Why Some ERP Implementations Fail
August 15, 2018 - By: SC&H Group
Deciding to upgrade and implement a new ERP system is a big step for many organizations. Reaching this decision comes after a lot of analysis, internal decision-making, and a desire to improve. Usually the need for an upgrade is in response to significant shortcomings of the current system in place; things like process inefficiency, high error rates, outdated technology, and a major reliance on spreadsheets to do too much of the work.
All of these are hurdles to overcome in bringing an organization up to speed with a cloud-based ERP, but the decision to upgrade is not the last hurdle. Not all ERP implementations are successful, and there are definite stumbling blocks to be wary of throughout the process.
ERP implementations can fail for a variety of reasons and being conscious of the issues that can derail an implementation is the best method to ensuring those dilemmas are sidestepped.
Few things prove more detrimental to an ERP implementation than a disengaged team. Engagement is already a huge issue for organizations around the world. Gallup reports worldwide employee engagement sits at a meager 15%. With employees spending more time at work than any other place, engagement makes a strong case as the single most important organizational issue.
The role engagement plays in an ERP implementation cannot be understated. Upgrading a significant system like an ERP requires substantial time, resources, and energy. If only a fraction of the workforce and management of an organization are actively engaged in the process, the implementation is in precarious territory.
From beginning to end, the internal team has to stay organized and do their part. Part of this responsibility falls on the shoulders of the outside team charged with managing the implementation. The consultants have an obligation to help push the engagement along and stay on track, but if the internal team and senior management can’t stay engaged, the implementation can fail. Both sides need to take ownership in promoting engagement during the process.
Buy-in from employees coincides directly with process engagement. A lack of buy-in can be a result of poor engagement, but it can also be a result of employee resistance.
Apathy is a big reason an ERP implementation fails. If the employees aren’t properly brought along throughout the process a passive resistance begins to form. If change management and communication is appropriately executed resistance can be avoided. When there’s poor communication across channels employees may not make an effort to understand the changes being made to the ERP system because they’re concerned more about their day-to-day work than the implementation.
It’s important to communicate to everyone in the organization why the implementation is being done, and how the new system is going to improve processes and make many people’s jobs easier and less complicated. Understand the pain points of employees and address how the updated ERP will attend to their needs.
Failure to See the Big Picture
When it comes to ERP implementations, organizations will occasionally struggle with the “big picture” and get lost focusing on some of the inherent challenges of upgrading. Before any successful implementation, organizations need to have a clear understanding of the short and long-term goals they hope to accomplish with the new ERP. It is critical to develop a clear vision of the desired future state for each primary business process early in the ERP selection process.
Instead, some businesses get bogged down in the minutia. Cost can sometimes surface as an issue because they see the price tag for what the implementation will cost as opposed to using a return on investment approach that evaluates the benefits and the costs holistically. Other times the organization will focus too much on the length of the process and try to rush things by cutting corners and truncating the education required to fully operate the ERP. With any new technology there will always be some learning curve but attempting to mitigate the importance of process education will have a negative effect on organizational efficiency in the long run.
The Successful Implementation
A successful implementation won’t necessarily be without these issues. At some point, one or more of them may become obstacles an organization needs to address and overcome. For the ERP implementation to be successful, an organization must come together and strategically navigate the situation. Rising above any challenge that surfaces is not only a hallmark of a good ERP implantation, it’s also a sign of a strong organization. The composure of the organization, its leaders, and its vendors are the real difference makers, and can carry the organization through the process – coming out the other end with a modern, efficient, cloud-based ERP system.
New ERP system selections and implementations are a substantial undertaking, and don’t have to be managed alone. If the process feels daunting or change management and employee buy-in seem out of reach, consider utilizing an experienced team of consultants like the SC&H Tech Advisory practice who can relieve the pressure of the implementation and make the entire process feel seamless. Contact us to learn more about how we can help you navigate this process.