ERP failures does not happen overnight, it’s a gradual and gathering of smaller decisions and actions. An ERP system will be said to have failed if it fails in driving up efficiency and effectiveness of the business. Failings of an ERP is dependent on what you expect out of the system. ERP systems don’t just fail, it must have given warning signs over time. There are 10 of these warning signs identified by Panorama Consulting Groups, of which we consider 5 the most important and closely linked to the failure of an ERP system;
• Unrealistic Expectations
This leads to unrealistic budget, timeline and resources allocation. This means business invest too much than needed into these project without a picture of reality. Don’t be clouded by the investment plan or proposal from the ERP vendor.
• Disconnecting Your Executive Team
By not involving your executive team, your ERP system is headed for failure. Executive involvement should be beyond approving budgets, resources and other peripheral functions. They need to be carried along in strategic decisions.
• Reliance on External ERP Consultants
It doesn’t have to be too little or too much. Both are the extreme and should be avoided. If you find yourself at either of the extreme, your ERP system is heading for failure. Ensure that your organization is at heart of the control of the ERP system.
• Lack of a Contingency Plan
ERP doesn’t always go as planned and when you are without a PLAN B, you are boxing yourself into a corner. Your plan should have a contingency budget of between 15% to 20% of the ERP system. This will allow you to wiggle your way around when things don’t go as planned.
• No Clear-cut Business Process Re-Engineering
ERP is all about improving business processes, and without understanding the current process, you might be wasting business resources. When there is a need for fundamental processes, you may be automating a business process bound for failure.
All of these are reasons that could bring about failures in your ERP system. When do the failure actually now surfaces;
1. Users of the ERP systems find themselves making adjustments or improvising to make the ERP works. When this is happening, the ERP system has failed or bound for failure.
2. Results are unattainable even after three years of implementing an ERP system. This amounts to total failure of the ERP deployment. ERP is a time bound project that have to produce results or it will be considered a failure.
3. If it’s still business as usual despite the adoption of a new technology and processes, the ERP system is considered a failure.
4. Absence of a clear cut goals and objectives of the ERP implementation project. There should be goals and objectives that can be shared with employees. Unavailability of these goals is tantamount to the failure of the ERP system.
5. The project is consuming more time, personnel and resources than apportioned for the implementation of the ERP system.