5 Reasons ERP Implementations Fail
Updated: Sep 19
It's no secret that ERP implementations have a reputation for failure. Everyone knows this. However, there are many reasons why those failures occur. Many clients will blame the software, the partner, and anything else other than looking inside. I challenge that clients have more control over the success or failure of their ERP implementation than they realize. Here are five of those reasons ERP implementations fail and how they are fully preventable if the client takes the right action.
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Failure # 1: Lack of proper planning for your ERP implementation
A client once unfairly accused their partner of hindering a project, but the real issue was their own unpreparedness. Being a new organization, they lacked the necessary team to run operations or engage in the implementation. They had no idea what to expect and therefore were completely unprepared.
Many clients rush into ERP projects without doing enough research, analysis, and preparation. They do not have a clear understanding of their current situation, their objectives, their requirements, or their risks. They do not have a realistic budget, timeline, or scope. They do not have a well-defined project plan, governance structure, or change management strategy. They do not have the right partner, team, or stakeholders. All these factors can lead to confusion, conflict, errors, delays, and dissatisfaction. Lack of proper planning can also result in poor data quality, inadequate testing, insufficient training, and low user adoption.
To avoid these pitfalls, you need to plan your ERP project carefully and thoroughly, with the help of your partner and your internal team. For a successful ERP implementation, having adequate resources is crucial. The McKinsey 7S Model highlights essential elements: strategy, structure, systems, shared values, style, staff, and skills—any deficiency could jeopardize your project.
Planning is the foundation of a successful ERP implementation. Without it, you are setting yourself up for failure.
Failure # 2: Unrealistic expectations (aka the magic bullet)
One of the most common reasons for ERP implementation failure is having unrealistic expectations of what the software can do for your business. Many clients think that ERP will magically solve all their problems and make them more efficient, competitive, and profitable. However, ERP is not a magic bullet, but a tool that requires careful planning and integration with your existing systems and processes. ERP solutions are not a one-size-fits-all solution, but a complex and dynamic system that needs to be tailored to your specific needs and goals. If you expect too much from ERP, you will be disappointed and frustrated when it does not meet your expectations. You need to have a sharp vision of what you want to achieve with ERP and how it aligns with your overall strategy. You also need to communicate your expectations to your partner and your employees and manage them throughout the project. Unrealistic expectations can lead to scope creep, budget overruns, delayed timelines, and low user adoption. In other words, unrealistic expectations will lead to a failed ERP implementation.
Failure # 3: Too much, too fast.
Another reason for ERP implementation failure is taking on too much too fast. Some clients want to implement every module and feature of the ERP system at once, without considering the impact on their resources, processes, and users. They think that by doing everything at once, they will save time and money, and achieve their goals faster. However, this approach often backfires, as it creates more complexity, confusion, and chaos. The project becomes unmanageable, the quality suffers, the risks increase, and the benefits are delayed. A better approach is to prioritize the most critical and valuable aspects of the ERP system, and implement them in phases, according to a realistic and agreed-upon timeline. This way, you can ensure a smoother and more successful ERP implementation, with less disruption and more user acceptance.
Failure #4: Not addressing change management.
Change management is not just a buzzword, but a crucial factor for ERP implementation success. Many organizations underestimate the impact of changing their processes, systems, and culture, and fail to prepare and support their employees for the transition. They assume that their staff will adapt quickly and easily, or that they are already eager for the change. However, this is rarely the case, as people tend to resist change, especially when it affects their roles, responsibilities, and routines. Without a clear and comprehensive change management plan, you risk facing low morale, high turnover, poor productivity, and reduced user adoption. Therefore, you need to communicate the vision and benefits of the ERP system, involve and empower your employees, provide adequate training and coaching, and monitor and address any issues or feedback.
Failure #5 Lack of leadership
One of the most common causes of ERP implementation failure is the lack of client leadership. ERP implementations require a strong and committed leader who can guide and support their team, make the tough decisions, and manage the scope and expectations of the project. Without a clear and consistent leader, the team may lose direction, confidence, and motivation, and face conflicts, delays, and errors.
Your implementation consultants are not there to lead your project, but to provide services that your organization has requested. They cannot make decisions for you, nor can they control your team's workload and performance. You need to have a leader who can collaborate closely with your consultants, provide feedback, resolve issues, and ensure that your team is aligned with the project goals and timeline.
Conclusion
In this article, we have discussed how you can avoid some common pitfalls that can lead to a failed ERP implementation. We have highlighted the importance of having a clear vision, realistic expectations, adequate resources, effective communication, and proper management of your implementation consultants. By following these tips, you can increase the chances of a successful ERP implementation that delivers value to your organization.
So, what's next?
At Elliott Clark Consulting, we have the expertise and experience to help you avoid the common ERP implementation pitfalls and ensure a successful outcome. We offer a comprehensive range of services, from strategy and planning to execution and support, to help you align your ERP system with your business goals and processes. We work closely with you and your implementation consultants to ensure clear communication, effective collaboration, and timely delivery. Book a complimentary consultation today. We are here to help.
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