Several real-world case studies are used as context as we investigate the factors that may cause an ERP failure in this blog. Even though there are unique difficulties with each ERP system, avoiding these five traps will help any business become more successful. Additionally, each part contains suggestions for best practices companies can use to better prepare for this challenging task.
1. A lackluster strategic plan
Proper strategic planning for installing an ERP is always necessary; failing could spell disaster.
Some businesses believe an ERP will solve all their issues yet end up entangling unsound procedures with the technology. Before the implementation process even begins, this reactionary mentality can cause business problems.
For instance, in 2016, Woolworth’s Australia, a department store, switched from an internal system that was 30 years old to SAP. Despite not fully understanding its operations beforehand, the organization altered data collection practices to fit the new SAP system. The company could not produce profit-and-loss reports for nearly 18 months due to improperly documenting existing business practices. The corporation lost $200 million due to this ERP failure.
Before implementing an ERP, businesses must evaluate their current systems, personnel, and procedures. Furthermore, ERP implementations can be seen as a business transformation instead of a technical undertaking. Setting the correct tone for the entire organization will be more accessible by putting procedures and people before technology.
Along with specialized employee training and information transfer sessions, the strategic planning process should include post-go-live assistance from the implementation partner. These will aid in better safeguarding the business against the need for a project rescue or other issues.
The process for goal-setting, budgeting, timeliness, and other ERP implementation-related tasks will be streamlined by having a thorough awareness of these elements.
2. Effortless Communication
A strategy plan can only be as effective as it is carried out, and effective communication is the thread that binds everything together. It is crucial for all stakeholders, internal and external, to stay open and forthcoming because poor communication can quickly sabotage an ERP deployment.
Any implementation step can have communication problems, but the requirements collecting stage can cause the most harm as the needs and project scope are discussed. Clear articulation of goals and expectations by the organization is crucial because even one misunderstanding could throw the entire project off course. The implementation partner must also acknowledge gaps in their ability to interpret requirements or unanswered queries.
Regular check-in meetings and open lines of communication (through Slack, phone, email, etc.) are typical to ensure goals are met and timetables are on track. To define the outcomes of their work, all parties must concur on standards and measurables. It could cost you if you don’t do this.
Waste Management and SAP engaged in a legal dispute worth $100 million due to an ERP breakdown in 2008. SAP responded with a separate complaint alleging a breach of contract for “failing to timely and accurately define its business requirements” in response to the company’s allegations that SAP participated in a deceptive sales campaign.
3. Absence of Corporate Buy-In
Having universal support is crucial since the effects of an ERP failure will be felt throughout the entire organization. After an ERP implementation, systems, processes, and roles change; thus, success depends on taking action to reduce potential conflict.
The implementation will fail if management is not on board or actively involved. As it establishes the parameters for the implementation team and its partners to work within, management plays the most crucial function in the strategic planning process.
The management team sets the direction for strategy, resource allocation, budgeting, timeframes, etc. Because some decisions may impact fundamental procedures and have long-term effects, this group must always be actively involved. This degree of involvement will make it simpler for larger organizations to inform stakeholders, the general public, or other interested parties of improvements.
Non-management employees are on the front lines and must fully understand the changes’ significance. Communication is essential, and “managing up” is quite helpful in this situation.
During the ERP installation process, some employees could feel they perform numerous responsibilities simultaneously. They will require guidance from management to balance their workload and establish expectations. The frontline staff should also feel empowered to offer suggestions for improving processes or identifying scalable solutions.
Organizations must commit to training to learn the new ERP system and business processes. Adoption will benefit and may shorten the project’s overall timetable.
4. Awful Implementation Partner Selection
Because the stakes are so high, choosing an ERP implementation partner can be difficult. Although it may seem as though you are betting the future of your business on the skills of an unknown party, there are many excellent partners out there.
Implementation partners should have appropriate real-world ERP simulations and an experienced team in a company’s industry. There won’t be a need for a learning curve because these partners will already be familiar with the difficulties in business experiences. Throughout the deployment phase, the partner’s experience can be used, and they will be able to customize the ERP to meet the needs of the business. Additionally, it is advantageous if they have ERP end-user experience (like the SCG team, Seibert Consulting Group).
The choosing of partners must be done with great care. Obtaining client recommendations might be beneficial to weed out unsuitable candidates, ask typical qualifying questions, and view a product demo. Companies could request to talk with potential partners’ consumers throughout the final phases of partner evaluations to obtain a sense of the overall experience. This may tip the scales in favor of one relationship over the other and be very revealing.
5. Selecting the incorrect ERP platform
The ERP platform may not be a good fit even if a company has everything in order internally and has a top-notch installation partner. Many ERP platforms are available, but not every forum is appropriate for every circumstance. Evaluation of various ERP platforms should be a part of the previously mentioned strategic planning procedure.
The selection of an ERP requires a thorough understanding of current operations, processes, and objectives. An ERP tool should assist a business in achieving its objectives. Companies should look at the ERPs that other profitable firms in their sector employ when performing research. These are frequently stated by the suppliers of ERP platforms in press releases or case studies.
Generic ERP platform choices with cheaper initial costs generally need more customization, development, and maintenance over time and other long-term difficulties. Longer deployment times may result from this, which will lower overall ROI.
As an alternative, the larger ERP platforms may occasionally pressure businesses to buy packages or other systems that are not necessary at that particular time. This could lead to high costs and compel a business to restructure its organizational structure before it is ready.
A third explanation is that the ERP technology is not as developed as SAP’s, which is blamed for the historic ERP disaster of the multinational cosmetics company Revlon.
We advise using NetSuite’s fully integrated ERP for all the above advantages and more. More than 30,000 companies and subsidiaries worldwide rely on it, making it the most widely used cloud-based ERP solution. Because of its modular design and native integrations with CRM, e-commerce, HR, inventory management, and many other systems, NetSuite ERP can expand with your company.
Conclusion
Taking Your Business to the next step can only become a reality if you have the expertise to deliver outstanding solutions. At Seibert Consulting Group, we provide modern solutions to businesses that fully utilize the NetSuite ERP, SuiteCommerce, Shopify, and BigCommerce eCommerce platforms. We always customize our solutions to meet Your Business’ requirements and goals. Let’s start talking about your project and find out how we can help Your Business grow. Contact us via our chatbot or email at hello@seibertconsulting.com and via our direct line at 760-205-5440.
