ERP needs optimisation to deliver
Enterprise resource planning (ERP) systems offer a great deal of potential to improve a business`s way of doing business. But Keith Fenner, vice-president, sales, Softline Accpac, says that while most organisations rely on ERP systems, relatively few are able to truly optimise the capabilities and functionality the software products can deliver.
Fenner says more than 60% of ERP implementations fail to meet expectations. "Not realising the anticipated return on investment, extending the implementation schedule and go live date far beyond planned, going over budget by a large amount, interrupting the organisation so much that business suffers, and stopping production and/or not delivering products to customers are the major issues."
But, according to Fenner, this doesn`t mean your project is doomed from the start. He says that understanding the factors that can interfere with the project as well as what items can lead to success is extremely important. "Knowing the common reasons ERP implementations fall short and how to avoid them can save you valuable time and money and help make your project a success."
Fenner says there are several common implementation pitfalls, the most frequent being the purpose of an ERP system. Companies can focus too much on replacing the systems and functionality they have and fail to learn enough about the capabilities the new ERP system can deliver.
In other cases, ERP implementation begins without a clear understanding of the benefits that will be attained. As a result, they are not measured against the pre-implementation environment. "Many companies go through ERP implementations without a step-by-step roadmap, making it difficult to achieve continuous improvement. It is also a mistake not to analyse existing business processes and identify opportunities for organisational improvement, expecting the software to cover up weaknesses."
Lack of commitment from top management is another pitfall. Fenner believes there is a high likelihood of failure if company executives are not strongly committed to the system, do not foresee and plan for the changes that may be necessitated by ERP, or do not actively participate in the implementation.
"Top management often tends to delegate the implementation to lower management levels, which can lead to their being out of touch with critical events or lack the understanding of the scope, size, and technical aspects of the project." He says top management must view the ERP implementation as a transformation in the way the company does business.
Another misconception is the assumption that an ERP implementation is viewed only as an IT project. If it is, Fenner says, it will never realise its full capabilities and it is likely the technology will be deployed in a vacuum, the software will not be aligned with business processes, and staff will resist using it.
He says some of the biggest ERP system implementation failures also occur because the new system`s capabilities and needs are mismatched with the organisation`s existing business processes and procedures. Poor selection occurs when a company hasn`t adequately developed functional requirements definitions or when the ERP project team doesn`t take the time to run through the system`s screens as they would during the course of their daily work to discover if the software`s features will accommodate their needs.
"While an ERP system can help, it`s only as effective as the effort placed on the implementation. By being aware of the reasons implementations fail and knowing what best practices can be employed to help ensure success, companies can save valuable time and money and achieve a higher return on investment," concludes Fenner.