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8 reasons why ERP fails

In corporations of all sizes and industries, business processes have a direct impact on success. A solid, reliable process must be established, formalized, enforced and maintained. Enterprise resource planning (ERP) is a common solution for accomplishing business process automation.

Benefits of ERP 

ERP is a type of software for day-to-day management of business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes. Moving to a single system or upgrading to a new version has many benefits, including better visibility, improved collaboration and workflows and lower costs, to name a few. 

So, why doesn’t ERP always deliver?

Despite its many advantages, ERP has various complexities and components—it cannot just be “turned on.” Without a full understanding of how to implement, upgrade and adjust the technology to your specific work environment and operations, systems often fail and do not deliver return on investment (ROI). Here are the top 8 reasons why: 

1. Lack of executive sponsorship

Commonly with ERP implementations and upgrades, an employee will be tasked with defining the day-to-day execution, in addition to their existing responsibilities. That’s why an executive sponsor is selected, to step in to make decisions when change requests might affect the project’s scope, and is responsible to the business for the success of the project. Without this level of vested interest, there is no one to ensure success.

2. Lackluster Project Management (e.g., scope creep) 

If project deadlines and schedules are not met or maintained, ERP can quickly become a lot more expensive than originally anticipated in the original scope. This makes it impossible to ever achieve return on investment. 

3. Insufficient Project Planning

Again, ERP is complex with many elements to consider and plan for. Implementing, upgrading or changing the tech is only one part of the process. There is functionality and technical infrastructure that needs to be changed or established to align with the new software. 

4. Unrealistic expectations on what the software can do

It’s software, not a miracle worker. If your operations are broken down at a cultural or people-level, ERP can’t fix that. In fact, first gathering alignment among employees and an overall business process is essential to a successful ERP implementation. Buy-in is the first step. 

5. Unwillingness to change business processes

ERP is not as customizable as it used to be. Solution providers have built the software with a standard process, with minor choices and preference selections to make it work best for your company. But in the end, if you are implementing a cloud-based solution, you are limited to the amount of modifications. Fighting this and refusing to change process only works against your long-term goals, and prohibits ERP from accomplishing what it’s intended to. 

6. Lack of a business case and performance measurement goals

Your “why” is important. In fact, it has a lot to do with the long-term success of any technology or software implementation. And if you’re not defining goals and measuring often, it’s difficult to know if the system is improving process and delivering ROI. 

7. Unrealistic expectation of the work required

This is not a simple “click install, click go” process. It is a complete overhaul of the systems that run your accounting, procurement, project management, risk management and compliance, and supply chain operations. Taking all of that data and building automation takes time and specialized skills. Not being prepared can slow the project and cause it to be done incorrectly. 

8. Level of change required within IT team 

Because of the high level of specialization required for ERP cloud migrations, it’s likely that your existing IT team will shift focus and access different skill sets. Putting it all on the shoulders of your internal resources without assessing and adjusting roles to best suit the software will cause frustration and errors. 

 

Modernizing  your business processes and improving operations with software like ERP is a no-brainer. But the actual process, functionality and infrastructure that will need to be finessed and built requires a lot of thought. If you ever want to talk business, or IT, or both, we are here to chat. 

Get in touch to learn more about Element Consulting and how we can help ensure your ERP is running smoothly and providing value. 

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