Failure factors in ERP implementation

Having discussed about the success factors ( in the previous articles it is time to anaylze on failure factors. Here is the first article on this series. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.

ERP implementation is, at its core, a people project: The biggest challenge before and after implementation is not the technology; the biggest issues are related to people. At every stage, companies must work harder to manage change, secure buy-in, communicate with and educate their employees. Top human resources issues are related to changing management, training and internal staff adequacy.

Employee resistance: If the employees are not educated and informed about the benefits of the ERP system and assured about the security of their jobs by the top management, they will start believing in the rumours that float around and will either resist or sabotage the ERP implementation.

Lack of top management commitment: The top management should pledge and demonstrate that the ERP implementation has its full support. They should assure the employees about their jobs, clear any doubts and explain why the ERP system is a necessity for the organization. The CEO or some senior level manager should sponsor the ERP project in order to demonstrate the management commitment.

Inadequate training and education: All users of the ERP system should be trained properly in using the system to its fullest. Different groups of people in the company will have different training needs. Managers need more focus on the decision-making and analysis features of the system, while the clerical staff need more focus on how to perform their jobs. But all the users must be trained in the ERP basics, overview of the system and its working, how an action by an employee triggers a host of events through the organization, how automation will help, what processes are changed and so on.

Educate everyone so that they understand what is going to be achieved with the new system. Additional education should include total quality management and change management strategies. Also the training sessions should be used to gain acceptance for the ERP systems by dispelling the myths about ERP. When the employees do not understand what the new system is and what it is supposed to do and how to operate it, they will not use it or use it incorrectly. This can lead to failure of the system. Train process owners (department managers) in how to use the system. Have them train the users.

Inadequate requirements definition: If the requirements of the new system or what is expected from a new system are not adequately defined, then the implementation team will find it very difficult to plan the project. Only if the requirements are specified correctly, the ERP package that is best suited can be selected.

Inadequate resources: ERP implementation is a complex, costly and lengthy project. The initial budgets are very often exceeded and there are still many hidden costs in an ERP implementation. So, while preparing the budget and allocating resources for the ERP implementation care should be taken to consider all the factors that could affect the costs, manpower requirements, infrastructure needs and then reserve a reasonable amount of buffer of buffer for any contingencies that might occur during implementation.

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