Top 8 Pitfalls
The Top
8 Pitfalls of ERP Implementations and How to Avoid Them
Implementing an Enterprise Resource Planning, or ERP system in any
company is filled with promise and fraught with danger.
Along
with the many benefits that ERP systems bring, the chief among these
being rapid access to customer and supplier information, there are also
pitfalls. One pitfall that can be so very costly is a poorly executed
ERP implementation, and this can cripple a company and cause a loss of
jobs.
In
order to avoid costly mistakes, an ERP implementation needs to be
thoroughly planned with a great deal of care. Then, once all is in place
and the critical path is identified, rapid implementation is the key to
success. Through our experience we've identified the "Top 8 Pitfalls of
ERP Implementations and How to Avoid Them".
If
even one of these pitfalls exists there's a good chance that the ERP
implementation will fail. The Top 8 Pitfalls of ERP Implementations are:
1.
When
there is no executive sponsor.
ERP crosses functions within a company. Therefore, the program
needs someone with the authority to bring various functional managers
together. People must devote time and resources to the project, and if
they don't think that doing so is in their best interest or important
enough to the organization, they will undoubtedly find something else to
do.
2.
When the
project is viewed as being of interest to only one department.
If
the project is seen as being important to just the finance department,
or the IS department, or just the manufacturing department, it will
fail. It applies to all departments not just one and people need to
understand that.
3.
When
there is no full-time project manager. ERP implementations are important enough to
warrant at a minimum, one full time person to manage the project.
4.
When,
because of the hardware/software/communications intensity, the IS people
make the decisions.
The problem here is that the IS people may not have a good understanding
of functional requirements of the other departments and how others will
use the ERP system. Input from all departments is needed for the system
to be most effective and to create a sense of buy-in.
5.
When
there is a lack of internal resources applied to the project.
Implementing an ERP systems take a good amount of time and effort from
the people within the company. This project is work on top of the tasks
that people currently are responsible for performing. If the
implementation constantly put aside to do “important” day to day work
the schedule will slip and the project risks failure. The question on
priorities should not be an “either/or” question. Work and task planning
must take into account the increased time demands of the project for all
participants.
6.
When
there is no documentation of the implementation procedure.
Most ERP implementation will constitute different degrees of business
re-engineering. It is imperative for companies to document their current
processes "as is" and reflect the re-engineering effort in a
documented "to be" process. This approach will maximize the input from
company resources and bring the need to revamp legacy practices to the
forefront.
7.
Lack of
training.
Companies often overlook the importance of training in enabling the
success of enterprise implementation. Training should be delivered in
stages. At first, company team leaders should be trained during
different stages of the implementation. The training should be delivered
by a product and process expert. It should follow a methodical approach
which maps the company's way of doing business, performed on company
data. The second tier of training should be rolled out and populated to
the rest of the company staff prior to the enterprise application "going
live."
8.
If there
is a massive change of everything.
From experience, companies embarking on massive re-engineering in
their core processes, subject the company enterprise implementation to
higher risk with greater probability of failure. It is our
recommendation that companies should implement less re-engineering
effort and more process enhancement. This will expedite the
implementation and will have less disruption on a company's culture.
We
recommend an approach where there is an upfront analysis of such
business issues as company competitiveness, the long-term business
objectives, a detailing of the functional business processes, a listing
of the business issues at an operational level, and a listing of the
company initiatives. Fundamentally, what is created is an architecture
of the business. Senior management, of course, is the group that defines
what the business objectives are. Then it is a matter of having the
functional managers become involved so that there can be a determination
of how the objectives can be met and to look within the architecture to
make a determination of what needs to be addressed.
ERP
systems can return great rewards, but because they are so high profile
and cut across the entire organization, they need to be approached
carefully to avoid the pitfalls.
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