ERP systems are complex, time consuming and expensive. Instances of failure of ERP projects abound including some high ticket failures such as Hershey, (largest chocolate maker of USA), where a SAP implementation was abandoned after three years. There are various â€œDosâ€ and â€œDontâ€™sâ€ effecting success or failures of an ERP implementation. Some of critical success factors, needing focused initiative, are appended below:
Commitment from project sponsor: Project sponsors normally belong to top echelon of the organization. A deep commitment and active involvement is needed from them and bare monitoring and oversight may not suffice. Their vigorous engagement should get other executives in board. One of their important roles will be to resolve any inter departmental conflict which is bound to occur during the course of implementation. They should also ensure that most knowledgeable executives are engaged in the project and released from routine functions whenever needed.
Commitment of resources: An ERP project needs a significant financial commitment and budgetary support. Expenditure involves not only direct expenditure relating to ERP package but a host of indirect cost such as integration with other software, gathering and cleaning of input data, archiving data from legacy system, engaging expert/consultant, additional support need, provision for contingency etc.
Selection of package and consultant: The selection of ERP package should be absolutely need based, as detailed on business requirement analysis, done beforehand. Selection should not be influenced by extraneous factors such as glamour involved in the name of big ERP packages. Selection of a consultant, who will provide advice independent of the interest of vendor and guide the entire process of implementation, should be done carefully and with due diligence. The consultant should be truthfully independent and should not be linked to a particular ERP vendor. This is also applicable to consultants from big named consulting firms as they may have tendency to recommend a complex product, requiring added consulting effort during implementation process.
Project Management: An empowered project manager, supported by IT and functional experts and appropriate project management methodology, is key to success of ERP implementation. Setting up of project team, resource allocation, milestones and deliverables etc form important part of project management. Tailor made training programme for different type of users and a predefined change management process, are also crucial.
Legacy Data: Legacy data are stored manually, in excel files or in legacy system. Collection of legacy data is needed to be planned carefully to avoid the syndrome known as â€œgarbage in and garbage outâ€ which will undermine the confidence on the system after implementation. Cleaning of data should be done by removing duplicate and unnecessary information, before importing to ERP system.
Critical failure factors: Critical factors for failure may be defined as contrary to critical success factors. Some specific concerns of failures are mentioned below:
Creeping in of additional functionality: Pressure often mounts for additional functionalities not envisaged earlier during implementation. This may lead to conflict with ERP vendor. Dealing through change management process also involves additional cost and time and should be avoided as far as possible.
Unrealistic expectations: ERP system is not an all cure silver bullet. Users often like to see an immediate improvement after installation. There are bound to be initial period of frustration which may snowball, undermining confidence on the system.
Information overload: An ERP system contains hundreds of reports and queries. Too much information creates a lot of confusion amongst users. Notwithstanding information overload, many a time, users feel cheated as the system fail to generate identical reports to which they are accustomed.
Resistance to Change: Users are overwhelmed by all the new features of the system. Some of the aged employees may be unwilling to adopt a new way of working. Some may be uncomfortable with the awareness that their supervisor will now keep a better trail on what they are doing.
Success and failure factors encompass pre-implementation planning, phases of implementation and managing post implementation scenario. There are many instances of failures resulting bitter legal battle with the vendor. Although vendor plays an important role, organisations are mostly responsible for success or otherwise of the project.