Top 5 Reasons Why ERP Implementations Fail

When listening to fears and concerns about ERP solutions, implementation is usually on the top of most lists.  Yes, it can be daunting, but it is the cornerstone of the overall project.    So why do implementations fail?  Below is our countdown of the most common ERP implementation errors and how to avoid them. 

5)  Don’t “Train the Trainer”

Proper implementation of an ERP solution takes a full-court press from your company.  Many times companies simply underestimate what it takes to get it done.  The “train the trainer” approach to cut costs can get you in trouble.  Having only one or two key people learn the system, so they can train other employees is a recipe for disaster.  All users should have an opportunity to work directly with the vendor’s implementation team.  Meet with your vendor to get a clear understanding of what it takes to fully implement the system so you can reap the benefits throughout your organization.

Also, avoid the temptation to train your personnel by department; such as having customer service train from 8:00 to noon on Monday and then have purchasing take over after lunch.  These sessions usually just devolve into a demo rather than interactive training.  But worse, trainees have no sense of how the software integrates nor how they are affected by events upstream and how they impact those who are downstream.

4)  Underestimating Implementation Days Needed

In order to keep costs down so they can close the deal, some vendors  suggest you purchase fewer implementation days than you really need.    This leaves you with buyer’s remorse when you learn you must spend more than you expected in order to fully exploit the software – not to mention the cost of a delayed or failed implementation.  Vendors will never guarantee they can get the implementation done with the days they quote, but press them to be up front with what it really takes to get their system up and running throughout your shop.  Ask for specific examples of other similar projects and their implementation durations – and insist on references.

3) Resistance to Change

Culture shock is possibly the most difficult hurdle in an ERP rollout.  Employees are resistant to change for a myriad of reasons; usually rooted in some type of fear.  They may be worried that their jobs are in jeopardy or that they will be unable to learn the new system.  Some may just be afraid of computers.  Whatever the reasons; education is the answer.  Try to let them see how the new system will benefit them personally.  They may be less stressed because all the information they need is readily available; they may be less exposed to failure because they have greater control and visibility or they may simply have time to organize a meaningful thought rather than just run from fire to fire.  Once they see how their own lives will be easier, they will actually be excited about the new system.

2) Choosing the Wrong Solution

Choosing the wrong ERP solution can be devastating.  Don’t get caught up with a vendor that tells you “yes we do that”.  MAKE THEM SHOW YOU!!  Unfortunately what you find out too late is that “yes we do that” turns into “yes we do that, but it will take some customizing”. For more on customization see our customization series.

1) Management Doesn’t Buy-in and People Aren’t Held Accountable

Management has to understand that all of the previously mentioned issues can be resolved when they accept the idea that a new ERP system is best for the company.  It is imperative that management also buys into the implementation process, and supports the plan throughout the organization.  They must understand that “train the trainer” to cut costs is not a solid option, and pressing vendors for honesty in implementation costs and educating employees on benefits of a new system is critical.

Everyone throughout the organization must believe that management is completely behind the project and will take any necessary action to ensure success.  Furthermore, management in smaller companies tends to be reluctant in holding people accountable for their performance.  Even the best employees can lose their edge when they know they will never be held accountable for sub-standard performance – and some less perfect employees will take serious advantage of such an environment.  Sometimes, management must be prepared to make some tough decisions if an employee remains a roadblock to the project’s success.

To sum it up:  Know what you’re buying, get your team on board, educate them fully and don’t underestimate what it takes for success!  Did we leave a common mistake out?  Let us know.

Posted By Ken Hayes, CPIM, OCP
Vice President, Product Development
ProfitKey International
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3 Responses to Top 5 Reasons Why ERP Implementations Fail

  1. Jay Snow says:

    Here at MTI Systems, we know what you mean. Since 1982, we have been offering cost estimating software for manufacturing companies to suppliers and oems and if each of your listed points aren’t properly addressed, as you say, “It’s a recipe for disaster.” One funny thing about both ERP’s and cost estimating systems, is that they are the backbone of the company. Sure companies can squeeze by, when they are getting started, but to be truly successful all manufacturers need software to help them excel into true profitability. Great work. Jay Snow, Marketing Manager.

  2. Thank you for the article. Many sources speak to the symptoms that result in ERP implementation failure but few speak to the root cause of these failures. The root cause has more to do with the wrong implementation strategy. Today, the majority of ERP implementations follow a traditional, “build-from-scratch” approach that is not adequate for implementing packaged software like ERP. What is required is an approach that addresses both the inherent advantages and challenges associated with ERP. Following are 10 principles to assist you in build the right ERP implementation strategy.

    http://gbeaubouef.wordpress.com/erp-business-solution-manifesto/

  3. Pingback: The Manufacturing ERP Search: The Daunting Task of the Short List | Navigating Manufacturing ERP

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