There are a number of reasons why problems can arise during the introduction of ERP software.
These are not to be presented again in this article, but rather dealing with the question:
The project is about to fail, what now?
Success Factors in ERP Software Implementation
The first questions that usually arise are questions about who is to blame for the current state of the project. Usually in companies it is not really easy to identify the culprit, as very many are involved in an ERP software implementation project. From the project manager to the ERP vendor, the number of people involved is large. If a culprit or several have now been identified, a solution to recover from a failed ERP software implementation is still not found.
The better question to ask for a solution approach is: "What were the main causes of project delivery failures?"
From projects where we have been called to help, we have learnt the following lessons: we have found that companies that have successfully completed ERP software implementations have seen their ERP implementations as business processes rather than technology projects.
These companies realise and understand that a new ERP system changes the entire business and needs to be driven from the business and not from I.T. The impact on employees and the associated change management process, the business processes and the overall strategy of the company are more serious in impact than implementing a software interface or performing an upgrade of a standard operating system. However, many ERP implementations and ERP consultants are more focused on the technology than on the processes and people involved.
Adopt a Technical Mindset Instead of a Business Focus
Our experience in many ERP selection processes and subsequent ERP implementations clearly shows that software functionality is one of the less important criteria for the success of an ERP implementation today. Today's ERP systems are now so loaded with functions and features that after a systematic, high-quality ERP vendor selection, the focus must be on the implementation model to ensure the success of the ERP implementation.
Why Are Excel Lists et al No Longer Suitable for Successful ERP Projects?
Using process models with Excel lists or primitive web selection tools for a software or vendor selection should therefore be evaluated extremely critically. The people involved and the processes ultimately determine the success of an ERP software implementation project.
Of course, this also applies to all other I.T. projects such as master data, master data, document management or CRM projects.
Entering an ERP implementation with unrealistic expectations is often the beginning of ERP implementation failures. It is not uncommon for software vendors to low-ball the costs and duration of the project in order to win the contract. During a project, it becomes difficult for the company to refuse subsequent demands or not to bear unexpected costs. A high quality specification with process requirements helps to reduce these risks and limit costs right from the start. Project plans and staff availabilities should not be presented too aggressively and should be realistic.
How can you determine if your plan is realistic?
Start creating a risk register and use it to determine the success factors of an ERP project. In the course of ERP consulting, it has become clear time and again that addressing questions such as:
- What could derail the project?
- What has worked successfully for a similar company and of a similar size
- What challenges during the implementation period does your company face? (Trade fair, season, acquisition of a competitor, expansion of production and many more).
When you start doing this, you will find that change management and business process redesign are critical success factors that ERP vendors tend to "overlook" because their focus does not have to be on improving your competitiveness.
The recent SAP failure at Lidl shows the importance of realistic expectations. The company defined strategic goals at the beginning of the project, but did not consider the success factors needed to achieve these goals. After several project years and about 400 million euros later, it became clear that the budget for a successful implementation was more than the company could afford or wanted. The project was discontinued. Lack of management supportThe management approved the project budget, but its work is far from finished. They need to form a steering committee to make decisions on resource allocation, timetable, budget and implementation of deliverables and accompanying change management measures for staff. Involving senior management (and the project sponsor) will ensure that the ERP implementation does not become a technology project but fits into the overall strategy of the organisation. Organisations that use ERP software to enable a long-term digital strategy are more likely to achieve sustainable competitive advantage.
Lack of Change Management
If there is one thing that can safely prevent ERP failure, it is the company's change management. In each of the problematic or failed ERP projects we were asked to assist with, change management issues contributed to the failure of the project. These companies did not build a change management team or help desk, or viewed change management as merely training for end users.
They should have invested in organisational assessments, staff communication and tailored training, which would have ensured that their staff used the new ERP software effectively and followed new processes and procedures. They cannot force their staff to adopt change. it is their choice and they can resist. Usually this is subtle and not harmful, but it can severely impact your ERP implementation or cause it to fail.
Too Much Individual Software Customisation
The risk of failure of an ERP software implementation increases with increasing requirements for individualisation of the software. Our experience shows that hardly any project or company will implement an ERP introduction without minor adjustments to the software. This is actually not a problem as long as no adjustments are made to functionalities that should actually be standardised. Many back office processes or workflows have no competitive differentiators, so standard software functionality is usually sufficient and reasonable. The decisive factor at this point, however, is whether or not this or that process is relevant to competition was already identified during the preparation of the specifications. The ERP consultant of the software house during the implementation and the ERP consultant as an expert for the definitions of the requirements in the specifications must bring in their experience from various ERP software implementation projects.
If your employees start to argue that the software should be adapted because their process has worked this way for years and they need your flexibility to make adjustments until shortly before the goods or services are delivered, those responsible should take notice. Process adjustments to the software are an indication of resistance to change. In order to then be able to decide which measures or which process description is the right one for improving competitiveness, experienced ERP consultants are needed. He or she will then also ensure that best practice and expertise can be drawn upon.
Safely Navigate Through Your ERP Software Implementation
You can drastically reduce or prevent errors in an ERP project by looking for warning signals. But you have to recognise them. Experienced ERP consultants are usually aware of these warning signals.
Also, always keep in mind that the ERP software company's interests may be different from yours. Independent ERP consultants can support you in your project work and help to get ERP projects in trouble back on track.
If any of the above warning signs or problems sound familiar to you, it is not too late to reset the course or project management. If you have not yet started an ERP project, you can avoid the above mistakes by developing and bringing to life a strategic and realistic implementation plan.