Risks in ERP implementation – Top 10 Factors that determine Success or Failure

Risks in ERP implementation – Top 10 Factors that determine Success or Failure

Seasoned implementers and ERP professionals know that there are many benefits that can be derived from and used to justify Enterprise Resource Planning investment. These returns are wide-ranging and include; realising sales growth, achieving better cash flow and raising levels of business productivity. These goals are genuinely attainable but are predicated on the project participants adopting the correct approach. In striving for this ‘correct approach’, we can unpack the top 10 reasons that contribute towards ERP success or failure within a business.

  1. Comprehensive Documented Scope: A written definition of what the business requires from ERP system, arrived at collectively

This item is crucial as all members of an ERP team must be consulted to achieve broad ownership. Defining the business in a ‘blue print’ should recognise all of the desired workflows and processes with a note of prevailing ‘pain points’ that must be resolved by the new system. The real impact of written communication can be clearly seen in this approach and this should be mutually non-esoteric.  It’s important that the language used is as clear as possible  and understood by both the Customer’s project team and the ERP provider.

  1. Strong Buy-in from the Team: poor adoption hampers progress

Too often, the first time that key users see the new ERP system is after software purchase and because of this some degree of consultation is needed with all users as very often company employees have insightful thoughts on improving their business function, whereas, in many cases, they won’t have been offered the chance of contributing their ideas.

  1. No plan or checkpoints

To achieve successful implementation, there needs to be a published and communicated plan. By identifying realistic, potential results, a shared plan can be successful if built around clear milestones and tasks assigned and driven by individuals, both internal and external. By monitoring and updating this regularly, bottlenecks can be quickly identified and resolved. Re-prioritisation can take place by considering the potential impact of items  that could negatively affect broader aspects of the business if the plan were to be left unchanged. It’s important to remind all participants that ‘failing to plan is planning to fail’.

  1. Absence of a realistic Go Live Objective

It’s evident from the above factors that implementing a new ERP system requires time and focus. At ‘go live’, training and User Acceptance Testing for Data and the New System workflows must all have been completed, this all takes time and there are no short cuts to this. When you hear “I want everything and I want it tomorrow” it’s important to weigh the real constraints on time and resources and offer a more realistic view with software launch occurring in phased elements. It’s better to create a strong platform in the initial phase that satisfies the business and then plan to introduce more applications and functions in subsequent stages.

  1. Ensure key staff are available at vital points in the project

It is important that all members of the ERP implementation team dedicate time and effort to its success. Too often individuals are side-tracked from the ERP project to handle day-to-day business needs and don’t devote adequate effort to managing their time effectively across all areas of responsibility. If we consider the dependency of the project on the knowledge and acceptance of key personnel then we quickly see the importance of staff being available at the key points in the project. If the availability of those vital personnel cannot be depended on then replacements must be found. We find here that for a project to succeed it takes time, effort and focus.

  1. Appoint both a dedicated Internal and External Project Manager

It’s good to understand these points and therefore crucial to have someone to identify when things are going awry and, for this reason, imperative to have a dedicated internal as well as external Project Manager. The internal Project Manager is better placed to anticipate potential shortfalls as internal challenges arise. Moreover, during the course of the project, there should be a diminishing reliance on outside consultants. A natural and gradual handover of weight of responsibility should occur towards the internal representative. After all, it’s the company’s system and should ultimately be owned by the internal team and their Steering Committee.

  1.  Unnecessary customisation: replicating old practices

Very often there is a temptation to customise the new ERP system to mirror the functionality in the legacy system. This may diverge from the objectives set out in the scoping exercise and the need for customisation should be reconciled with this and assessed as part of User Acceptance Testing. This testing must be carried out at a timely point before ‘go live’ so that any reworking can be resolved. The key point here is that unnecessary complexity can be confusing, unproductive and costly, certainly in the long term as software upgrades emerge. Users must be discouraged from requesting ‘personally preferred’ customisation and encouraged to adopt an open mind to new workflows as these will often improve overall efficiency and decision-making as part of the bigger company picture.

  1. Adequate and timely training

Training should be orchestrated to fulfil the critical timelines of the ERP project and should concentrate predominantly on the ‘day to day’ processes to run the business. It’s important to build up confidence in the use of the system and bring into focus the interdependency of data and processes between functions.

  1. Selectivity and relevance of migrated data and its accuracy

When implementing a new system there should be a very early review of the nature of data to be migrated from the old system. This process should allow a step to recognise the viability or non-viability of data to be imported, especially historic data. Too often a desire for ‘wholesale’ migration is present and this isn’t always necessary. Not only might the data that is several years old be inaccurate or ‘map’ poorly into the new system but invariably represents an unattractive return on investment of time and money. It’s easier to summate this data into a format that allows simple reporting or separate access and in so doing produce not only a more cost-effective option but minimal distraction from key items on the ‘critical path’ of the implementation.

  1. Inheriting a system that is understood and supported

Accepting that all the above items have been considered, the compelling aim is to achieve effective transfer of ownership. The users must have ‘buy-in’ to the company’s longer term objectives set within the project and therefore adopt the system as their own. As part of this, formal endorsement should be reached to confirm that the system satisfies the project scope and customer expectations.

Going live is just the beginning, the customer must be given support after ‘go live’ to assist in areas across the entire operations including:- month end, Management Reports, Tax Returns etc. With cloud, this is made far simpler as on line access to the customer’s software enables prompt and effective help.

An ERP system represents a significant investment in terms of both money and time. It should be expected that it supports the business’ changing aspirations for a period of at least 10 years. Therefore a close and reliable relationship with the ERP implementer is vital to help the organisation prosper and grow.

 

 

Dave Rogers
Dave Rogers