Many ERP implementations fail to become success stories. According to analyst firm Gartner, approximately 75 % of all ERP projects fail. Only a very small percentage of ERP implementations deliver the business benefits initially mandated as a part of the project objectives. Business leaders and project sponsors very often misconceive that implementing an ERP solution is a silver bullet that can solve all organizational problems. This misconception compounds the challenges that are faced during implementation. An ERP implementation is a business-led initiative, and it should not be considered an IT department-led initiative. Effective organizational change management, strong leadership commitment, and a good governance framework are some of the key factors that drive an ERP implementation to success.
In the following sections, I explain the key risk areas that project managers must focus on during each stage of a typical ERP implementation cycle.
Project Initiation Phase:
- Understanding the organization’s mandate in the ERP implementation initiative and having measurable Key Result Areas (KRAs) to evaluate the success of the ERP implementation project.
- Executive commitment:
- Providing the best resources from the organization to be part of the project team. The best of the best employees from key functions should be released so that they can contribute to the implementation.
- Selecting the right technology and implementation partners with domain expertise. Not selecting a competent implementation partner despite investing on a sophisticated ERP platform can have costly business implications. Therefore, proper due diligence should be carried out when selecting an implementation partner. Organizations should remain technology-agnostic when selecting the technology applications and implementation partners.
- Setting up the project organization structure including a governance structure and framework. This is necessary for facilitating the coordination and implementation of project activities.
- Lack of planning:
Very often, due to go-live constraints, implementation teams rush into execution. Lack of proper planning and estimations can throw major obstacles during the execution phase.
- Executive commitment:
- Difficulty in adapting to process changes and ERP best practices.
- Focus on the 80:20 rule. Exceptions in the business requirements most often complicate the solution design. Manage exceptions through SOPs or workarounds without complicating the solution design.
- Early change management is a must.
- Set the right expectation upfront during the design phase. A lack of transparency can present unexpected challenges during the build and test phases.
- Scope creep: Establish good governance to mitigate risks.
- Lack of involvement by the business users
- Poor documentation
- Non-existent risk management
- Business involvement in testing early – unit testing
- Test, Test, and Test! Ensure that the business gives priority for testing
- Data conversion challenges – Plan mock conversions/ dry runs and test with real business data
- Data cleansing is one of the most important factors of successful ERP implementation. Master data comes from multiple legacy systems with different formats. Hence, ensuring the accuracy and completeness of master data is important to conduct proper testing and synchronization
Run mock data conversions to ensure the integrity of data before go-live; check and reconcile
- Provide end-user training. Evaluate user readiness through initiatives such as mock exams
- Plan for support desk and controlled startup where required
Post go live (Optimize)
- Monitor and fine tune. It’s important to measure business benefits defined at the start of the project and make continuous improvements to realize post-implementation success
Five golden rules to follow
- Spend time planning and on getting estimations and the schedule right.
- Ensure that the right assumptions are made and validate them before starting.
- Establish a strong, good governance framework.
- Provide regular updates on status and risks with mitigations.
- Manage stakeholder expectations.