ERP (Enterprise Resource Planning): Top 10 Reasons for Failure

With many information technology projects considered failures (see Standish Chaos Press Release) during the last decade, where do we go from here?

erp-failure-success-implementation

When considering implementation of ERP (Enterprise Resource Planning), an organization must determine the best solution for their business operations. Overcoming the challenges presented is critical to have successful implementation of an ERP solution. It’s interesting that many failed ERP implementations have much in common with other large scale IT failures. The following are challenges that have led to troubled, or failed, ERP projects and programs:

  1. Large scale endeavors affect many departments and business processes. ERP impacts financial areas such as billing, payroll, and core business operations.
  2. ERP implementations are time consuming, long term projects and complex system implementations involving many interfaces.
  3. Absence or lack of customer and user participation and involvement as team members and Subject Matter Experts (SMEs), for functional areas and departments
  4. Incomplete, inadequate, or not mutually agreed upon business and user requirements
  5. Failing to use clean data and business processes in the problem scope that results in inaccurate or obsolete data and functions (reengineer where required)
  6. Core team members not having the proper skill sets (soft and hard)
  7. Risk identification and management have not been thoroughly performed (Identify risks in the beginning and throughout execution for the following areas: technology, organization, processes, and people)
  8. A communication plan has not been planned and executed for all levels and without the appropriate information and statuses
  9. The absence of adequate training for the change within the organization and business operations. This issue, along with item 3 & 10, impacts getting users’ participation in focus groups, pilots, etc. to provide input or feedback, including feedback on prototypes and mockups early in the development process.
  10. The absence of adequate and continuous communications and education about the change within the organization and business operations. Not having consistent organizational readiness for the change that will take place in the culture and with business processes contributes to the failure of programs and projects.

Enterprise Resource Planning is an intense undertaking but does not have to be. 

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{ 1 comment… read it below or add one }

Gerry Finn January 3, 2011 at 7:14 pm

Has the thought ever crossed anyone’s mind that maybe the need for ERP was not there on many, if not all, of the failed attempts to implement this process?

Just because ERP may be a great idea for one organization does not mean it is a great idea for ALL organizations.

Before the attempt to install ERP was made was there a study to determine the need? The first step in all projects should be to determine what is needed and then develop a solution to fulfill the need. NOT begin with a solution and then try to fit it to a need that is not there.

First step seems to have been ignored.