ERP Implementation Failure: 10 Steps to Avoid the Pitfalls

Posted on August 31, 2015.

The city of Anchorage, Alaska has been in the public spotlight lately due to their millions over-budget and years behind-schedule SAP implementation. The struggling city has spent $35 million so far in trying to migrate from PeopleSoft to SAP, and has recently decided to place the project on hold.¹ Anchorage isn’t alone in their struggles with implementing new enterprise resource planning (ERP) software. According to research by Panorama, 21% of ERP projects fail. For another 21%, the outcome is “undecided”, often because organizations did not include planning and baseline measures that would help to identify success. There is hope here: the remaining 58% of projects in Panorama’s study were deemed a success.² Clearly, many organizations can and do avoid ERP implementation failure, and see measurable returns on their ERP investments. So, what are those 58% doing right? We asked our team of systems integrators, engagement managers and project managers for their input on the key steps to avoiding ERP implementation failure. Here, we’ve summarized their top 10 points:

1. Every project needs a goal; identify your vision, anticipated ROI, and baseline measures. This is essential in order for you to determine whether or not your project succeeded. In addition to having your goals mapped out, you should plan to do at least two post implementation audits, one following go-live and another after Phase 2 where you’ve implemented at least a portion of your future wish-list.

   Related: How to Conduct a Post Implementation Audit

2. Early on, involve ERP consultants who know the software AND your industry. ERP consultants with experience in your industry can help make sure you’ve obtained all the modules and functionality your organization requires to be successful. They can also assist you with business process reengineering, and with determining what should be implemented now versus what can go on your wish list for later ERP enhancements.

   See related article: 4 Critical ERP Consultant Requirements

3. Obtain strong, experienced project management. Your PM must keep the project on track, meaning that it stays the course as to scope, budget and timeline. The PM will hold team members accountable and remind the team about what delays mean to the overall project. The PM has the backing of leadership. Project management’s role is essential and includes frequent reminders, checking up on status, and making sure steps are completed on time and within budget. The PM draws quick attention to problems along the way and obtains team and management cooperation to resolve issues quickly.

4. When building your system requirements document, include input from knowledgeable employees in each functional area. No one knows your current processes better than your employees who run them. Don’t overlook involving these employees as you begin to identify your system requirements. While a new ERP provides opportunity for business process reengineering, understanding what you’re doing currently is an important first step. Without that valuable input, you risk overlooking necessary system capabilities and having to shoehorn in additional modules and customizations later on, significantly impacting your budget and timeline.

5. Separate necessary implementation requirements from future wish list items. It takes time and money to implement everything you want, so don’t break off more than you can chew for implementation. Your goal with implementation is to get the system up and running with basic essential functionality in place. Your wish list then contains enhancements and customizations your system is fully capable of supporting but are not essential at go-live and can be added later on. These enhancements are important as they add value and may even help to create strategic advantage, but you can get along without them for a little while. As additional requests for functionality come up mid-way through implementation, the PM should use the wish list as a way to get people to separate out what’s absolutely necessary from what can be added later as enhancement requests.

   Related: How to Achieve Greater ROI from ERP Customization

6. Address change management from the very beginning. This goes way beyond training. It includes early communication from leadership about the upcoming project, opportunities for employee input, project visibility, helping employees adjust to change, and monitoring progress to ensure new procedures are being followed once the system is implemented.

7. Use mock go-lives to test your system configuration. It happens: teams get in a rush and move ahead with a system that isn’t configured properly. They don’t do enough testing before going live and the nightmare begins. The organization is now running its data in a system that’s not configured correctly. The results of this can include such problems as customers receiving the wrong orders, incorrect quantities being shipped, errors in billing and the financials, and certain processes in the system not working. You’ll be left with unhappy customers, frustrated employees, and huge business risk.

8. Provide adequate training. This is part of change management, but it’s overlooked so often that it deserves to be mentioned again. Many organizations neglect to provide adequate training to system users, who then create workarounds outside of the system. If your users are not well trained, you won’t achieve the desirable ROI from your new ERP.

9. Put resources toward a well-planned go-live. This means more than just having help desk support available for questions and issues from employees. Go-live is a real event in your organization. It’s important that your employees and customers know how to get help, and that the team supporting go-live is freed up and available to them. You’ll also want to develop messaging that is placed in your physical and web locations, and guides people to the support they need when issues arise.

10. Don’t blame the system on issues you encounter. Leadership must acknowledge broadly that implementing new technology and business processes requires time to adjust, and when leadership models a positive attitude it carries that sentiment throughout the organization. Encourage employees to report any issues they encounter. Provide information such as an FAQ that addresses the questions and issues employees and customers are encountering. Respond to concerns in a timely manner to help resolve them more quickly.

Including these steps in your ERP Project Plan will help you make the migration successfully and avoid the pitfalls of ERP implementation failure. If you’re looking for experienced ERP consulting to help with your project, Trek Global provides the full range of ERP implementation support, from project management, pre-planning, selection, configuration, integrations and customization all the way through to go-live and post-implementation audits.

Learn more about our ERP Services.

Sources cited

¹PC World. SAP project put on hold yet again by Alaskan city.
²Panorama. 2015 ERP Report.