Implementing an ERP system requires a cross-functional team of individuals with diverse skill sets, including business process experts, project managers, IT professionals, and end-users. Each team member brings unique perspectives, experiences, and expertise to the table, which helps avoid ERP implementation failure and ensures the deployment is successful.
A strong team is essential for a successful ERP implementation, as it enables the organization to identify and address potential challenges, overcome roadblocks and achieve its goals. The likelihood of success can come in many forms, but the team must establish key success factors as part of its strategic plan. Let’s explore the top six causes of failed ERP implementations and what you can do to ensure yours is successful.
1. Lack of Strategic Plan
An ERP strategic plan outlines the goals, objectives, and strategies for deploying and using the system. It serves as the blueprint for integration, combining business objectives with the right people, budget, project scope, training, and complexities to formulate an actionable deployment timeline. Establishing an appropriate budget will prevent insufficient resources from impacting the time needed to properly gather and evaluate your requirements. A deployment plan will help to ensure sufficient time is allocated to managing the backlog, preventing a backlog of essential deliverables and delays in ERP implementation.
A solid strategic plan starts with a detailed list of requirements, scope, and budget. It is also essential to develop a project team responsible for different levels of decision-making, knowing whom to escalate decisions to aid faster and high-quality decision-making. Communicating, training, and preparing employees to embrace change can help reduce resistance.
2. Insufficient Training
Successful ERP implementation depends on whether the end users can use the tool for their day-to-day tasks. With a lack of understanding and insufficient training, your business may miss critical targets and incur unnecessary costs due to inefficiencies in business processes.
Practical training puts the learner first. At the end of each training session, they should clearly understand how to use the system, the applications, and the implications. In addition to focusing on specific tasks, offer a clear view of the entire process and the benefits of using the new software. In the implementation plan, accounting for sufficient training time will ensure the highest training success.
3. Failure to Engage Stakeholders
Not engaging key stakeholders, such as business leaders, can lead to a failed implementation. Communication between consultants and client teams can create a better alignment of expectations, leading to a buildup of confusion and difficulties along the road.
Maintaining documentation of meetings, critical decisions, and risk management decisions allows problems to be escalated and followed through faster. Engaging stakeholders ensures business leadership and the organization are committed to this implementation’s success.
4. Lack of Understanding of the Project Scope
Lack of project scope is another common reason for ERP implementation failure. If the project’s scope is adequately defined, managed, and communicated, it can lead to clarity, understanding, and meeting expectations, resulting in a successful project.
Organizations must clearly understand and communicate the project scope effectively to all stakeholders to avoid this. This can be achieved through developing a detailed project plan, regular status meetings with progress reports, and thorough communication with all project participants. It is vital to continuously assess and adjust the project scope to ensure that it remains aligned with the company’s goals and objectives.
Involving all relevant stakeholders in the scope definition process, including business owners, end-users, and IT, can help ensure that everyone clearly understands the project’s objectives, deliverables, and timeline and can help avoid misunderstandings and scope creep. This can also help to ensure that the ERP implementation is aligned with the organization’s goals and objectives and that all stakeholders are fully committed to the project’s success.
5. Overreliance on Technology
More reliance on technology can also contribute to the failure of an ERP implementation. While technology is a crucial aspect of an ERP implementation, it should never be the project’s sole focus. Organizations should remember that technology is simply a tool to help achieve their desired business outcomes.
To avoid this, businesses should focus on their business processes’ goals and how the ERP system can provide optimization. This requires a strong understanding of the organization’s processes and the ability to map these processes to the ERP system. Organizations should also ensure they have the necessary resources to implement, configure and maintain the ERP system properly, including trained and knowledgeable staff. For instance, they have standard procedures for handling specific issues. Also, make sure each stakeholder has a defined role and their part of the contribution to the project.
6. Lack of Quality Data
A lack of data quality can also prevent a successful ERP implementation. Poor quality data can result in incorrect information entering the system, leading to wrong business decisions and decreased efficiency.
Organizations should prioritize data quality and develop a comprehensive data management strategy to avoid this. This can include data cleansing, standardization, and verification processes to ensure that the data entered into the ERP system is accurate, complete, and up-to-date. Businesses should also establish data governance processes to ensure that data is managed, maintained, and protected over the long term.
Data quality checks and validations should also integrate to prevent incorrect data from being entered. This can include field-level validations, data format validations, and cross-field validations to ensure that the data entered into the system meets the necessary standards.
Additional training and support to end-users would help them understand the importance of data quality and correctly entering and managing data within the ERP system. Organizations can avoid poor data quality and ensure a successful ERP implementation by prioritizing data quality and establishing effective data management processes.
How Can Withum Help?
ERP implementations can be difficult and complex. Withum has ERP implementation expertise with several platforms, including Oracle NetSuite, Microsoft Dynamics Business Central, and Sage Intacct ERP. With a focus on people, processes, and technology, we can help you navigate incomplete implementations, enhancements, and additional functionalities and troubleshoot your existing ERP systems.
Authors: Angie Ng | [email protected], Mars Lomtakul | [email protected], Riley Larsen | [email protected]
For more information on this topic, please contact a member of Withum’s CRM and ERP Consulting Services Team.