realistic timeline with agreed-upon milestones build confidence in the process, prove the business value of the project and confirm that the project is back on track. Momentum can quickly be created when projects have everyone’s commitment and the rationale for undertaking the project is well understood.

It’s important to be able to quickly identify when the project isn’t properly resourced and heading for failure. A failed ERP implementation can flounder for months – or even years - wasting company resources without realizing any of the promised benefits that the new technology solution can provide. 

Companies can recover from missteps in a failed ERP implementation project with a strategic review of what went wrong and a firm plan for how to correct the previous mistakes. The first step is recognizing that the current implementation plan is not working and realizing that a thorough analysis and a revised project implementation plan is required. 

Then the enterprise will be able to reap the benefits of adopting more sophisticated and efficient technology, improved business processes and a workforce invested in increasing the quality and volume of its output.

Andrew Bolivar, Director, Center of Excellence, Ultra Consultants (opens in new tab)

Image Credit: Mikko Lemola / Shutterstock

Andrew Bolivar serves as Senior Consultant at Ultra Consultants and Director of Ultra’s Center of Excellence, an enterprise vendor research initiative. Andrew has conducted ERP selections for both process and discrete clients in F&B, CPG, plastics, distribution and other industries.