Implementation of an ERP system is an important task as it involves assembling complex parts in integrating software that is essential for business procedures and similarly not every business will get simply benefited from an ERP system.
Various features regulate the success and failure of ERP implementation. A properly implemented ERP system can enhance and improve the business process over a period whereas the failure rate of ERP implementation is also high, which can lead to loss of business, loss of market share and price etc. Hence, in this article, we will look at various causes which lead to the failure of ERP implementation so that it can be avoided for increasing the productivity of the business.
Following are the common causes of failure of ERP implementation–
- Lack of knowledge – There can be a failure of ERP implantation if staff is not educated and they do not have knowledge on how to operate ERP systems and will listen to other people and interrupt the execution of the system.
Hence, it requires a well-educated team that have excellent organization skills and can familiarize with day to day operations and build a strong relationship with the stakeholders thereby maintaining the working of the ERP system and hence, leading to the productivity of the business.
- Absence of enough management commitment – As the ERP operation is complex, takes time and requires to be done correctly, hence the managing team that is installing ERP should provide their complete support and if it is not properly installed, it will lead to disturbance in working of business procedure.
Hence, the projecting team should always keep a positive attitude and communicate properly with the company regarding the project thereby showing appreciation for improving the productivity of the business.
- Insufficient resources – As the implementation of ERP software can get expensive and can cross the primary budget of the company and still requires some changes to be done for its execution.
Hence, to prevent this while making the budget and assigning resources proper studying of all features should be done that affects costs, infrastructure requirements etc.
- Wide customization – When the company installs the customized ERP solution this not only enhances the time and price but also requires installation of the latest publication which is tough and expensive which leads to failure of ERP implementation.
- Unrealistic expectations – If properly implemented, it leads to increased productivity of the company but the managers and workers should be thoroughly aware of its benefits and advantages to reduce any over expectations about the product.
- System requirements – This is the most common cause of failure as the company does not have proper knowledge about their current and future requirements related to their business.
Hence, before investing in purchasing an ERP system and its implementation, one must discuss thoroughly with their department managers about the understanding and list of requirements and then one can match the requirements with ERP features and install the one that fits best with the company needs.
- Insufficient capacity plan – There is ERP implementation failure because companies fail to resource and plan accurately the team that works on ERP system as it can take months and even years to complete its implementation depending upon the size of the business and the company needs to provide their best people for working in teams performing ERP system.
Hence, to prevent this failure one needs to plan capacity accordingly so that the team can focus on working with the ERP system and also be able to educate other team members related to its working whenever needed.
- Lack of focus on business outcomes over technology – Mostly many companies that are implementing ERP systems only focus on this part, but it is just one part of your business and one needs to focus on the entire business process.
The company needs to understand and dedicate their time to stopping the current and desired workflow that can maximize the ERP implementation and leads to an increase in the productivity of the business and increase sales.
- Failure to cleanse data – It is one of the most important steps in ERP implementation success as it is a time-consuming activity as it requires cleaning and verification of data in the existing system before transferring the required information into the new system but if not done properly can lead to the failure of the new system.
- Insufficient testing of the implemented system before rollout – It is also a major cause of ERP system failure as testing of system needs to be passed through various stages including a single test to volume tests and mock go-live cutover and if insufficient testing is performed it can lead to the failure of the implemented system.
- Lack of investment in change management – It is the end-user training exercise and requires organizations to build a change management team that works on it but lack of team can lead to failure as the team is not only involved in the business process but includes the whole culture of the organization.
When the user of the team is not fully involved, process changes are not communicated among employees and the expectation the company will have from the new system will not be met which leads to the failure of the system. Hence, a proper change management team is required for performing the working of the new system.
Summing up, although ERP systems can lead to the enhancement in the business industry by providing various features and benefits it not always turns out to be beneficial due to the failure of ERP implementation that can not only prevent business productivity but also hamper the customer’s experience. Hence, thorough knowledge about ERP systems and the requirements of company businesses is needed before implementing the ERP system.