Top 5+ Reasons For ERP Implementation Failure

Enterprise Resource Planning (ERP)-  is software that automates  core business functions such as finance/accounting , supply chain , sales and marketing ,  and human resource. Data available in ERP facilitates organizations to effectively analyse and make data-driven decisions. Many organizations implement ERP due to its benefits but terribly fail to use it properly and get the return on investment (ROI). This article examines the ERP implementation steps and possible failure scenarios.

ERP Implementation Process

ERP implementation denotes the process of installing ERP software within the infrastructure of your organization, migrating open/historical data to the new system, and training users. The duration of the process depends upon the modules, complexity and expertise of the implementer and availability of resources. 

An ERP implementation has the following steps:

• Discovery and Planning
• Design and Development
• Testing
• Deployment
• Support

1. Discovery and Planning

A team of subject matter experts analyze the requirements and needs of the new system through  conducting individual or group questionnaires,  use-cases preparation,  documentation, prototyping, and observation. After getting a clear idea about the business process, procedures, and policies of these SMEs, then  define a plan. A well-established plan makes the process easier. Planning describes the type of activities that occur in each stage of the process -  their time frame, required budget,  and risk factors involved.

2. Design and Development

Detailed understanding and analysis of the current workflow of the business helps them to design  a more efficient system. The development stage includes customizing software to support the new process, configuring the system and integrating with it.

3. Testing

Evaluate the functions added to the system and ensure if it works properly or not. This practice considerably reduces error. To ensure the different functional aspects and performance  of the system, businesses need to perform various tests including -  functionality test, integration test, performance test and validation test.

4. Deployment

Deployment includes golive,  loading your final data and validating your business process.  For implementing an ERP, companies are generally advised to  choose implementation partners who are well experienced and can help you  implement ERP at your organization that perfectly aligns with your business process.

5. Support

Businesses may have trouble adapting to the new system post Go-live. Post-implementation support helps them  overcome worries by making way for better user experience and maximum benefits.

Reasons for Implementation Failure

There are instances where ERP implementation fails completely or partially. The reasons for ERP  implementation failures include lack of internal preparation, limited implementation design and requirement, and unprofessional implementation.

• Insufficient Requirements

Companies often make mistakes  at the time of requirement gathering, it is the responsibility of the implementation team to create a good understanding of internal and external resources needed for the completion of the project to avoid the implementation failure.

• Frequent Missing of the Timeline

Timing is key in the implementation. Frequently missing timeline leads to ineffective decision making, stress within the team members and inability to meet the desired objective.

• Lack of Training

Organizations often ignore the importance of training. It is necessary to train your key stakeholders and employees with the new system to avoid wastage of time. An ERP covers all the functional areas, hence basic awareness of the overall system working is necessary for users.

• Ineffective Communication Between Departments

Lack of communication between the management, project team, employees and vendors can lead to internal conflicts and inefficiencies. Employees get confused when they are  not provided an answer to their questions and concerns about the system.

• Frequent Updates in Previously Defined Goal

The backbone of every project is the goal. A reasonable update is acceptable but a frequent update each time affects the entire system. An ongoing process cannot accolade new changes.

• Unrealistic Customization

In a Gap-fit scenario, customization of ERP satisfies the specific needs of a firm. However at the same time, unrealistic customization results in complex processes and non-aligned business processes.

• Lack of a Steering Committee

One of the cardinal crimes behind each ERP failure is the lack of a steering committee to review the feature/customization request and process flow enablement. Employees and managers often make changes that fit  their convenience and not based on role or business process. This creates unending feature requests and scope changes. Only a knowledgeable steering committee can control this situation.

• Unprofessional Implementation

Unprofessional implementation often leads to system failures. The first priority for implementing an ERP is having an expert team. One of the common factors behind many failed ERP implementations is that the organizations dare to constitute an internal team for the implementation. The members of the team may not have first hand implementation knowledge. They are seasoned in the business process; not in the implementation process.  

Implementing an ERP system costs both time and money for the business. Give equal importance to each and every phase of ERP implementation. Because a slight change will have a huge impact.

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