Why do ERP implementations fail?
Generally speaking, people don’t find failure that appealing of a topic...
Seasoned professionals who don’t feel uneasy at the first mention of something having gone wrong in an implementation have most likely been around long enough to know, that right after the hard lesson follows a ton of practical knowledge and lessons emerge that otherwise would have been tough to discover.
Typically, most of us would like to think of ourselves as eager to learn and prepared to do all that we can to get to where we want to be, either in terms of acquiring information or developing skills. Well, anything but encountering failure.
Sure, we can sit by and watch others having to go through the consequences of a less than ideal situation and observe their lessons learnt. We can look to history and nod our heads at how a seemingly conventional sequence of events has gone downhill and required an unintended course of action.
But when it comes to our own failures, we’re generally quick to sweep them under the rug, the sooner the better, and try to rebuild quickly so we can resume projecting a perfect picture to whoever’s watching. This is especially the case for the business owner with a rep to protect, which are essentially all business owners. It isn’t a secret, either. Everybody knows everyone else is merely projecting a fail-free business model and that mishaps are an inevitable part of day-to-day operations.
People, processes, and gadgets fail all the time. Acknowledging this and understanding the why and the how can help one successfully move on from the setback when it does end up happening to them.
Ways in which your ERP can fail
Can you protect the operating model of your company from failure? Well, first it depends on the kind of failure we’re talking about here.
An alert and ready to go team will hopefully always be able to spot things that can be improved. That being said, it’s important to recognize that dealing with challenges on the technical side is a very normal, and frankly, kind of expected thing to happen with any up and running system. But that’s different than to say your ERP implementation failing on you.
Maybe you’ve been on the fence regarding the functionality level of your company’s software for a while - Is it me or is it my ERP? - so perhaps it’d be best to take a few minutes to go through the most common reasons ERPs fail and put an end to your confusion once and for all.
1. Unpreparedness to facilitate change
Did you set it and forget it and then with the benefit of hindsight you understood that such a move, although sounding as convenient and straightforward initially, implies thorough preparation beforehand if it is to work?
Or maybe it was planning you could have done better? But then again you can only do so much planning. It’s just as possible of a scenario that your business has taken off more than you’d anticipated when you’ve decided to install your ERP and the metrics you had in mind then don’t fit your current circumstances, wonderful as they may be.
Say, for instance, you’ve been told to expect your ERP conversion plan to be ready in a given time period and yet, regardless of the efforts made along said interval, you notice that’s not going to happen.
Personal pride set aside, the answer should be no. For your business’ sake. It might not have reached completion in the allotted time, but being close to completion is something that shouldn't be thrown away in a tantrum.
2. Uninformed ERP purchases and/or unexpected outcomes
Even with the best intentions in mind, the business owner might make a choice that disturbs the way the company processes function. It seemingly works for everyone else, but it’s not a good fit for their firm at all.
The ERP systems we get to work with nowadays can, depending on specific models, be quite complex and multifaceted. With this in mind, it’s easy to understand how one might acquire something that doesn’t match the needs of their company’s specific infrastructure.
It has all these features, it must be good! Consider first what kind of strain all those features put operationally for the way your firm does things. What you ultimately want to accomplish with your ERP is to have a well-adjusted system in place, so that you know you can count on it to do its job.
3. Unintended consequences and unforeseen costs
Undoubtedly, the decision to implement an ERP will have caused a company to pull quite the sum out of their pockets, and so, understandably, they will be paying more attention to their spending habits in the period immediately following the purchase.
Ideally, they’d want to make the most out of their buy without any additional expenses, and while guiding oneself by this mindset can determine them to act more financially-aware, getting stuck in it might lead to failure. How? By refusing to acknowledge the importance of unforeseen expenses.
The current ERP industry reality however, is that the majority of expenses associated with having an active ERP implementation are incurred after the implementation is done when the company wants to make additions or amendments to their system.