In one of our recent webinar “Leading People Through Change,” Revolution Group was asked: Why ERP implementations fail and what proactive steps do you recommend to get ahead of these? Since this is such a great question, we asked our one of our ERP consultants Mario Lopez to address it in a blog:
3 Big Reasons Why ERP Implementations Fail
Reason 1: Unrealistic planning
Because of the urgency and pressure to have an ERP solution in full production, the planning team puts together a highly optimistic plan. As a consequence, budget and needed resources are miscalculated. The timeline is so tight that it becomes a source of frustration and conflict.
Proactive steps: ERP implementation is often a marathon, not a sprint. Many companies are too aggressive when setting their initial timeline which leads to the “hurry-up-and-get-it-done” approach. The expectation needs to be set before the project begins that implementing an ERP system is a complex, multi-step process that will be achieved over a period of time. It is good practice to plan an optimistic, pessimistic, and conservative scenario and then play them out, exercising all of the variables that come into play. You can then pick the more realistic option as the starting point for your timeline. Our ERP consultants bring years of business and manufacturing experience to the table and can help you work though scenarios and identify road blocks you might not think about.
Reason 2: Lack of executive support and involvement
The top and middle management do not completely buy into the ERP implementation project as a company-wide initiative that will create a new way of doing business. Or, management does not get involved in guiding the implementation team to keep it under strategic parameters, remove major roadblocks, and keep the level of motivation and participation that is needed.
Proactive steps: The key individuals in the organization championing ERP must convey to management the importance of change and how it will affect the business. A good ERP partner will assist with this and help management understand the value of ERP. Revolution Group works with our ERP customers and potential customers to outline the business value and identify the ROI for their ERP projects.
The methodology used to plan and implement an ERP system must involve all levels of management. It is important to clearly outline their tasks, actions items, and the decisions they need to make. Also include what part they will play in keeping people informed and motivated, and anything else they need to do to support the implementation team. Revolution Group’s revEdge Implementation Methodology helps our customers identify those management decisions, tasks, and action items.
Reason 3: Lack of communication
Employees don’t show up to important meetings because nobody has communicated the overall priority of project to them. Or, people show up to meetings unprepared because they don’t know what’s going on. Even worse, there are no meetings at all. End users are not trained and don’t know the status of the project, but are called on to test functionality. Individuals cannot answer important questions about the implementation.
Proactive steps: A communication plan is essential to project success and should be included in the overall project plan. Champions need to have distinct tasks of communicating to their stakeholders and an outline of how to do that. The goal is to keep every potential user informed on the status of the project, key activities they will participate in, and their expected contribution. It is also a good idea to continually keep the project front of mind for the whole organization. Everyone should be aware that your company is implementing a new ERP system. Revolution Group encourages our new ERP customers to develop a communication plan for their implementation, and we work with them to ensure it has all the needed elements.
Now knowing why ERP implementations fail, it’s important to understand that implementing an ERP system is a huge undertaking with many potential pitfalls and road blocks. Many of those fall into one of these three areas: planning, executive involvement, and communication. Addressing these ahead of time will greatly enhance the potential for success. If you would like to talk about ERP success, give us a call at 614-212-1111 or fill out the form below.