Top Reasons Why ERP Projects Fail

While ERP systems deliver many benefits to organisations, sometimes the implementation project can seem daunting. Today's article explores some of the top reasons ERP projects are unsuccessful.

The author of this page: Brendan Geraghty
Brendan Geraghty, Practice Director - D365 for Financial Operations Apr 04, 2023

For many organisations today ERP software acts as a critical business system, centralising all financial and operational processes and data. According to a 2022 TEC report, 50% of companies are soon planning to either acquire, upgrade or update ERP systems soon. While many organisations may need to consider implementing an ERP system and are aware of the benefits this software can offer, they are often held back by the fear of project failure. ERP implementations can be bigger and longer projects, so when a project of this size fails it can have quite a negative impact on the organisation. Research in the TEC report referenced earlier revealed that 50% of ERP implementations fail first time around based on data gathered over the years. Those who are at the start of their ERP journey are often met with daunting statistics such as this. However, generally the reason for project failure is not due to the functionality of the ERP software but the implementation process itself.

Below we explore some of the top reasons why ERP projects fail.

Poorly Defined Objectives

When organisations decide to implement an ERP system, they can have many ideas of what they want the ERP system to deliver. Often organisations can perceive the introduction of a new ERP system as the solution to all their problems, but some do not take the time to define specific and actionable goals that they want to accomplish, which is where they can fall short. Particularly with a project that has the scale of an ERP solution implementation, it is important to take some time in the planning phase of the project to fully define goals. These objectives can act as a project guide, keeping it on track to align with these objectives. Then following implementation organisations should be able to look at these objectives to measure the success of the project.

Lack of Executive Support

ERP implementations can be a project that touches many different departments in an organisation, so having buy-in and support from the top-level is a critical factor in achieving project success. Many organisations are aware that ERP projects require a high level of commitment in order to facilitate the implementation while keeping day-to-day operations going in the meantime. If a leadership team is not fully behind a project, it may cause project delays and bottlenecks down the line with things like budget or allocating resources. The project team requires strong support from top management from the outset. It is also important that management support this project in a way that the whole company can see, such as communicating the project expectations.

Inaccurate Requirements Gathering

Requirements gathering is a critical component of any technology implementation project. This is a part of project planning that should be done thoroughly with time taken to speak with different user groups to understand all pain points. These can be then translated to requirements ranging from critical to those that are not required but would add additional value. This should be explored prior to deciding on which ERP solution is best for your business as it can help make your decision easier. With a clear set of requirements, a clear scope of delivery can be set. One of the top reasons for ERP projects to go off track is due to the scope of delivery not being set correctly. However, if your organisation is finding requirements gathering challenging or even just too tedious and time consuming, you can enlist the help of business analyst professionals who can help organisations during this step.

Challenges with Data Migration

Often an overlooked and underestimated aspect of a successful ERP implementation is the transfer of old data into the new system. Many will just assume that data migration will just be a straightforward export. However, the data in the new system will only be as good as the quality of the data migrated. Therefore, transferring across poorly maintained data will not set your company up for a good start with the new system. While your technology partner will be able to help this process, they will require input from the business to ensure accuracy of the data. Before transferring, data quality will need to be reviewed. This means cleaning up the data updating any errors, removing any duplicates or updating inconsistencies. Once data is prepared it can be mapped across to the new system.

Lack of Change Management & User Training

Another top reason that ERP implementations are not successful is low user adoption and a lack of change management. Despite the benefits a new system will bring for employees, there is a natural reluctance to change, and organisations should expect this. Good communication is essential here, helping users understand that change is coming, how it will impact and improve their daily job and management should listen to their concerns around the change. Getting users on board and enthusiastic about a project can really help drive project success. In line with this, adequate user training should be provided. If your organisation anticipates a high level of change resistance or just simply lacks the time to dedicate to change management, your organisation can enlist the help of change management professionals to help drive project success.

Another critical consideration for your ERP implementation is your choice of technology partner. You want to ensure you are going with a trusted and experienced partner to set yourself up for success. If you would like to start your ERP journey today, get in touch to speak with one of our specialists.

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