ERP Project Killers: Five Things You Need to Know to Avoid!
Posted on: March 23, 2012 | By: SuperUser Account | ERP Selection
KILLER 1: Lack of Executive Buy-In. RESOLUTION: Secure Executive/Owner Project Buy-In
Some ERP projects are IT-driven. Other ERP projects are business-driven. Regardless of whose pushing for an ERP project, it is critical to ensure ownership and/or executive management supports the project, embraces the objectives and understands the risks, costs, hard work and additional effort required by internal personnel. At some point during almost any ERP project, there will be tough times. When and if a tough situation occurs, it is critical for business leadership to stay the course – encouraging the team forward, leading discussions on how to resolve difficulties, discouraging finger pointing and helping the team prioritize and resolve issues. According to Gartner research, 55% to 75% of all ERP projects fail to meet their objectives and one key driver of these failures is a lack of executive sponsorship.
KILLER 2: Failure to Properly Define Requirements. RESOLUTION: Understand Critical Requirements, Unique Industry Requirements and Requirements Which Give Your Company Its Competitive Advantage
Arguably no area of ERP design and implementation gets more attention than requirements definition. ERP packages have certainly evolved to the point where most major players handle standard business processes pretty well. As a result, we believe it’s important to focus more precisely on your specific industry requirements, and even more specifically, the things you do as an organization that gives you your competitive advantage, and the business processes which support them. Defining these critical requirements up front will help you narrow possible ERP candidates down to a short list of niche players who target your industry and larger breadth players who have the robustness and configuration flexibility to handle your industry. With research indicating a 55% to 75% ERP project fail rate, we strongly believe one key root cause is a failure to identify critical, industry or competitive advantage requirements up front.
KILLER 3: Failure To Anticipate How Project will Impact Customers and Other Stakeholders. RESOLUTION: Understand How Project will Impact Customers and Other Stakeholders
An ERP project can affect customers in 3 ways:
1) During the project as resources are pulled away to the project, potentially leaving fewer resources for taking care of customers,
2) At project cutover/go-live, if there are failures which impact inventory availability, shipping, invoicing or other customer-facing problems, and
3) Post-go-live, if the ERP implementation results in different service levels or impacts other customer-facing business processes.
In most cases, one of the goals of an ERP project is to improve service levels, so hopefully that part of #3 does not happen. However, customers should be notified well ahead of time of any changes to forms, invoices or other things impacted by the new ERP system. During the project, it is critical to make sure that customer-facing personnel have enough assistance to fulfill their ERP project duties and to do their jobs. Following a proper implementation methodology can greatly reduce the chance of customer-facing errors. Our 20 years of ERP implementation experience clearly shows that organizations that adhere to a proven implementation methodology and use collaborative tools have a much lower chance of experiencing a customer-facing systems problem. And customer-facing systems problems cost you money.
KILLER 4: Inadequate Budget. RESOLUTION: Secure Appropriate Project Budget
ERP projects can help you automate processes, better serve customers, reduce overhead costs, grow without increasing headcount costs, reduce inventory costs and improve customer service levels, resulting in huge increases in company profitability. These ERP projects also cost a lot of money to do right. Some companies see all the benefits of better ERP but are unwilling to allocate the budget necessary to do the job right. In a study of 30 manufacturing organizations who recently implemented ERP, over 50% of the CIOs identified inadequate budget as a major or contributing cause of their unsatisfactory ERP project.
KILLER 5: Focusing on the Technology. RESOLUTION: Focus On Business Processes Rather Than Technology
You purchase ERP from an ERP company. The ERP company is rightly proud of their ERP and logically makes ERP the primary focus. You should not. While the technology is important and impressive, what is more important is how the technology supports the business processes which support your critical, industry and competitive advantage requirements. It is easy, time consuming and costly to get caught up in all the technology bells and whistles offered by today’s packages, especially the major ERP providers whose offerings need to be robust enough to support all sorts of industries. A majority of business executives surveyed say they spent time and money on technology they don’t need or use. Clearly it is as important to know what to turn off as it is to know what to turn on. This mindset starts with focusing on the business and the business processes, not the technology.
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