Success and Failure factors in ERP Project
Success and Failure Reasons in ERP Implementation
- Realistic Development of Project Schedule and Plan
ERP implementations can fail because organizations underestimate the magnitude of the undertaking and develop a project plan with an unrealistic timeline that leaves no flexibility to accommodate delays due to even minor unforeseen circumstances. In fact, these “unknowns” can result in significant project delays, as the dependencies between activities tend to affect project schedule and resource costs because team members are not effectively utilized. Planning and managing milestones are critical success factors for the execution of a successful ERP project schedule. While it’s important to give consideration to resource loading to ensure the team is equipped to handle the project, it’s extraordinarily difficult to maintain a fully resource-balanced plan at the task level for a large ERP implementation.
- Appropriate Business Involvement
Another potential risk area during the ERP implementation process is lack of appropriate involvement from the functional areas of the business. Each business process (e.g., Order to Cash, Record to Report and Requisition to Payment) on a large implementation should have a process owner whose full-time job is the success of the ERP implementation. Process owners should be empowered to make functional decisions about the “to-be” business processes, as well as for scoping, testing and issue resolution. In large organizations, the process owner role may become permanent, continuing on after implementation to provide global decision-making, issue resolution and governance for units conducting business within the same ERP system.
- Organizational Change Management
The impact the user community has on the overall success of an ERP system implementation should not be ignored. An ERP solution will change the way people work in the organization, making their activities much more connected and transparent. Existing business processes are likely to change or even become unnecessary, as might the responsibilities of individual employees.
Change management – a planned approach to change in an organization – is vital to providing structure for the workforce’s transition and acceptance of the ERP system. A common mistake is to think of change management as simply “training.” A formal change management plan should be developed and a change management team gathered to work throughout the ERP project life cycle to support change management issues related to the system’s implementation.
- Project Management and Executive Sponsorship
ERP systems are supposed to promote the flow of information throughout the organization, and enhance communication and decision-making. Yet one of the most significant and frequently identified risks to project success is lack of communication and slow decision-making among key stakeholders – such as executive management, the IT organization, business process owners, and compliance. The view that an ERP implementation is simply an “IT project” affects lack of engagement by stakeholders. Quite often, core business process owners are assigned responsibility for managing all aspects of the process, from overseeing system design to go-live, even if they have little or no experience as project managers or understanding of ERP systems.
- Technical Infrastructure and Custom Development
There is a wide range of technical issues – some anticipated in a formal risk assessment, some not – which can result in delay or failure in an ERP implementation. Common issues include:
- Insufficient knowledge transfer from the system integrator to the long-term support team
- Network and service-level issues associated with upgrading or outsourcing of data centers
- Insufficient system resources allocated for high demand on middleware and interface architectures
- Stressed network or insufficient bandwidth, especially at remote sites, due to inadequate volume and stress testing of the infrastructure
- Ineffective technical change management processes
- Inadequate or unproven business continuity and disaster recovery plans