ERP Success By Avoiding The Implementation Failure Factors

For years I have been involved with every aspect of ERP system projects, I have led upgrades, conversions, mergers, new system implementations, and decommissions. I have learned through the school of hard knocks and observations what it takes for a project to be successful. Often the path to success is to avoid making the all too common mistakes others have made in their ERP system journey.

Here is the list I put together on factors to avoid when in the midst of a major ERP transformation project at your company.

Top ERP Implementation Failure Factors

Almost everyone has seen the headlines or analyst reports citing ERP implementation debacles and a disturbing industry implementation failure rate. The Gartner firm estimates that (55%) percent to (75%) percent of all projects fail to meet their intended objectives. The Standish Group has been doing research and surveys on all types of IT projects since 1994. Their investigations, published under the title CHAOS, reveals some startling facts. The CHAOS research and database shows an astonishing 31.1 percent of projects being canceled before completion. The results also illustrate 52.7 percent of projects cost 189 percent (almost double) of their original estimates. The cost of these failures and overruns are just the tip of the legendary iceberg. The lost opportunity costs are not always measurable but could clearly exceed the out of pocket expenses. However, recognizing the repeated causes of project failure permits understanding, preventative occurrence, and proactive risk mitigation strategies.

Lack meaningful involved executive sponsorship

While its rare these days to have projects without executive sponsors anymore, there are plenty with ineffective executive sponsors. Executive sponsors cannot just take the stance of spectator and treat it as an IT project. They must visibly, vocally, and actively demonstrate leadership, strong commitment to the project and support of project team members at every possible point. They must act swiftly to resolve obstacles and champion the projects continuous forward movement.

Lack of formal and disciplined project management

The implementing a mission critical business system is not the time to begin figuring out project management for the first time. The Project Management Office (PMO) with experienced project managers supply their skills, their experience, and a proven project management discipline to advance projects according to plan and towards predicted successful outcome.

Project team turn-over of key staff

While it is bound to happen, losing an executive sponsor or project manager can delay a project’s progress. Losing these roles multiple times or substituting lost roles with less capable replacements can dramatically increase risk and wreak havoc on the project. If this becomes a pattern, the executive team should take a hard look at the overall health of the project and its framework.

Inability to identify and mitigate risks or remedy incidents which ultimately escalate

Red flags and surprise project risks generally occur throughout the project, however, if the project manager or project team don’t recognize, communicate, or act upon these issues until late in the project the obstacles often compound and become even more difficult to resolve.

Insufficient staff training

Implementation project teams and integration partner consultants are famous for short-changing user training. It is also common that during cost cutting sessions, training is one of the first things to go. Do not fall into these traps. Training is essential to leverage the system capabilities and realize the benefits. On-going training updates in short bursts are recommended after each new version upgrade.

User adoption troubles

There are few system advocates with the release of a new information system and getting users to accept a new system can be a big challenge. Combine the anxiety associated with change along with an unfamiliarity for the new system and a nervousness from only completing a minimal training program and user fears can escalate if not proactively grounded. Not only do many users fear change in and of itself, but more often than not the new system hasn’t had the years of tuning to mature like the prior system so users sometimes feel as though they are initially taking a step backward. The longer a prior system has been in place, the more difficult it is to overcome this mindset. Proactive change management is the best tool to address user adoption challenges.

Too much software customization

For many companies, the ERP software is viewed as too rigid or restrictive. However, responding to a lack of perceived flexibility by customizing the software before fully investigating re-configuration options, business process work-arounds or an interim period of trial before committing to customization can violate the integrity of the software, delay project progress, lead to excessive costs and impose significant risk to project success. Also, on-going upgrades to the system become more costly and extend project time-lines due to the customizations requiring extra effort. Unless the customization has hooks into a company competitive advantage, it would be best to reengineer the business process to match the standard functionality of the ERP.

Project viewed as an “IT” project

Business system implementations should be spearheaded and driven by business leaders. While IT resources are clearly key participants, ERP systems should not be viewed as IT projects but business projects.

Dirty data

While not usually a cause for project failures, most organization’s do not schedule sufficient time for data cleaning and transformation and are not aware of their poor data quality until they retrieve that data for import into the new system. This is a delay that occurs near the beginning of the implementation project, often lies on a critical path, and therefore often pushes back all other tasks for the remainder of the project.

Lack of milestones (tollgates)

Key implementation deliverables and milestones are needed to measure progress, identify stalls, and ensure a smooth conclusion. A lack of checkpoints with periodic deliverables is a sign of future trouble.

Missed deadlines

Project deadlines can slip for many reasons, such as staff turnover or unforeseen events. However, a team that repeatedly misses its deadlines exhibits a lack of discipline which dramatically increases project risk.

Shifting priorities and specifications

Scope creep and shifting requirements will affect the project's timeframe, cost, and risk. Sometimes this is unavoidable due to rapidly changing business conditions so you need to be aware of this.

Infrequent or weak executive sponsorship

Employees take their cues from the leaders of the company. If the organization’s leaders haven’t demonstrated the project is a priority, it isn’t a priority and user adoption will be extremely difficult. Take this one to the bank.

Poor incident management and spotty reporting.

Open issues which linger eventually escalate. The inability to recognize and resolve issues or an absence of management reporting tools almost guarantees that problems are not being reported or are not being communicated to the extended project team. There is a tendency to only report good news on project progress. Don’t make this mistake. Full transparency is highly recommended.