The Top 4 Causes of ERP Failure & How ERP Consulting Can Help

There is no way around it, ERP projects are expensive; but there is a difference between money well spent and money wasted and an ERP consulting firm can help you avoid the latter. According to recent research, over 30% of ERP implementations are considered to be a failure because they do not help businesses achieve the benefits they had planned for. These failures occur for a number or reasons, all of which can be addressed by working with an ERP consultant, here are the top four.

Proper ERP system selection: This is a subject that goes far beyond this small paragraph; choosing the right ERP software is absolutely critical to the success of the entire project so be sure to do more research. We have a white paper to help you dig deeper and avoid common pitfalls, “6 Common Mistakes Businesses Make When Selecting ERP Software.”

Lack of a (good) plan: A plan is necessary for any ERP project, but a good plan is critical and not easy to lay out. More often than not an ERP plan is put together at a high-level and is not realistic, detailed enough, or specific enough to truly lead the way to a successful end. This may seem like an obvious point, but companies continue to make this fatal mistake. An ERP consultant has been through the planning process many, many times, and they can help you make sure you don’t leave anything out that could come back and bite you later.  In a general sense, a solid plan will include:

  • Identification all of the technical and people related requirements.
  • A list of the changes you’ll see, how to plan for them, and how to address them in stride.
  • A logical to-do list in sequential order as well as associated deadlines or sub-processes.
  • A realistic time frame and budget.
  • An outline of the problems being solved and the desired outcome so you can measure your success at the end of the project.

There is much more to planning your project than this generalized list, learn more here.

Going over budget: According to industry research, more than half of ERP projects go over budget. Spending more than you had planned on your ERP project can stem from many areas. As mentioned above, planning plays a huge part in truly determining your budget. Additional costs can crop up easily if you purchase additional modules you don’t really need, choosing a solution that is not a good fit and will require additional customization, do not account for the needs of all end users, failing to attain a list of needs from stakeholders, etc. An ERP consulting professional can help you avoid all of these issues by not only helping you come up with a solid plan and realistic budget in the first place, but by helping you look beyond the technical requirements and focus on processes, problem identification and resolution, required modules, customizations, etc. so you are not spending more than you bargained for.

Related reading: 6 Reasons You Need to Work With an ERP Reseller

Extending beyond the planned time frame: Similar to the common problem of going over budget, many companies struggle to stay on track and go-live on the day they had originally planned for. The number one culprit of extended timelines? Being unrealistic. There are other factors that play into this issue as well, such as expanded scope or technical issues, but more often than not it stems back to unrealistic expectations. ERP consulting professionals can help you because they’ve been there, they know how long certain steps generally take and how your specific project will be either faster or slower in certain areas based on requirements, staffing, experience, and other factors.

Low adoption rates: Many companies have felt the frustration of spending many hours and even more money implementing an ERP system only to realize employees are not using it! If you have carefully selected the right system, this is likely not due to a lack of functionality or usability, but because you’ve committed the cardinal sin of ERP projects, not spending enough time on end-user training. This can not only increase your timeline but will also negatively impact ROI.  This is another area where your consulting company can be instrumental. You do have the option to use an outside party for training, but your ERP consultant may be cheaper as they are able to bundle the training into your overall project costs and they will already be well in-tune with your business needs and software system. By providing thorough training, your consultant will help increase your adoption rate and to make that adoption more valuable, they’ll ensure those users have the knowledge to actually using the system as they are meant to in order to help the company achieve maximum ROI and other planned benefits.

Related reading: An ERP Training Horror Story (and How to Make Sure it Doesn’t Happen to You)

These may be the top three causes of ERP project failure, but they are by no means the only troubles companies face, learn more in the white paper below.
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