In our prior post we described what Panorama Consulting in a recent article said were “3 Things That Will Help You Achieve ERP Success.” They published a companion article around the same time this year in which they suggested what constitutes a failure in an ERP implementation, which we’ll highlight below.
Noting that according to a survey they recently completed over 80% of ERP projects are late, over budget or fail to deliver expected business benefits, they make the point that while these events are indeed frustrating, they don’t necessarily constitute failure.
In fact, their survey showed that ‘operational disruption’ occurred in over 40% of organizations, but that in about half of those cases, the disruption lasted only between a week and a month. (The other half consisted of projects whose disruptive effects last several months longer.) That’s not failure, it’s just disruption, and frankly, it’s common. Projects are typically over sold and underestimated, and everyone gets ‘happy ears’ at the outset, so the results should come as no surprise.
The failures, in truth, are what come as a result of the disruptions, or of poor implementation planning, and for evidence of this Panorama cites a good example. A client’s engineers and sales reps were having trouble with the product configurator in their new system, not uncommon among ETO (Engineer to Order) manufacturers. The consultants recommended delaying the Go Live by 30 days to allow users to become more comfortable with the new processes, an unwelcome event with an estimated cost of $70,000. Instead, the client opted for “a Hail Mary flick of the switch.” In other words, they rolled the dice that the decision would not affect their business.
You can probably guess the outcome. The client had not built enough safety stock to account for a potential disruption, barged ahead before critical engineering processes were fully defined, and experienced a revenue loss of over two million dollars as a result.
The good news is that most failures are avoidable. Sure, delays are sometimes required. Disruptions happen. Training, implementation and configuration can take longer than expected. But with the right focus on, and belief in, sound project management and the right expertise and methodologies, companies can succeed. (And it helps to define success, as we noted in our prior post.)