5 Reasons ERP Implementations Scare Executives

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Posted by: briansittley Comments: 0 0 Post Date: February 9, 2017

time_riskIn a recent post from Panorama Consulting, CEO Eric Kimberling – using the article title “Five Reasons Executives Say “No” to ERP Implementations (and How to Overcome the Resistance)” – points out some of the common pitfalls of ERP implementations.  Today we’ll blend his comments with ours, based on three decades’ of implementations on our part, and about half that much from Mr. Kimberling’s firm as well.  Together, we’ve seen a few things…

  1. They are worried that the project will take too long and cost too much. And he’s right.  Most projects, as notated in both annual surveys and real-world experience of implementers such as them and us, run long and go over budget.  There are several reasons for this, most all having to do with the fact that the projects involve humans.  Strong project controls and limits can help.  But in the end, no one can predict all the nuances and twists and turns and unexpected glitches and changes of heart and new things learned… that all occur along the way.  The key to managing this lies deeply in the partnership, agreement and underlying trust and confidence between the client team and the implementation team.  Communication is key.
  2. They are afraid of the project disrupting their daily operations. Statistics confirm this happens in about half of all projects.  We’ve experienced it ourselves in at least some parts of implementations.  We find that a thorough “quote-to-cash” testing scenario prior to going live – while usually easier said than done – can mitigate most of this risk.  It takes time, effort and investment, but it is possible to predict and correct most potential errors, albeit not all of them.  We recently did an implementation that by all measures was really successful – except, there were too many snafus in shipping, where more testing should have been done, earlier.  Live and learn.  Won’t happen again.
  3. Their own people are the real sources of resistance. This varies by company.  We always remind clients that while their employees are busy up to the ears in the final pre-go-live stages of implementation, they still have a regular job!  Be careful what you ask of your team.  Invest in thorough training of the users.  Have a realistic timetable (noting that projects nearly always take longer than predicted).  Be ready to hire temps to handle parts of their ‘regular jobs’ when needed.  Conduct frequent, regular, well-announced project meetings.  Involve all your stakeholders.  Communicate freely and openly about project goals and tasks.  Make your users central to your process analysis and organizational change management.  And listen to them.
  4. They don’t have the budget to pay for the initiative. Within some limits, the more detailed the pre-project spec, the more accurate the budget.  But, there are  You need a working relationship with a provider who can give you their best good-faith estimate as to cost and time.  Some items can be quoted accurately and/or on a fixed price basis, but many (i.e., exact amount of training required, change orders, sudden exposure of previously unknown processes or issues) cannot.  Here we like Panorama’s advice: “Define a realistic business case that captures not only the project costs, but also the potential benefits that your company is currently missing out on.”
  5. They are concerned that the new ERP system will not improve their business. No one’s interested in an investment with no return.  ROI matters most to execs.  To ensure your goals are met, begin  A process analysis can usually uncover numerous areas of redundancy, inefficiencies, recommended process changes, technology touch-points and advantages… the list goes on and on.  Quantify, and then monetize these.  Whether you use time studies or back of the napkin calculations, you can pretty quickly – if you’re honest and complete in your analysis – come to a fair calculation of all the cost savings inherent in an IT project, especially ERP.  Take the time to do the calculations.  Then recognize (and keep reminding yourself) that once you’re up and running, those cost-savings will repeat themselves year after year after year…

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