Top 10 Reasons for ERP Implementation Failures – And How to Avoid Them

ERP implementation failures and how to avoid them

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Imagine investing thousands, millions of dollars, and countless amounts of hours into a project that eventually… doesn’t pan out. Doesn’t sound too appealing, does it? Wasting time and money is never in the cards, especially in this economy. We’ll explore together how to ensure the success of your ERP implementation.

Why do ERP (Enterprise Resource Planning) projects fail? There are three axes that fall as the main reasons for an unsuccessful ERP implementation:

  • Budget
  • Timeline
  • Business requirements

For an implementation to be successful, those three elements need to be taken into account. Failing to do so will inevitably result in what we call an implementation failure.

Throughout the years, we’ve noticed recurrent reasons why an ERP implementation can go south. Follow these guidelines to avoid setbacks and save yourself from the frustration that comes with them. Let’s get into it!

1. Failure to meet system or business requirements
2. Inability to get sufficient financing
3. Inability to select the most appropriate implementation partner
4. Unrealistic deadlines throughout the implementation process
5. Inability to designate a project leader
6. Capacity planning failure
7. Focusing on technology rather than results
8. Data cleaning failure
9. Lack of investment in change management
10. Lack of investment in employee training

1- Failure to meet system or business requirements

This one is crucial and pretty self-explanatory – when you implement an ERP system, you expect it to do the job it was designed to do, which is to eliminate pain points and increase overall business profitability and efficiency. However, it’s not always the case, which leads without a doubt to frustration, but also a waste of money and resources. It feels a little like buying a can opener that doesn’t open cans or buying glasses with the wrong prescription.

How to avoid: Before you choose or implement the ERP software, provide your consultants or in-house engineers with a detailed list of your business needs.

Before doing so, you’ll need to understand what an ERP does and its benefits. With many out-of-box functionalities available, you need to determine which ones will benefit your business and which processes will be impacted by the ERP. It’s tempting to want all that an ERP can offer, but it would be overkill, like using a Maserati for your weekly grocery store trips. Sure, you’ll fulfill your goal of getting groceries, but the wear and tear on the car is just not worth it.

Before even looking at software or implementation partners, make a list of the functionalities and requirements you want your ERP to have. Make sure to survey your teams and find out what pain points they are experiencing and what processes need to be improved.

Here’s a list of some questions to get the ball rolling:

  • Do you need your ERP to support payroll, end-of-the-month closures, quote-to-cash, billing, etc.?
  • What reports might be needed by the different users?
  • Do you only require an accounting and finance module, or do you need other modules – for your sales department, inventory, manufacturing, and distribution, etc.?

Once you have your list of non-negotiable and nice-to-haves, you will be able to better determine your ERP requirements. Your implementation partner, like the experts at Big Bang, can also help guide you through this step, with the help of a Business Process Review.

With that being clear with the stakeholders, you’ll be able to choose a platform that meets your requirements and even tailor it to give it the exact functionalities needed to perform at its best.

Our ERP Solutions Can Streamline Your Business

2- Inability to get sufficient financing

Cost overruns are common, it’s not unusual for a project to go over the intended budget – the timeline can change, and unexpected costs can arise. The reason, however, for implementation failures due to insufficient financial resources, is the lack of planning. In other words, it’s always good to plan for a buffer before diving into a substantial digital transformation project, like an ERP implementation.

How to avoid: A best practice to put in place while building an ERP implementation project is contingency. Contingency consists in keeping a certain amount of money in margin of the project to use as a buffer. In case the final cost exceeds the budgeted amount, this money can be used to keep the project afloat. That said, the best way to keep on budget is to plan your implementation cost properly, from the get-go – that’s where a good digital transformation partner comes in handy.

If you are located in Canada, you may find this blog we wrote about digital transformation loans offered by the Canadian government helpful to meet your implementation financial needs.

3- Inability to select the most appropriate implementation partner

A huge cause of ERP implementation failures resides in selecting the wrong implementation partner. Nothing is worse than working with people who don’t have your success at heart, or simply don’t know how to meet your business requirements.

How to avoid: This step is not to be taken lightly – take your time to weigh your options. Your expert consulting team will be crucial to the success of your ERP implementation. Make sure you select a partner who has a deep understanding of your business processes, market, and industry. Don’t be afraid to take free assessments, ask questions, and request demos. All these things will help you evaluate your options in order to choose the right partner.

If you’re already burdened with the consequences of a bad implementation partnership, consider contacting our experts for a rescue mission. We can hop on your ERP project where others have failed, and turn it into a success.

4- Unrealistic deadlines throughout the implementation process

No one is superhuman – it’s foolish to set unrealistic expectations and deadlines while planning an ERP implementation. This sort of project mismanagement is a common mistake made by project teams who expect all players to dedicate 100% of their time and efforts, to the project at hand.

Even the employees you assign to the project will have other obligations. An ongoing ERP implementation doesn’t put the business operations on hold – meaning that they will likely have other tasks and other priorities that will take precedence from time to time, and add to the project’s time scope. The same goes for your consultant team, who most likely will be working on other complex projects at the same time.

