Minimize your risk of ERP failure?

In the last few years some of the typical responses we have heard on experience of ERP implementation range from

1. I could not get ERP working in my company as my employees failed me.
2. I installed ERP of a reputed company. It took us a year to implement it but I am still not getting the information that I want. Should I go in for a different ERP?
3. Our implementation was going fine. We were able to meet with all of our deadlines. Then we asked client for data and the client has gone into a sleep. For the last one month, we are just waiting for data.

All these are not a surprise when we see that 50-75% of ERP implementations do not succeed, that is do not get implemented within time or within budget or both. To share some statistics on ERP implementation

• Organizational challenges are the main reasons for ERP projects missing the deadlines.
• Similarly, half of ERP implementations fail at first try.
• ERP implementation time has increased from an average of 16.9 months to 17.4 months.
• A majority of ERP projects (74%) take longer than the intended deadlines.
• 64% of ERP projects will spend more than the allotted budget.
• Testing and other related processes can shoot up ERP projects’ budget to 50% more than what was allotted.
• 51% of users needed to manually extract their data from their ERP systems. Additionally, 33% of ERP customers needed APIs to do the same. As such, significant technical knowledge is required for data extraction in ERP platforms.
• It is difficult for organizations to achieve a unified data view as a large number of ERP platforms (92%) need manual intervention to enable data sharing.

The companies can reduce some of the common problems with ERP implementation by

Planning – Prepare a plan for ERP implementation. Be realistic in assumptions on allocations of resources and timelines. Take an end to end cycle that includes functional training and training of ERP solution for the employees. One area which is generally under-budgeted is time taken in testing. It would be good to develop various use cases to test. This would also help in developing a realistic testing plan. Another area which is generally under-estimated is reconciliation of data and migration of data. Some organizations maintain good quality data in legacy systems, others who do not, may want to take stock of their data and plan accordingly.

Change Management – Its very difficult for people to change their habits. New technologies and better software typically come with increased fears. Fears of being exposed, fears of under-performance etc. New behaviours also need time to be accepted and internalised. It is important to identify early adopters and include them in change management strategy. Adequate time has to be provided for acceptance and adoption of new technologies.

Define the needs properly – Rework and customization are spoilsports that derail most of the projects. It helps if the company is aware of the systems, including management information system, that it wants and completes their design before starting implementation. Systems should help the company in meeting with its business objectives and not be tailored to limitations of the ERP software. An analogy would be using an architect to prepare design of house before the contractor starts construction. We get the house designed based on our needs and not what the contractor can deliver.

To summarise, it is essential that the organization clearly articulates its needs, prepares a comprehensive action plan which includes people aspects such as broad-based engagement with people while preparing for and during the transition from legacy systems to ERP. A good project management team, either consisting of employees or a mix of employees and management consultant(s) with experience of implementing ERP (at end user level) goes a long way in minimizing risks in ERP Implementation.