Why ERP Projects Fail

Enterprise Resource Planning (ERP) projects are implemented in order to reduce cost, streamline existing business processes and to have a greater visibility in operations that helps in making faster and informed decisions. Sounds like a perfect solution, right? Then why do so many of ERP projects fail?

There are a number of reasons for the failure of ERP project implementations. Below are some of the most common causes of ERP failure, in random order of importance.

1.    Project Objectives Are Not Clearly Defined

Clear and specific goals are critical to measuring ERP implementation success. Careful planning and consideration in defining objectives is needed before you dive in to the implementation process.

Some companies tend to avoid setting hard deadlines, preferring to plan as they go and avoid the pressure of meeting the expectations. But they are doomed for failure because a well-defined project plan that includes clear objectives is paramount to success. The project plan should identify, at a minimum:

  • Project objectives
  • Timeline
  • Budget
  • Required resources (people, material, tools, equipment, etc.)

2.    Inadequate Resources

Resources needed to successfully implement the ERP solution can vary, depending on the organization and extent of the project. It’s fairly simple to budget and allot for resources such as tools and equipment. However, allocating and budgeting for with people assigned to the project can be more unpredictable. Some may be needed for the duration of the project and some for certain phases of the implementation.

A company preparing for an ERP implementation must identify personnel needed throughout the project and allow for sufficient time and effort dedicated to it. Expecting employees to expend effort on the ERP project in addition to their normal duties is asking for trouble. They must be available as needed without the pressure of outside demands or having to choose one objective over another. High employee turnover rates also present a challenge in resource planning and can cause delays in the implementation when an assigned resource leaves the company.

3.    Insufficient User Training

Even if your ERP project is successfully implemented, it must be managed and run by your workforce. Failure to properly train the staff who will be involved in the day to day operations of the system will result in a total waste of the cost and effort to implement it in the first place.

You will need to identify the resources who will administer the ERP system once it’s implemented. Then you’ll need to decide how they will get the training they need; whether you have in-house experts or need to hire a consultant. A detailed training program, schedule and location should be documented so that this important requirement is not minimized. If the knowledge and skills necessary to operate the new ERP system aren’t there, it’s doomed for extinction.

4.    Lack of Commitment

Companies must completely buy in to ERP implementation. It starts at the top—if the CEO or other executives aren’t completely on board, they won’t urge lower-level management and employees to embrace the new system. Change is not easy and most people don’t react positively to it. Encouragement, positivity and optimism need to be stressed from the top down or the project will not succeed.

5.    Undefined Internal Processes

If the company doesn’t have current processes and procedures clearly defined and documented, the ERP implementation will be based on incomplete or inaccurate data. In order for ERP implementation to succeed, it must be based on a well-defined operation. As the old adage says, “garbage in, garbage out.”

E3 Consulting Is Your Expert ERP Consultant

Launching Enterprise Resource Planning technology on your own without relying on expert ERP Consulting Services is guaranteed to be a frustrating and costly experiment. E3 Consulting can help you choose the system and components best suited for your specific needs. We also handle dealing with the software manufacturer, supervising the installation, training your team to use and maintain your new ERP software, and easing everyone through the process as smoothly as possible.

Contact us today to learn how we can be your partner in ERP implementation success!

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