How to avoid: Taking the time to be candid about the amount of time you can put into the project and establishing realistic and attainable deadlines will save a lot of trouble. Make your priorities clear to your implementation team, and don’t bite off more than you can chew. Likewise, your implementation team should do the same, and keep their timeline as precise and transparent as possible. Great communication with periodic follow-ups throughout the project is essential, to allow stakeholders to provide feedback, and expert consultants to resolve key or minor issues as they arise while readjusting the timeline accordingly.

In the long run, establishing a time scope with the right projections will end up saving you time and money, and make your ERP project a success.

Bus.com Case Study

5- Inability to designate a project leader

Project leaders, or team managers, can make a huge difference in the success of an ERP implementation. Even when hiring consultants to support their implementation projects, companies tend to forget they also have a crucial part to play which requires some leadership on their part. Upper management often doesn’t get involved enough or fails to designate an internal project leader. This can lead to confusion, frustration, and miscommunication between the client and the implementation team. By the same token, your implementation partners also need to assign a team lead and a project manager, to ensure the project goes smoothly.

How to avoid: It goes without saying that having a leader both in-house and on the implementation experts team will make things much more efficient. Choose someone with relevant experience who is also comfortable taking the lead on long-term projects.

6- Capacity planning failure

Overestimating the capacity of your available resources is a big no-no when it’s time to implement your ERP. By resources, we obviously mean human resources, but also material and financial resources. Thinking you can do something in-house and realizing halfway through the project that you don’t have the knowledge or capacity to execute it properly can lead to delays, mistakes, and, ultimately, failure.

How to avoid: Simply plan according to what you have – no more, no less. It’s good to be ambitious, but when it comes to an ERP implementation, it’s always better to be on the side of caution. Plan more than one scenario, so you can be prepared for any eventuality and adapt your time frame. It will eliminate the risk of resource shortage throughout the project.

7- Focusing on technology rather than results

Computer engineers and cloud solutions experts are passionate people – they live, eat and breathe technology. However, focusing too much on technology is a slippery slope. Sometimes, the reason an ERP implementation fails is simply that there are too many functionalities, some not useful or relevant to the business requirements (refer to the luxury car metaphor, as part of reason #1). This increases the risk of teams getting lost in the new system and not being able to properly operate the ERP which can eventually lead to a lack of adoption of the new software. The goal of the ERP is to simplify your life, not add a layer of complexity to your work.

How to avoid: Always keep your focus on business results and only implement or customize a functionality if it’s truly beneficial to your business goals. This is not to say that you should refrain from trying new technological avenues, but do keep in mind your needs and ROI.

8- Data cleaning failure

When implementing a new ERP system, many companies make the mistake of blindly importing all their data from their legacy system without taking the time to assess the quality of said data. Garbage in, garbage out. If you’re not familiar with this saying, it means that “the quality of output is determined by the quality of the input.” To put it simply, importing poor quality, irrelevant or obsolete data inside a new system will inevitably lead to a bad quality ERP, and won’t make your life easier in the slightest.

How to avoid: When it’s time to switch over to the new ERP system, take the time to clean your old data, rename some items, put some order, and eliminate irrelevant data and duplicates. That way, your new software will be able to run on quality data, significantly reducing errors due to wrong data.

Our ERP Solutions Consultants are Here to Help!

9- Lack of investment in change management

Low user adoption is a death sentence for a new technology like an ERP system, as it cannot serve the purpose it was initially intended for. Oftentimes, it’s because the employees are resistant to change, thinking upper management is trying to replace them with machines – making their jobs obsolete. This misconception results from omitting to invest time and money in change management.

How to avoid: It’s important to get your staff on board with the upcoming changes right as the project begins, with the help of a clear transformation path, complete with vision and goals. Knowing change is about to happen allows employees to prepare themselves and feel more at ease. Explain to your teams why the ERP implementation is necessary for the company’s growth, and how it’s going to help them in their daily tasks. You need to make sure they understand that this new system isn’t going to replace them – it will only simplify the way they work.

10- Lack of investment in employee training

Implementing ERP software, and having no one use it, is the epitome of failure. Training is one of the last pieces of the puzzle and is not to be neglected in your budget and timeline. At the end of the day, if your teams do not know how to properly operate the ERP system, you will never get out the return on investment you were promised and hoped for.

How to avoid: Taking the time to train your staff is crucial for a successful implementation process because you want your employees to be able to use the software at its full potential. Invest in training before, during, and after the implementation to keep your employees up-to-date with the software’s newest functionalities. If you don’t have the appropriate in-house resources for the training, consider getting it from your implementation partners, who can offer courses and support your employees in their learning journey. Learn more about Big Bang’s training programs here.

Conclusion

Ultimately, your ERP implementation should resolve your company’s pain points, not become one of them. With these tips in mind, it should be easier to lead your ERP implementation project to success, and reap the benefits of your new cloud technology. And don’t forget, Big Bang’s experts will always be there, should you need an implementation partner who has your best interest and success at heart. Good luck!

Ready to kick off your ERP implementation journey? Take our free assessment now and see how your company stacks up!

Jeanne Dorais

Content Coordinator
Jeanne holds a Bachelor’s Degree in Fashion Marketing & Management from the École Supérieure de Mode at UQAM. She joins Big Bang with a strong experience in customer service and content creating. Being a quick and efficient learner, she’s excited to develop expertise in the tech industry alongside a team of experts. Passionate about anything related to culture and marketing, she’s currently building an online cultural magazine about Montreal youth to promote up-and-coming local artists and creatives. On top of…

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