ERP or Enterprise Resource Planning is becoming increasingly popular in the business arena. This is a collection of software solutions that organizations employ for performing general business functions. These functions include accounting, collecting data from multiple sources, project management, along with tackling future risks and managing the functions of supply chains. A complete ERP suite also helps a user company to create reports and visuals from the analyzed data. But, ERP Implementation failure is a reality in the present business sector. Several reasons contribute to ERP system failure. These can be categorized as follows :-
- Software misfit – Sometimes organizations choose the wrong ERP solutions without calculating their requirements. This leads to a misfitting situation whereby the resource planning system does not integrate with the organizational needs. Conversely, ERP Solutions may provide more than the company requires. This creates an inadequate requirement void.
- Lack of business leadership – At times the ERP Solutions and the organizational requirements are at par with each other. But the management of the company does not provide the required leadership for implementing the solutions in the company’s internal system. In the absence of motivated management, the ERP systems are bound to be a failure.
- Insufficient resources – The term insufficient resources in this context, refers to the lack of talent and expertise in the team working towards employing the ERP systems within the company.
- Lack of accountability – Enterprise Resource Planning is designed to perform the business functions of the company. This is supposed to provide the organization with the data required to make well-informed decisions. But the lack of accountability within the company’s management makes ERP Solutions a failure.
- Lack of investment – In the beginning, the procedure of deploying ERP software requires a certain amount of expenditure. The lack of this investment leads to the improper deployment of the system.
- Insufficient support– The deficiency in the training methods or after deployment supports may lead to the failure of the ERP system.
- Absence of communication – As ERP Solutions are technologically advanced, it can be difficult for a lot of people. This can be solved only by constant communication and sharing troubles. Lack of communication of the employees can lead to failure in deployment.
- Unsatisfactory data cleansing – ERP systems are designed to perform advanced data analytics functions. But this is possible only with clean data models. Insufficient data cleansing may lead to improper functions.
- Insistence on making ERP a legacy – Some companies tend to over-customize the ERP solutions. This has the potential of making the ERP implementation a failure. As a result, companies may not receive the same benefits from the software as expected.
Why does ERP Implementations Fail?
In the current business arena, the majority of ERP solutions are turning out to be a failure. The expenditure on the software increases, analytical schedules are not met and the technological improvements do not meet the expectations. The failure is majorly due to the improper implementation of the software system. The cause that lead to the failure of ERP Implementation are as follows:- Poorly defined goals: Organizations in recent times are eager to earn success too fast. In this process, the companies loosely define the goals that they wish to achieve with the ERP software. As a result, the software system is unable to perform proper data analytics and turns out to be a failure. Lack of well defined organizational goals leads to confusion and unsatisfactory performance. Absence of management commitment: The management of the company needs to be driven with motivation towards improving the business standards. Although the implementation work is to be performed by the project team, strong management support is required. In the absence of motivated leadership, ERP implementation will suffer drastically. Absence of expertise: Currently several companies are deficient in the talent and expertise required to handle ERP analytics. Although the system is not extremely complex, a certain level of technical experience is required . In the absence of this talent and technical knowledge, ERP Analytics fails drastically. The employee managing the project has a significant role to play in this situation. The manager needs to have organizational skills and must be aware of the department activities within the organization. Appropriate communication patterns: The process of deploying ERP systems is complex and time-consuming. Technical expertise is also a requirement here. So, there must be a proper communication pattern between the management, company and technicians for making the software a success. Lack of documentation of production scenarios: An ERP Solution is expected to perform the data analytics functions and to keep a track of the production procedures. But if the solution has to map the procedure patterns properly, the steps of the process need to be documented properly. Lack of proper explanation of the production procedure will lead to ERP failure. Poor understanding of data migration: The process of data migration from the old to the new system is often overlooked. But this is one of the basic ways of successful ERP implementation. It has to be understood that poorly maintained data cannot have high-quality data analytics through ERP Implementation. Fear of change: The analytics patterns in companies are taking on a new pattern in the contemporary world. the employees previously working as analysts, are being replaced by advanced software. Along with this the expertise and knowledge to operate this software are decreasing in number. In the first scenario, companies are lacking the courage to implement advanced ERP solutions due to constant denial from the operational staff. Conversely, the employees are half-heartedly implementing the ERP solutions thinking that the procedures will be too tough to handle.
Preventive Measures in the context of ERP Systems Failure:
The competitive modern world has forced companies to transform themselves into a digital entity for business functions. Enterprise Resource Planning helps organizations to improve their current business patterns and enhance their brand value. But, most often than not this collection of software usually fails to provide the desired results. There are certain measures which when implemented can prevent ERP failure. These measures can be collectively called the ERP system failure preventive measure. The methods can be classified as follows:-
● Choosing the right partner: Most often, companies fail in implementing ERP solutions properly. One of the major reasons for this is that they are commonly persuaded to choose the wrong ERP solution. The team members of the company face difficulties later regarding the use of software applications.
● Selecting the correct product: The ERP solutions are currently available in an array of options. These include the cloud services, the on-premises model as well as customized solutions for multiple industries. The company needs to calculate it’s requirements and choose an ERP solution accordingly.
● Long-term planning: If an organization wishes to expand its business portfolio, then the choice of ERP must be very calculated. The resource software needs to suit the future functional needs of the company even after some time.
● Change management: The company management should make the process of change more acceptable for the employees. It has to be remembered that employees are indispensable for an organization. The process of managing the solution can be difficult for employees. But with motivation and communication from the company, the transition can be smoothened.
● Bureaucracy: Although decision making patterns are multi-layered within organizations, it makes the process slow. Sometimes concentration of the decision making power in the hands of the management speeds up the business activities.
● Cleaning the data: The more clean the data, the better data analytics functions that are performed. Messy models of data can slow down the procedure of analytics.
● Understanding the need for coaching: At times, the implementing patterns of ERP can be very complex. This can be simplified by providing technical training sessions to the members of the project team.
Methods that make ERP Implementation a success:
ERP system success might seem like an impossible task, but in reality, is quite achievable. The methods of turning ERP implementation success, a reality, can be categorized as follows :-
- Identify the exact problems – ERP solutions are as the name suggests, a collection of applications that provide solutions. But, merely having solutions to issues is not the exact requirement. In order to implement the software collection successfully, the company needs to clearly define the issues faced by their internal systems. After this clear mapping of the issues, the solutions can be implemented accordingly.
- Defining the scope and the team – A clear description of the scope of the solution is a necessity before the implementation of ERP. The extent to which the software will integrate with the existing system and the issues that will be determined, need to be defined. Along with this, the members of the team that will work in implementing ERP need to be chalked out.
- Evaluation of options – Companies should be clearly evaluating the functions and capabilities of the different ERP solutions available in the market. Upon successful evaluation the company should buy the ERP that suits their business needs the best.
- Data Migration– Finally, the companies need to focus on the transportation of data from the previous system into the improved one. The existing data models need to be transported safely in order to provide better analytics from the beginning of the implementation.
