Understanding Failed ERP Implementations

If your company is looking to purchase, or change to, a new ERP solution then you have likely seen some rather frightening statistics on ERP failure. The one that might be the most startling is one by Gartner that shows ERP implementations have a 75 percent failure rate. With a number that high, it makes you wonder why any business would sink money and resources into a software application that is going to surely fail.

The good news

Lucky for us, and most businesses, the term failure is used rather loosely here. If the implementation doesn't meet its deadline, if the project runs over budget, if not all of the goals are met or if the ROI isn’t met according to schedule the project is deemed a failed implementation. So there are degrees of failure involved, the question becomes how much are you willing to live with?

So now that we know that failure isn’t defined as a catastrophe where the entire project is scrapped, in all cases that is, we can take a sigh of relief and get down to determining how to keep these failures to a minimal, acceptable level.

Determine what failure is

The first step in avoiding a failed ERP implementation is to determine what success and failure is. Early in your project planning, you should be determining what a successful implementation looks like. Maybe it is to have all users trained and on the software by a certain date. Maybe success includes the ability for your ERP solution to function within your current infrastructure without any outages. Most likely, you will measure how much more efficiently people work once they use your new system. However, once you know what a successful implementation looks like you need to examine what a failure is as well.

As a team, you need to be specific about what components of your ERP solution are mission critical. Is having the software running by a certain date imperative to your business? Will business come to a halt if your data migration results in errors that fall within an expected range? If costs run over the estimated budget, will the project be affected in a way that the software is useless? In any of these scenarios, the answer is likely no. These events will not cause catastrophic failure that brings your business to a screeching halt. That doesn’t mean these problems are acceptable, it just means that they are manageable.

Justified in the end

If you are looking into implementing an ERP solution its because you need one, not just because you want one. Your business sees how much this type of application can benefit them by:

• Improving visibility
• Controlling costs
• Reducing lead time
• Maintaining accurate records
• Helping you operate more efficiently

So if the failures common to ERP implementations are a concern, or even a deal breaker, then bring in people who can help keep these problems to a minimum. Most large scale projects fail because of poor planning and that comes from not knowing how to effectively plan for a project of this magnitude. By making sure your team consists of end-users, stakeholders and people with experience in successful ERP implementations you have a higher likelihood of falling in that 25 percent where nothing is considered a failure.