10 Warning Signs of ERP Project Failure

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Posted by: briansittley Comments: 0 0 Post Date: April 19, 2018

As ERP implementers, we’ve seen many of them: the signs that an ERP project is in jeopardy.  Or in some cases, we get called in after it’s happened, and are asked to help set things right.  In that sense, we’re in the same business as the folks at Panorama Consulting, who recently released a brief outline highlighting some of those very warning signs.  Their list was complete and good enough that we thought we share excerpts of it in our post today.  Here then is their Top 10 Warning Signs list:

  1. Unrealistic implementation project timeline, budget, and resources. Unrealistic expectations lead to bad decisions.  A strong dose of reality goes a long way.  This one’s more common that you think – and no one thinks it’s going to happen to them.
  2. Lack of involvement from your executive team. Exec involvement needs to go beyond approving budgets and timelines, and must include being involved in key decisions all along the way.
  3. Unclear business processes and requirements. Take time to complete this step clearly, in writing, with full team cooperation before you begin your implementation process.  The Business Process Analysis is the critical first step toward project success.
  4. Not enough time spent on business process reengineering. If you don’t refine and redefine your business processes, you’re just “paving the cow paths” as they say.  Or automating already inefficient processes that “bake in” those inefficiencies for the long run.
  5. Your organizational change management strategy consists solely of end user training. User training is important, but it’s only one component of what you’ll need to overcome resistance to new ways and new systems.  Change-impact plans and constant communication are required.
  6. Too little or too much dependency on outside ERP consultants. Don’t underestimate your need for outside help, but don’t “outsource” your whole implementation either.  Remember, it’s your system, and you need to own it.  Find the balance that leverages outside help while allowing your team to take project ownership for the long haul.  It’s hard work.
  7. Ill-defined project governance and controls. Make sure you have clearly assigned approval processes in place for changes and change orders.  Scope changes, customization requests and unexpected challenges need to be met with an intelligent process that vets each change, if you want to keep your project within scope, budget and timeline.
  8. No business case or benefits realization plan. You can’t improve what you don’t measure, so be sure to have benchmarks, goals and KPIs (key performance indicators) defined and thought through before you begin to implement.  As Panorama says, your ERP investment should be “a tool to manage and optimize potential business benefits during and after implementation.”
  9. The project is managed like an IT project. The only truly successful projects, as benchmarked by several of the criteria above, are those that approach ERP as a strategic business effort.  While ERP involves technology, in the end, it’s about the business, and not the technology.
  10. You don’t have a contingency budget. Most projects don’t go exactly as planned, and you don’t want to “paint yourself into a corner,” as Panorama notes.  Plan, budget-wise, for the unexpected, so you can finish up your project satisfied that you completed your goals.  They recommend 15% to 20% of expected project cost as a contingency.  A word to the wise.

We agree with Panorama’s assessment as shared today, and encourage anyone to match up their own ERP project goals and parameters with those listed above.  Thinking about them will be some of the best time you’ll spend in your entire project.

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