Lessons Learned: ERP Failure

November 1, 2011
By

ERP Lisa Anderson The ACA Group

ERP success or failure depends on how you set up your resource planning.

ERP system implementations fell off the grid during the recession; however, I’ve seen resurgence in the last year. Companies are thinking about investing again. However, although businesses are picking up, they are by no means out of the woods – every dollar invested must provide a solid return.

Implementing a new ERP system can provide you with upgraded tools to run your business or it can devastate your business – it all depends on the effectiveness of your ERP selection and implementation processes. It is not nearly as simple as it seems. Unfortunately, in my experience, 80% of the time, it fails to achieve the expected results. Worse yet, I’ve seen some horrific customer service impacts. Thus, when you choose to implement an ERP system, it’s worth taking into consideration the lessons learned from failures.

After being involved with many system implementations including several ERP implementations across multiple industries and globally, I’ve seen what works and have compiled lessons learned from failures. As I could go on for days on this topic, I thought I’d pick three top lessons learned from failures to discuss: 1) It’s all about culture change. 2) It’s not black or white. 3) KISS.

  1. It’s all about culture change

    One of the largest and most commonly repeated mistakes is to forget about the culture. It doesn’t matter if you’ve purchased the latest, best, world-class system; if you haven’t considered your culture in your selection and implementation plans, you can count on failure.

    As system implementations always involve some aspect of culture change, it is vital to think about it in advance. What are your culture norms? Are you planning to change the culture? Are you thinking you’ll change the culture by implementing a new system? I hope not, as it won’t work! Instead, you should consider how to integrate the new system and work processes into the culture in a way that will benefit the organization.

    If you incorporate culture change into your plans and stick by them (a plan that is communicated but not executed is worse than no plan at all), you’ll be able to leverage the system implementation to achieve significant results. Remember successful culture change requires exceptional leadership.

     

  2. It’s not black or white

    I have lost count of how many times I’ve seen ERP implementation teams forget common sense – what will “work”? Instead, as these types of projects tend to be massive, they will throw out random rules such as “no changes to the way the system is designed”, “we’ll do a conference room pilot but we cannot make changes”, “we’ll keep the same number of people in xzy function as we cannot afford to increase staffing” (regardless of whether it would stay the same overall but needs to be adjusted by functional area), etc. Instead, we need to think in terms of guidelines and allow for common sense.

    For example, one of the most frequent rules thrown out is “no changes to the way the system performs the function” – we’ve spent a boatload of money on this system, and we need to use it as it was intended. I loved one comment, “xzy system is set up for best practices; use them” (even though these best practices were not aligned with the industry requirements and would lead to disaster). Of course, these statements are reasonable overall and can be a common sense guideline; however, it can lead to disaster when viewed without consideration for the circumstances. Allows for a few tweaks, and I’ve seen companies dig out of customer service nightmares and achieve 98-99% levels.

     

  3. KISS

    KISS (Keep it simple stupid) – I was reminded of this by a former mentor recently. Why is there such an inclination to get complex and convoluted so quickly? I find that it is best to continually review the plans, progress and system utilization for simplicity. There is no reason you need to implement all of the system functionality, even if you purchased it. Instead, think about what will add value to your business. Look at it from a lean point of view – what is waste? And keep it simple. Of all of the system implementations I’ve seen or participated with, those which kept it simple turned out significant better than those who wanted to leverage all the complexity the system had to offer on day one.

    In today’s new normal business environment, it is not only essential to improve the bottom line but it is also vital to provide exceptional service levels. Do not let your system implementation transition from a tool to leverage for success to the noose around your neck weighing your business down. Learn from others’ failures and continually remind yourself to focus on culture and common sense.

Lisa Anderson, President of LMA Consulting Group, Inc.  is a senior supply chain and operations executive and management consultant.

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