Is ERP failure inevitable? No. Despite what the headlines may tell you, companies successfully complete ERP implementation projects every day. Too often, leaders going through the early stages or even on the cusp of signing on to an ERP project will get cold feet after reading about the latest implementation failure that left stock prices plummeting or legal filings imminent.
But luckily, with many others experiencing high profile failures, there are a lot of opportunities to learn from others’ mistakes. From poor fit to the wrong software, seeing the red flags in hindsight can provide you a clear picture of what you should be on the lookout for.
Failure can happen in multiple ways. A lack of buy-in or change management can result in executives pulling the plug or users revolting. Even something like poor cultural fit can leave you struggling throughout the process. Following our recent articles on what you should look for in the right partner and the five biggest drivers of ERP failure, we’d like to discuss five ways you could fail before you even start.
ERP Failure Warning Signs: Five Ways to Fail Before You Even Choose a Product
Did you know that roughly ten percent of ERP projects fail before they even get started? Considered the “first stage” of ERP by independent ERP consultant Third Stage Consulting, these are the projects in which selections are made and contracts are signed—only to collapse before anything starts moving. Often, these happen when companies fail to address the five biggest reasons for ERP failure.
The ERP selection process takes time. Sometimes, leaders can cripple their project long before they even get to the shortlist. Often, this happens when a leader decides on a solution without exactly thinking about the impact said decision has on staff. Zeal is great, but being overzealous often results in one of the following failures:
- Lack of User Involvement: Your end users are most heavily impacted by the decision, and if you want the product to succeed, you’re going to have to find out what they want. If you don’t, you’re rushing to fix a problem with more problems. Poorly documented needs set you up to pick the wrong functionality, leading to lack of value and lack of adoption.
- Lack of Communication: Don’t underestimate the stress that change management can have on a company. Communication needs to be prioritized as you narrow down options and choose features that matter. Without it, morale will suffer as end users fight back against the implementation, resulting in increased stress and employee turnover.
- Lack of Support: Discussed in last month’s blog, lack of executive buy-in is the fastest way to see an ERP project fall apart. ROI justification is pivotal, as executives who are unconvinced that the ERP will provide a reasonable and achievable benefit will pull the plug at the first challenge.
- Lack of Realism: Think ERP is going to solve all your problems? Take off the rose colored classes. Projects are hard, and if you’re promising a lack of milk and honey, you better be realistic about the time in the desert. Promise too much or promise simplicity and you’ll end up with everyone against you.
- Lack of Consistent and Clear Documentation: Don’t get lost in the desert. If you took the time to ask users what matters to them, be sure to combine that information with the realities of the business. Without a clear picture of what you need now, what would be nice to have, and what you might need in the coming years, your request for information may not allow you to get the information you need.
Many Ways to Avoid ERP Failure—Learn More in Our Free Guide
Whether you’re looking to uncover more mistakes to avoid or want to know what to look for in an ERP partner, we recently wrote a free resource to help you learn. Reducing ERP Project Risk: Why the Right Partner Matters is our latest whitepaper and explores in much greater detail the above-mentioned failures and the ways your partner can help.
You will learn common reasons why ERP projects fail, errors made during the pre-selection, selection, and implementation process, disadvantages of working with ERP publishers, and important tips for selecting the right partner. Click here to learn more.