You may have decided to implement a new EROP across your organization. However, the strategic risk of ERP implementation can be quite daunting. Failure rates in ERP projects have reduced over the years but still, one-third of ERP projects end up in failure.
According to a survey conducted by Panorama Consulting between September 2012 and January 2013, there were some key findings which point-out the shortcomings in ERP projects. The average cost of implementation was $7.3 million with an average duration of implementation of 16.6 months. 59% projects went over the budget while 53% projects failed to meet the project deadline.
There are other cases, where companies fail to recognize that they are heading towards a failure and find it convenient to make the vendor a scapegoat. Arguably, this can be attributed to varying perceptions of failure. In this article, let us take a look at key symptoms of an ERP project that might be headed for failure.
Certain questions to ask yourself to see if something is going wrong
Though there is no objective method of pin-pointing failure of ERP projects, there are certain signs and symptoms which indicate a serious rethink over the state of affairs.
- Desist from setting unrealistic timelines as they can never be met. ERP implementation is a complex state. Any hurtling attempt to meet the deadline will have a cascading effect on the project.
- The time you realize that your projected implementation budget is ballooning in an uncontrolled manner, and bound to exceed 30% of the projected cost; find out what’s going wrong before you proceed.
- ERP projects are not implemented just for the sake of competition. Is your project helping you to achieve your projected ROI?
- Have a list of clearly defined objectives that you wish to achieve during the projected schedule. Are your objectives being fulfilled?
Why do ERP projects fail?
- Lack of commitment
For an ERP project to be successful, it needs participation and commitment from all stakeholders like vendor, senior management, employees, IT team, and clients’ customers to smoothly achieve the desired goals. In cases where the implementation part is left to lower level management, the project is likely to be doomed. Even a project manager can’t take bold decisions if senior management does not plunge into the details.
- Poor change management
ERP project changes the way the organization carries its processes. Quite often, old employees show a resistance to change their way of working which creates a problem for the younger lot as well. A project manager should make sure that everybody is equally involved and aware of their changing roles and responsibilities. Regular training and education should be imparted to employees about the need for ERP implementation and how it is going to benefit the employees and organization alike.
- Software incompatibility
Before you choose ERP software, examine its software codes and their alignment with your existing processes. Once a wrong software is chosen, a lot of customization will be required making the software unfit for use. Anticipate the process changes before you begin implementation.
ERP implementation is a serious process which needs a lot of commitment from the senior management of the organization. Apart from that there are many internal and external factors that integrate to deliver a successful implementation. Despite that, many organizations fail during the implementation phase and end up losing a lot of money and time.
With a growing demand for cloud-based ERP systems, the risk factor associated with ownership of the software and hardware has come down to a larger extent for small-scale organization. Yet, you need to watch out for signs that indicate that you are headed for failure. If you do notice those signs, speak to your vendor or ERP consultant and get things sorted out.