17 March 2010

Preventing the Failure of ERP Implementations

    Answering to Why many ERP implementations fall short of expectations and how to prevent failure? discussion  in LinkedIn’s Oracle ERP group, discussion based on a Webcast on the same topic, I tried to list a few of the possible reasons for failure as follows:
- not understanding what an ERP is about - functionality and intrinsic requirements;
- not evaluating/assessing ERP's functionality beforehand;
- not getting the accept/involvement of all stakeholders + politics;
- not addressing the requirements beforehand, especially in the area of processes;
- not evolving/improving your processes;
- not addressing the data cleaning/conversion adequately;
- not integrating the ERP with the other solutions existing in place;
- not having in place a (Master) Data Management vision/policy that addresses especially data quality and data ownership;
- not involving the (key) users early in the project;
- not training and motivating adequately the users;
- lack of a reporting framework, set of reports (reporting tools) that enables users to make most of the ERP;
- lack of communication between business and IT professionals;
- relying too much on external resources, especially in the PM area;
- the migration of workforce inside the organization or outside (e.g. consultants coming and leaving);
- inadequate PM, lack of leadership;
- the lack of a friendly User Interface (referring to the ERP system itself);
- inadequate post-Go Live support from the ERP vendor and business itself;
- the lack of an ERP to evolve with the business;
- too many defects in the live system (results often from inadequate testing but also vendor related issues);
- too many changes on the last 100 m of the project;
- organization's culture;
- attempting to do too much in lesser time than needed/allocating more time than needed.

     On the same list I would also add the following reasons:
- not understanding business’ needs and the business as a whole;
- the inadequate choice/use of methodologies related to PM, Software Development, Data Quality in particular and Data/Knowledge Management in general;
- ignoring Software Projects’ fallacies in general and other ERP projects’ failure causes in particular (not learning from others’ mistakes);
- ignoring best practices in the ERP/Software Development/Project Management/Data Management fields;
- not having a Risk Mitigation (Response) Plan [falls actually under inadequate PM but given its importance deserves to be mentioned separately];
- not addressing requirements equidistantly, as opposed to unilaterally (not becoming one department’s project or even one-man-show);
- ignoring special reporting requirements during implementation phase;
- unrealistic expectations vs. not meeting business’ expectations: ROI, incapacity to answer to business (decision making) questions (actually it refers mainly to the existing reports but also to the system itself when the needed data are not available at the needed grain);
- unable to quantify adequately ROI for the ERP-system.
- not making expectations explicit and not communicating them on-time and in a clear manner;
- lack of meeting governmental requirements (SOX, IRS, etc). 
- not monitoring Post-Go Live systems’ use/adoption (e.g. by defining Health/Growth metrics) and addressing adoption issues in-time;
- lack of mapping and transferring/distributing the knowledge existing related to the ERP system (experts, processes, documentation, reports, best practices, etc.);
- not integrating customer’ customers/vendors’ requirements/needs (supply chain vs. sales chain);
- using inadequate technologies/tools to solve ERP-related issues;
- the lack of ERP systems to be integrated with new advances in technologies ([3] refers it as technological convergence);
- the hidden costs of ERP implementations and Post-Go Live support;
- expecting IT/business to solve all the problems;
- over-customization of software [1];
- over-integration of software; 
- not having a global technological view (on how the ERP fits in the technological infrastructure);
- underestimating project’s complexity
- unbalanced daily work vs. project workload [2];
- choosing wrong time for implementation [2];
- engaging in too many corporate projects [3];
- multiple vendors on the project [3];
- not having clear phases, deliverables, boundaries, accountability, quality control components[3], communication channels defined;
- not having an external project audit committee [3];
- having the management over- committed [3];
- inadequate skill sets [3].

    Given the multiple mitigation solutions/approaches for each of the above causes and the interconnectedness between them, each of the above topics deserves further elaboration. There is also lot of philosophy involved, some of them are more important than the others, though all of them could be in time a cause for failure. Failure at its turn it’s a vague concept, highly dependent on context, an ERP implementation could be successful based on initial expectations but could fail to be adopted by the business, same as it can meet business expectations on short term but be not so flexible as intended on the long term. In the end it depends also on Users and Management’s perception, on the issues appearing after Go Live and their gravity, though many such issues are inherent, they are just a projection of the evolving business and system’s maturity.

     Preventing the failure of an ERP implementation relies on the capacity of addressing all or most important of the above issues, being aware of them and making at least a Risk Mitigation Plan with a few possible solutions to address them. In a project of such a complexity and so many constraints, planning seems to be useless but is a good exercise, it prepares you for the work and events ahead!

[1] Barton P., (2001). Enterprise Resource Planning: Factors Affecting Success and Failure. [Online] Available from: http://www.umsl.edu/~sauterv/analysis/488_f01_papers/barton.htm (Accessed: 17 March 2009)
[2] ERP Wire. (2009). Analyzing ERP failures in Hershey. [Online] Available from: http://www.erpwire.com/erp-articles/failure-story-in-erp-process.htm (Accessed: 17 March 2009)
[3] Madara E., (2007) A Recipe and Ingredients for ERP Failure. [Online] Available from: http://www.articlesbase.com/software-articles/a-recipe-and-ingredients-for-erp-failure-124383.html (Accessed: 17 March 2009)

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