5 Characteristics of ERP Implementation Failures

    5/16/18 10:00 AM

    erp-implementation-failures

    ERP implementation challenges

    Clear signs of risk and unavoidable challenges can usually be identified from the start of every ERP implementation. Similarly, challenges that are completely unanticipated almost always arise throughout the implementation. Every issue, big or small, should be identified as a risk to the project that might lead to failure.

    In this article, we will focus on the five most common characteristics of ERP implementation failures. But let’s first define the term “failure.” The complete abandonment of an implementation can certainly be considered a failure by anyone’s measure. However, I would suggest that even a seemingly successful implementation can be considered a partial failure if all expectations weren’t met. Failure could simply mean that an important requirement in the original scope of the solution was never fulfilled. Or perhaps the implementation was originally a success, but thought to be a bust several years down the road. 

    While this isn’t a complete list of all characteristics of an ERP implementation failure, these are the more common reasons we come across. The more you know, the better your chances are for success.

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    1. Underestimating internal time requirements

    During initial planning discussions, the scope of the implementation is often separated into different phases to meet time and budget considerations. Generally, phase I consists of the “must have” items necessary to replace your current system and process at the time of go-live. You will also include other key features that you don’t currently have, but for the most part, you are covering all existing business requirements. 

    When companies lose sight of the goals and scope for each phase of implementation and try to implement everything in one phase, the stress on the internal resources to learn new processes and keep up with the project timelines can become overwhelming. There’s only so much time that they can dedicate to the project while performing their normal job activities each day. This can lead to frustration and loss of momentum in the implementation as your resources become unable to keep up with all of the additional requirements. Don’t underestimate how much time each resource may have available to work on the project!   

    Related: ERP Implementation Roles & Responsibilities: How to Build Your Team

    2. Lack of departmental cross-training

    While this should be done in the initial ERP training, it is very important to have an ongoing plan for inter-departmental cross-training for all users, not just the ERP project members. End users will gain a much broader understanding of how their role in the ERP software affects, and is affected by other users’ roles. Not including this training as part of the initial scope or continuous improvement phases is an often overlooked opportunity to improve upon procedures, and could lead to ERP implementation failure (either immediately or down the road). 

    For example, an engineer developing the bills of material and operations (bill of manufacture) would better understand the effects of the detail they are entering if they understand how the buyer will see and react to the demand for the materials in the job. Advanced ERP solutions have the ability to associate a material with a specific operation on a bill of manufacture. This allows materials to be purchased in a ‘just in time’ format, according to the schedule. If an engineer doesn’t understand how scheduling or planning works, they may just associate all materials to the front end of a bill of manufacture. The bill of material would still be correct; however, it can lead to purchasing materials before they are required. This would lead to excess inventory and unnecessary cash burn. Scheduling would not start the first operation until all materials are due in – even if they aren’t needed until further in the process. Not only is purchasing affected, but so is inventory, scheduling, and finance. 

    Related: What is Infor CloudSuite Industrial?

    3. No plan for process refinement

    During phase I of implementation, processes and operational procedures are developed and recorded to help mitigate ERP implementation challenges. Once the system is in full use under load, additional processes may be discovered or changes to the original procedures may be required. This should lead to additional ERP training for the affected users and departments. Not having a plan for how to handle process refinement generally leads to the new or updated process being ignored or completed incorrectly, which can be a primary cause of ERP implementation failures.

    Changes to original procedures should be expected and encouraged as part of the continuous improvement effort, and it’s critical to include the necessary training as part of those changes.

    4. Not having a new user training policy

    Employee turnover can have a significant impact on the continued success of any ERP implementation. After all, the system is only as good as the input it is given. During implementation, key users and end users are provided with the proper training and guidance on the new solution. Unfortunately, users that were involved in the initial project may change over the years. New users enter the scene without the same structured instruction given to their predecessor. Oftentimes they are trained by someone else who believes they know how the previous person was doing procedures and valuable information is lost along the way.

    Having a policy for new user ERP training, along with keeping updated processes and standard operating procedures, is critical to mitigating the risk caused by turnover. Develop a plan to meet with all users over specific periods of time to be sure any process changes or improvements they may have developed on their own are properly documented and recorded. Ongoing training programs and success always go together!

    5. Lack of ongoing process validation

    This is a very important step to help avoid failure in the post-implementation training process. Months of hard work went into getting all of the data and procedures just right for your go-live day. To keep everything in order, there needs to be a training plan for checking all transactions and processes on a daily, weekly, and monthly basis. This is one of the most pivotal steps to success, and not keeping the ongoing process validation consistent will surely lead to issues down the road.

    For example, if your new system allows negative inventory transactions, you want to be sure someone is trained to check them on a daily schedule. Negative inventory transactions can be a normal part of the process, but become a classic case study of ERP implementation failure if they aren’t corrected with the proper positive transaction on a timely basis. 

    A weekly process example would be checking and validating efficiencies and utilization of resources. Confirming users are properly recording labor time on jobs is crucial to accurate costing and scheduling, so someone should be trained to always check those transactions.

    And a typical monthly process would be training for month-end close procedures. If all other daily and weekly validations are being performed, the month-end process should be fairly smooth.

    Avoiding these common mistakes are the keys to success

    Ensuring the success of your investment of a new ERP solution starts with understanding what NOT to do!  Having an understanding of how these risks can affect the overall achievement of your goals is the first step in the journey.

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    Nick Mendolia

    Written by Nick Mendolia

    Nick is the VP of Professional Services at Visual South and has been in the Manufacturing industry for over 30 years. He has been involved in many ERP implementations as both a customer and as a consultant. Nick has been with Visual South since 2003.