Reasons why ERP projects fail

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Not getting board level sponsorship for the ERP project: ERP is a game-changing project that requires leadership in the upper echelons. A high-level sponsor should rally support, distribute resources and delegate ERP project management. Normally the CEO is the board level project sponsor. The project sponsor should set up a steering committee to manage the ERP project. The steering committee is responsible for: setting project objectives, establishing scope and timeframes, selecting project manager, approve subject matter experts, define critical success factors, approve potential ERP vendors. Recommend initial vendor list and short list and monitor implementation and stop ERP scope creep.

Not selecting the right staff for the ERP steering group: Companies need to drive the ERP project forward with an executive committee to sponsor and oversee the entire ERP project. Companies also need to select the best people they have, a line of business managers have the best knowledge of their departments and how the ERP software will be configured for their business. The ERP project team should have department heads that will have an impact on the project including finance, manufacturing and logistics/warehouse. There should also be an ERP project manager position created.

Underestimating ERP project duration: It is unusual for a company to complete their ERP project on time, in fact, research by Panorama Consulting states that 61% of ERP projects do not finish on time. Organisations should plan for the ERP project to overrun and have emergency funds allocated and not cut the budget for end-user training.

No defined business objectives: Analyst firm Gartner estimates that 55% to 75% of all ERP projects fail to meet their goals. Organisations should have explicitly quantified business goals, well-established timelines, and an ongoing commitment to measuring ROI, including a clear baseline for measuring performance improvements.

Relying on the ERP vendors benchmarks to measure the success of the project: Organisations should develop their own criteria. ERP Vendors can supply you with their templates and best practices that can reduce the duration and complexity of the ERP project, but you still need to define what you measure as success and failures.
Allowing your ERP vendor to manage your companies change management strategy: Don’t rely on your vendor to handle change management. Your ERP change management plan should provide a detailed roadmap to the desired business environment. Organisations need to use a planning approach similar to the one used for business process mapping. The change management plan should be based on an analysis of the gaps between the “As Is” and “To Be” environments.

Poor project management: Most companies do not have an experienced ERP implementation project manager on the payroll. Companies should either hire an external project manager for the duration of the project or consider using the services of a third party ERP consulting firm to help manage the ERP implementation. Don’t rely on ERP vendor’s project management services as they are geared to maximise the amount of billable days.

Cutting the budget for end-user training: ERP projects that are over budget do have a tendency for the end user training budget to be 3ddcut. Gartner research from its study, “The Justification of IT Training,” states that “companies spending less than 13 percent of their ERP project costs on training are three times more likely to fall short of their business and project goals than organizations spending 17 percent or more.” Ask the ERP vendor to provide a clearly defined ERP training budget, resource and timeframes plan.

Lack of resources to dedicate to the ERP project: It is important to have clearly defined plans in your project plan about how many internal and external resources will be supporting the project. Many organisations agree to a project plan with their chosen ERP vendor, only to find that the two parties have completely different expectations of how many and what types of people will support the project.

Not measuring ROI post go-live: Companies need to measure their ROI after the ERP implementation determining ROI before and post go-live – is essential to achieve success with the ERP project. Research from the Aberdeen Group shows 94 percent of best-in-class companies measure ROI after ERP project go live while only 55 percent of laggards do so.
Selecting the wrong product: Some organisations often select ERP solutions that don’t have vertical functionality or the solution is not commonly used in their industry.

Cloud ERP vs. On-Premise Total Cost of Ownership: When considering an ERP solution, some options need to be weighed.Like which solution is right for your organization, how many users you will need, what functionality you will have implemented. However, with the increasing capacity and security of cloud computing, You now have another choice to consider.How you are going to deploy your ERP solution, whether you will maintain your data on your servers or if you will have it hosted in the cloud.
An important factor that will influence your decision between a cloud ERP solution and a more on-premise ERP solution is cost.

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