A successful ERP implementation requires more than luck. You may have heard the often quoted statistic that four out of five ERP implementations result in failure. That statistic arose from surveys that were taken in the 1990s and early in the last decade. More accurately, these surveys found that only 1 in 5 organizations were completely satisfied with their implementations, and only between 40 and 60 percent of companies believed that their projects were successful. Additionally, they found that the larger a project was in size and scope, the more likely it was to experience failure in at least some aspect.
Judging by recent high profile ERP project failures, the findings of these surveys from over 10 years ago are likely still valid. For example, Fortune 100 companies Hershey, Hewlett Packard, Nike, and Waste Management all reported significant ERP implementation failures during the last several years. If large companies such as these experienced failures, how can small and medium sized businesses avoid ERP implementation failures?
Here are a 3 success factors that build on each other to improve the odds of a successful implementation:
Success Factor #1: Define the goals for the project from the beginning. What does success mean to your organization?
The definition of success must be clearly defined and understood by management, users and vendors. Almost all projects require a discovery 'phase' to make certain that critical business processes are identified and documented. It’s important that the reasons for undertaking the project are thoroughly discussed, and that criteria for a project success are documented in the project charter. The criteria can include any feasible goal such as achieving a specified cost reduction, meeting a new government mandate, or even avoiding disruption in handling customer orders. Of course, metrics may need to be established to measure both goals and outcomes.
Success Factor #2: Maintain Executive leadership and sponsorship from the start and throughout the project
Up front, management is responsible for obtaining the required budget, time and resources. However, their responsibilities must not stop there. C-level management must also make the final determinations regarding the goals of the implementation. They must effectively communicate these goals to all parties in order to set expectations.
Changing priorities are an often cited source of delays and additional project costs that can lead to failure. Executive management must see that the original goals of the project are met before layering on additional requirements or diverting resources for other objectives.
Next, management must see that testing and training disciplines are enforced, as temptation always exists to cut short these activities. This is important not only in order to identify and correct points of failure, but to identify new procedures.
Finally, management should maintain communication and involvement throughout the life of the project. Their involvement can result in quick decisions when unexpected challenges arise.
Success Factor #3: Prepare for change
An ERP system is not just new software. It usually results in re-engineering a company’s processes and reorganizing their human resources. Training is an important aspect that cannot be understated, and adequate resources must be allocated to it. Developing internal “super users” during initial training can help with training for future users and remedial needs.
Spend the time to develop and document new procedures. This is usually a joint responsibility between both implementers, users and managers. Practicing these new procedures in the new ERP system will help users to overcome fears and take away reasons for users to “do it the way that they always have.” After all, a goal of all ERP implementation projects is to replace inefficient practices with new ones that are both efficient and effective.
Implementing an ERP system is no small undertaking and can be fraught with risks. The risk of failure can be significantly reduced with a solid project plan that clearly defines project goals, management’s maintenance of focus on those goals, and adequate preparation for change that is painful at first, but has long term benefit to the organization.
BTerrell Group has Sage ERP and Intacct implementation specialists that you assist with your organization’s project. Contact us for a free consultation.