What a failed ERP implementation looks like
It happens every now and then, and it’s discouraging and frustrating: a failed enterprise resource planning (ERP) implementation.
Some enterprises are unwilling or unable to go through the process transformation steps to gain real value out of their ERP investment and the moment in time it offers to affect real business improvement.
A successful ERP implementation is significantly more than just exchanging one software program for another.
Here are four areas where companies can often go wrong in their ERP implenetation:
1. An over-extended implementation team
Some companies go wrong when the implementation team is pulled in all directions away from its desired focus on the ERP implementation, it lacks resources and time, and doesn’t have the executive level mandate to support it.
Structuring the internal implementation team and giving it the proper time and resources it needs to carry out the implementation and associated business transformation is one of the first and most critical steps following an ERP selection project. This high-performing team requires the right people, with executive buy-in and support, and decision-making power to get the job done.
The implementation team must have a complete understanding of the full scope of an ERP implementation and must have the resources to dedicate to it. This often means re-assigning the team’s day-to-day responsibilities.
Educating the implementation team and working side-by-side with it throughout the ERP selection and implementation project makes for a winning strategy. It’s a problem when the project team lacks the necessary resources and decision-making power to get the job done.
2. Lack of organizational change management
Other organizations are challenged when the enterprise is more focused on the demands of day-to-day operations and is unable to think in terms of business process transformation and operational change as it deploys new enterprise technology.
Organizational change management is an absolute requirement when implementing a new ERP solution. Organizational change management focuses on the “people” aspect of the change and ensures that the organization is ready for the new system. It involves communication, training, user readiness, support and fostering understanding of the change. Business transformations through ERP will not take place without effectively managing change across three key organizational areas: people, process, and technology. Change management planning from the very beginning is essential.
3. Fuzzy future state vision
Companies go wrong when the manufacturing organization can’t articulate a future state vision and is completely engaged in “how we’ve always done it.”
Coordinated with change management is the creation of a vision of the future state the enterprise wants to achieve, based on a review of the current state. Without this essential step of analyzing the present situation and identifying the improved situation, the new ERP is likely to fail and ROI will never materialize. Far too often, new systems are implemented that essentially mimic the old system and or the old process. Other than some nicer screens and easier navigation, the process hasn’t changed much. True business transformation needs process and system change to be achieved.
The future state vision, which the team identifies through detailed process mapping, must be shared among all departments and locations to encourage buy-in and team acceptance.
Because it is such a critical step in any implementation, we have developed a number of resources to help enterprises create their future state vision.
4. Data management challenges
Lastly, failure often results when a company can’t answer these questions:
- Who owns the data?
- Where is it?
- How do we clean it up?
- How can we consolidate it?
- Is there duplication?
- How can we get real-time data anytime/anywhere for better decision-making?
Too often, companies with a failed ERP don’t know how to get the data out of the system or use it effectively to streamline operations and improve forecasting and decision making. Sometimes manufacturers haven’t implemented all of the ERP modules that would provide better data and more efficient processes. Often duplicate databases impede the benefits an ERP solution could deliver.
Data conversion problems without proper planning and execution will hinder even the best ERP solution.