Enterprise resource planning (ERP) projects have a bad reputation. Like wayward children, they can be difficult to control and expensive to bring to full maturity.
Yet just as parents often fail their errant children, ERP projects that go bad often do so because they're let down by the companies that brought them into existence.
ERP projects don't fail - but the people that drive them can make mistakes that lead to budget and time overruns as well as poor return on investment. Here are a few of the mistakes I've seen companies make as they roll out ERP systems and new business processes.
Avoiding them can be hard work - even when you're aware of the risks they pose - so these are issues that need constant focus in any major ERP implementation.
1. No compelling reason for the project's existence
Why is your business implementing an ERP system? Often, in failing ERP projects, the project sponsors and managers battle to give a single crisp and compelling answer to this question. Sure, they'll be able to mention many benefits their company hopes to achieve, but they can't provide a succinct view of what it is that makes this complex and expensive project worth the time, budget and commitment it demands from everyone in the business.
To avoid this mistake, one needs to draw up a detailed business case that aligns with the company's vision and objectives. It's not enough to say you want to become more efficient or profitable - you must have a business case that maps the investment to specific business outcomes you wish to achieve.
2. Failing to anticipate change
The first lesson anyone learns about shooting a moving target is to aim for where the target will be rather than where it is now. The same is true of ERP projects, where the people driving the project need to anticipate where the business will be in a few months as the first deliverables come on-stream.
Mergers and acquisitions, new product launches, divestures, technology rollouts, new laws and regulations, and more - all these things could impact on how you use and configure a new system. Make sure that your specs are not out of date as your project goes live by planning for changes - predictable and unforeseen. Don't carry on blindly when circumstances change, but adapt your project plan accordingly.
3. A lack of project governance
Project governance is perhaps the most important factor that will determine the success or failure of your ERP project. If you don't have a systematic way of planning, making decisions, documenting change, coordinating resources and assigning accountability, you are setting your ERP project up for disappointment or even failure.
Even if your software vendor and consulting partner have superb methodologies and technology, they need governance support to drive a successful implementation. One important aspect of this is that you - as the client - must take the lead and support your vendors and consultants to ensure that they can marshall the resources they need to do their jobs.
4. A loss of focus
ERP projects can take months or years to complete. They are big and complex, and when they go on for too long, people begin to lose focus. It's important, therefore, to keep one eye on the big prize and another on shorter term deliverables. Keep things moving - for example, by focusing on master data management, training, and so on - and keep people focused on the ultimate aim of the project. Make sure that everyone knows what the business case is and keep driving home the benefits.
Keith Fenner is the Senior Vice President Sales, Sage ERP X3 AAMEA (Australia, Asia, Middle East and Africa).