Hardfacts on Software -The 12 cardinal sins of ERP implementation
My last two articles were aimed at painting a clear picture of what is involved in an ERP implementation and how one can picture this process by comparing it to infrastructure development in a little kingdom. One of the key issues I mentioned was leadership buy-in.
But there are many more issues that leads to failure of an ERP Implementation. I found a very good white paper online, published originally by Richard G. Ligus of the Rockford Consulting Group, which is widely referenced online. Here is Richards ‘take on the 12 cardinal sins of ERP Implementations:
The biggest single issue in ERP is the failure of a successful implementation. It is mind-boggling to continually encounter companies that make major ERP gaffes in this day and age, especially since most of the trials and tribulations of MRPII implementation were suffered and learned from in the early 1980’s with alpha, beta and gamma releases.
So what constitutes failure? Several things come to mind:
1. Not making the promised return on investment,
2. Inordinately extending the implementation schedule and start-up date,
3. Running over budget by unconscionable variances,
4. Grinding the organisation to a crawl pace, or the severest of all consequences,
5. Stopping production and/or not delivering orders to your customers.
Industry statistics show that more than 60% of ERP implementation starts historically fail. Does this mean that you are doomed from the start? Of course not, if you learn from the mistakes of others. So the pertinent question is, what are the main causes of ERP failure and what can be done to prevent this from happening to you?
The 12 cardinal sins of ERP Implementation
There are twelve major reasons why companies get bogged down or fail in implementing ERP.
1. Lack of top management commitment
The propensity of top management to delegate the oversight of an ERP implementation to lower management levels often results in (1) being “out of touch” with critical events, or (2) the lack of understanding of the size, scope, and technical aspects of the project, and subsequently, the lack of proper commitment of time and resources required for a successful implementation. The result is a failure waiting to happen.
2. Inadequate requirements definition
Surveys have shown that inadequate definition of functional requirements accounts for nearly 60% of ERP implementation failures. This is simply a matter of not comprehensively and systematically developing a quality set of functional requirements definitions. This leads to the second greatest cause of ERP implementation failures: poor package selection.
3. Poor ERP package selection
Poor package selection occurs when a company has inadequately developed functional requirements definitions. It also occurs when staff members assigned to ERP projects do not take the time to run the screens of the new system, as they would during their daily work tasks, to find out if the software package features are adequate for their needs.
Another reason we have found is executives, familiar with an ERP system from a last job they held, implement the same system in their new company without defining functional requirements. We have also encountered companies who made major gaffes by selecting a package at the top level of a company without intimately knowing its characteristics. What often results from this is the ERP package doesn’t fit the organisational needs, or that the package selected takes longer to process daily work tasks.
We have also seen executives select a distribution package for a manufacturing environment, or a manufacturing package for a distribution environment, for obscure reason, such as liking one salesman over another.
Let’s look at more reasons next time then – remember – Keep it (A)fresh