Critical Success and Failure Factors of ERP Implementations: A Market Perspective

Every year, according to the Project Management Institute (PMI), nearly 70-80% of all Enterprise Resource Planning implementation projects fail, go over-budget or go live past the original deadline (A. Roman, 2005). There are various reasons attributed to the success or failure of ERP Implementations. One of the reasons is resistance to change and top management comes across a feeling of apprehension from potential users who have certain reservations for the new application. The fundamental causes of failure are of a wide-range and are often discovered late in the process, if they are discovered at all. Highly skilled and experienced implementation consultants are the better choice because they have the capacity to provide an unbiased analysis that gives consideration to the big picture. Having a clear view with wider aspects is important to successful implementation. Using a method of survey through questionnaire, a study was conducted to find out the factors that really matter when it comes to successful ERP implementations. Varying results were drawn from the survey. It showed various reasons that ultimately result in the success or failure of an ERP implementation and showed that these factors were manageable. In the subsequent blog posts an attempt will be made to find the real answer to problems being faced in ERP implementations and what really makes an ERP implementation successful.

Introduction

Failure has been common among ERP implementations are not new to the business world. The business world has seen ERP implementations fail in big companies like Hershey and the result of it being lawsuits against ERP software vendors (Kimberling,2006). So, how can we increase the possibility of an ERP implementation being successful and realize its benefits? The success or failure of ERP implementations is assumed to be the fault of the software a company purchases, but in reality, 95% of a project’s success or failure depends on the company implementing the software rather that the software vendor. (Kimberling, 2006). It is not always that the ERP package vendor or the consulting company is to be blamed for the ERP implementation failure. If the organization implementing the ERP fails to document their business requirements properly then the entire implementation project may fail.

Market analysis reports show that the high percentage of ERP implementation failures are due to many reasons and are sometimes discovered very late during the implementation phase. ERP implementations require highly skilled consultants who have worked on a number of projects and are familiar with mapping of various business processes or an organization to the ERP package. The key is to understand the big picture and align the ERP implementation to the vision, goals and objectives of the organization. Every ERP implementation project should ideally have some consultants with prior experience.

ERP has become the latest buzzword in the IT industry and almost every company is trying to follow the trend but not without reason. An ERP package can be of great benefit in implemented properly (Henderson, 2007). Earlier, organizations used to have heterogeneous legacy systems that were complex and difficult to incorporate but with ERP all the business functions and processes can be integrated to function in sync. But companies need to understand and accept the fact that ERP does not work miracles by taking away all the defects in business processes.

If companies continue to follow their old business processes post implementation, then they are bound to fail. ERP is all about re-engineering the business processes and mapping them to the ERP application to streamline the operations (Gould, 2007). Some organizations have issues and apprehensions about end-of-living their legacy
application which is understandable. It should be understood that it is not easy for the employees of an organization to suddenly adapt to a new application. This might prove to be a disaster for organizations as legacy systems have critical data. Hence, it is the responsibility of the ERP vendor or the consultants to build confidence in the staff to using ERP applications.

If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.