DOs & DON’Ts of ERP software implementations

In a recent Google of “Failed ERP,” I received an astounding 1,450,000 hits. Search result highlights included high profile organizations like Hershey Foods, the U.S. Navy, National Australian Bank, Grainger, and the list went on and on.  Is there a reason so many ERP implementations fail?  You bet.

Best systems no guarantee of success

A plethora of data specifically points to what an organization must have or must avoid if it expects ERP implementation to succeed.  So why do 40% to 70% of them fail?  Some in the industry would say 60% is not all that bad.  For example, a baseball player with a .400 batting average is a superstar, or that you’re an excellent bowler if you roll strikes 60% of the time.

But, the difference in magnitude between these examples and implementing an ERP system is you could be betting the company, with the downside of risking the loss of huge sums of money and resources. 

Let’s compare an ERP implementation to open-heart surgery: Would you have a dentist perform the procedure?  Probably not.  If you put the right software solution in the wrong implementation partner’s hands, or the wrong software in the right partner’s hands, it will likely lead to failure.  Improve your odds.  Implement the right ERP system and hire the right partner from the get go.

Of the many articles written about ERP implementation, some offer real insight into why it fails.  “The 12 Cardinal Sins of ERP Implementation,” written by international supply chain strategy and operations consultant Rich Ligus, is a good example.  The following paraphrases key points from the article, which was published in the February 2004 issue of Global Logistics & Supply Chain Strategies:

What constitutes failure?

• Not making the promised ROI
• Undue extensions to the implementation schedule and start-up date
• Running over budget with imprudent variances
• Grinding the entity’s pace to a crawl
• Stopping production and not delivering customer orders

The Twelve Cardinal Sins

• No commitment from top management
• Poorly defined requirements
• Poor ERP package selection
• Inadequate resources
• Resistance to change or buy-in
• Miscalculated time and effort
• Poor fit between application software and business processes
• Unrealistic expectations for system benefits and ROI
• Inadequate training and education
• Poor project design and management
• Poor communication
• Ill-advised cost cutting

To improve your chances of successful implementation, adhere to best practices and do your homework on the front end.

Contact your BKD Technologies advisor or your BKD Manufacturing & Distribution Group advisor for help choosing the right ERP system and improving your chances of a successful implementation.

Quick tips for improving your ERP software implementation

BKD Technologies’ recent review of past Axapta (Microsoft Dynamics AX) projects provided insight into why some manufacturers’ ERP implementations succeed and others fail.  Successful on-time, on-budget implementations are possible when companies adhere to these actions:

• Assume true ownership of ERP application and implementation
• Define realistic requirements and expectations
• Work within the software process as opposed to custom code
• Manage scope creep by requiring valid business objectives for any change in plans
• Simulate or test their business processes multiple times to validate business needs are met
• Create and continually review or update company how-to documents

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