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How to Avoid ERP Failure

Wednesday Nov 14th 2018 by Arthur Cole

Nobody likes to admit failure. By nature, ERP calls for a wholesale reimagining of business processes and perhaps the business model itself. That kind of change is not easy, nor is it risk-free.

Enterprise Resource Planning (ERP) is very complex software that is usually applied to very complex data environments to solve very complex problems. As such, there are many points of failure during the implementation process and later in the lifecycle as constant upgrades and customizations become part of the operational mandate.

It’s no surprise, then, that about a quarter of ERP deployments fail. The good news is that there is now a fairly sizable knowledge base to help guide new installations to successful outcomes.

One of the most recent big-name failures happened at German discount grocer Lidl, which implemented SAP’s inventory management system to great fanfare in early 2017 following nearly six years of development involving thousands of employees and hundreds of outside consultants. According to Handelsblatt Global, the system, dubbed eLWIS (Elvis, in German), cost upwards of €500 million and drew a top prize from SAP in April of 2017. In July, however, Lidl scrapped it entirely and returned to its old inventory system. The reasons are many, but overall the key stumbling block was a familiar one: internal resistance to changing processes.

In many cases, the seeds of ERP failure are sown long before the first code is booted up. In her “10 Ways to Avoid ERP Implementation Failures,” Cloud Solutions’ Lucy Thorpe lists things like selecting the right product and vendor as top priorities, followed by adequate long-term planning and the need to prepare staff for ongoing change. At the same time, organizations should take a look at the current state of their data and infrastructure. The more disjointed it is now, the more difficult it will be to harness it under a single overarching management profile.

Even then, however, it can be difficult to gauge the outcome of a given implementation up to, and even after, the system has gone live. Part of the problem is that many organizations fail to properly define failure, says Andrew Bolivar, director of Ultra Consultants’ Center of Excellence. Without defining what you hope to achieve, it becomes very easy for knowledge workers to resist change, even if the operational benefits are tangible. As well, this prevents upper management from devoting the proper resources for a successful outcome and implementing the data federation needed to make better decisions.

Unfortunately, a failed ERP implementation leaves the enterprise with not just an operational problem, but a legal problem as well. As Mark P. Ressler and Thomas Kelly of Kasowitz Benson Torres noted recently, most failures end up with the “trusted partner” suddenly blaming the client for inadequate oversight, failure to define requirements and other issues. Only after a thorough investigation does it turn out that the vendor or consultant assigned poorly trained “experts” to the deployment, lacked the appropriate tools and methodologies, or even had conflicting loyalties with software vendors or other parties. To avoid this, enterprise executives would be wise to look beyond the sales pitch and delve into the nitty-gritty of the proposal before signing on the dotted line.

Nobody likes to admit failure, but more often than not, it’s the first step on the road to recovery. By nature, ERP calls for a wholesale reimagining of business processes and perhaps the business model itself. That kind of change is not easy, nor is it risk-free.

As mentioned above, however, the success-failure ratio for ERP is about three-to-one. By taking the proper precautions, it is more than possible to be on the winning side of that equation.

Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.

 

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