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Why ERP Implementation Fails?

There are a number of things which goes into planning an ERP implementation project. There are success factors which can contribute towards success if given right attention. The failure reasons described in this blog can become those success factors. The top three reasons majority of implementation fails in the priority order are user engagement, master data quality control and sustenance strategy. Let us look at them individually.

 

User Engagement

In one of the auto-component company manufacturing site in Sankt Michael, Austria the schedules to vendors were not going because the local plant team could not run the MRP – Material Requirement Planning – Module of SAP. While there was no problem on same topic at another manufacturing site of same company at Munich, Germany going live on SAP simultaneously. Both teams spent similar time for training local users. When investigated what is understood that there was time allocated and users attended training but there was no clear tool to assess whether users have learned what is required to transact post go live. A company need to plan assessments by conducting ‘day in a live scenario’ pre-go-live to ensure success in one go. The troubleshooting team recovered the situation by rushing some central core team resources to site to run MRP module – this resulted in logistics on halt for 2 days which was avoidable.

 

Master Data Quality Control

Vendor quota numbers were entered incorrect in the master data resulting into wrong procurement quantity in vendor schedule at manufacturing site of same auto-component company at New Delhi site in India. The data upload happens very close to go live date. The last minute hustle can be killing if proper quality control is not in place. One aspect that can help is multi-tiered control layer. Secondly a high frequency tracker is very helpful to check if each tier is able to complete task in time and within quality standard. Lastly data validation checks need to be performed and enough correction time needs to be granted as in the absence of such buffer time team leader tend to skip some checks or delay go live date. The validation checks can be simple like all routing data in a production organization sums to appropriate cost of produced item.

 

Sustenance Strategy

A well tiered help-desk function, tracking of business value additions and augmenting new features plan can ensure stabilization, stake holder motivation and growing value add to business respectively.

A well tiered help desk can mean below structure or what may work in your org like-

Users (example – Production Planning executive)

Key Users – supports Users (example – central planning project core team member)

Consulting Partner – supports Key Users  ( example – IBM)

Product Partner – supports Consulting Partner (example – SAP)

Tracking of business value additions can be additional reports like ‘New Product Development Profitability reports’ using ABAP/other developments. This can include launch of any further DSS – Decision Support System – layer. This layer sits at Level 5 of ISA95 from data collection and usage perspective. This can ensure constantly improved motivation of stake holders of various business processes.

New Feature Plan can ensure continued value addition to business by launching additional features like Ware House Management , Customer Relationship Management as future modules. Thus making the implementation process a continuously evolving and enriching process for organization.

 

In summary the top three major success factors user engagement, master data quality control and sustenance strategy are discussed. The project scope involves large number of aspects so it also important to focus on overall planning process. Visit change implementation blog to see more elements.  In addition the importance of promotion of project withing organization, making sure process owners in the business are engaged from beginning till end with clear deliverable association, a full time project team as organization of change along with operational team which has process owner who are responsible for final delivery through their teams are very important for project success.

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5 thoughts on “Why ERP Implementation Fails?

  1. Well written Rishi!
    Another point which often has led to failures for ERP implementation in organisations is imparting the importance of this useful technology and how this would transform the entire operations and control in the organisation. While the top management might understand this, the team at implementation level (not from technology side but from business side) do not clearly have an understanding if its benefits and they have a casual attitude towards its implementation which often results in poor configuration of the original software to mirror the organisation’s actual business perspective and leads to a showdown. This then has a multiplier effect wherein while the employees are already suspicious about such tools and enormous number of teething problems further fuels their suspicion and so on thus leading to a total chaos.

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