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10 early warning signs of ERP disaster!!

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Enterprise resource planning systems reap business efficiency by tying together disparate systems and services. But an ERP implementation can quickly unravel into disaster if you don’t heed these early warning signs.

Enterprise resource planning (ERP) systems weave together software and services from disparate departments into a cohesive, collaborative whole. Companies rely on ERP systems to keep their business operations running smoothly. Without ERP implementations to coordinate purchases, customer orders, financial transactions and beyond, modern business would take a significant step back in efficiency.

But the integrated nature of ERP systems makes them tricky to maintain and update. Many ERP systems are out of date or need major improvements. Plus, many organizations, seeking cost savings and flexibility, are considering migrating their ERP needs to the cloud. All of these factors make ERP systems ripe for disaster.

We reached out to experienced ERP consultants to discover early warning signs that your ERP project may be on the verge of suffering major problems. The large scope of ERP projects often means that a warning sign today may not manifest in problems for several months, so it takes a close eye to detect and anticipate an ERP disaster in the making.

You’ve made a large technical leap

While consumers may purchase the newest smartphone immediately after release, most organizations take their time before adopting a new technology. This is especially important with ERP.

“If you are an early adopter of a new ERP technology, you may be in for greater challenges,” says Michael Hughes of West Monroe Partners, a consulting firm based in Illinois. “If your ERP is several versions behind the version you are planning to adopt, you may also encounter challenges in the transition.”

If either of these situations applies to you, and you don’t adjust your schedule and budget assumptions accordingly, you could be headed toward disaster.

You’ve neglected business engagement

It is a dirty secret that technology and business units often struggle to find alignment. Nowhere is this discord magnified more than when it comes to ERP projects.

“No ERP project goes perfectly — there will always be hiccups and problems. If you have a strong engagement with the business, you are likely to be forgiven as you work through the problems. On the other hand, if you neglect to engage users, you can expect resistance and protests when problems occur,” says Ed Featherston, vice president and principal architect at Cloud Technology Partners, a technology consulting firm.

Put it another way: Your people skills may be your greatest asset or liability on ERP projects. Empathy for the impact on your users goes a long way.

“One of the best ways to engage users is to directly explain how ERP changes impact their daily work. If users have to guess, they are likely to resist since human nature tends to be change resistant,” Featherston adds.

You’ve overestimated staff savings in the cloud

For years, cost savings and flexibility have been the key selling points for cloud services. But banking on savings — especially in staff resources — when undertaking ERP in the cloud can come back to haunt you.

“Some organizations expect that moving to the cloud means that you do not need process owners and other internal support. Internal governance and support are still needed for ERP, whether it is cloud or on-premises,” West Monroe Partners’ Hughes says. In fact, if your ERP project is developing new capabilities, you will likely need additional support in analytics and related functions regardless of where those capabilities reside.

Evaluate cost reduction claims with a measure of skepticism as you develop business cases for ERP projects. One may assume that a department’s staff can be eliminated due to ERP efficiency improvements when moving to the cloud, but that analysis may be based on out-of-date job description documents. In fact, your business users may be even more reliant on their ERP support staff to engage.

Your project requirements are high level and vague

The fundamentals matter in all projects including ERP upgrades, enhancements, and transitions. Here, getting the requirements phase right is key.

“When I see inadequate requirements on an ERP project, I expect to encounter problems later in the project. There is an increased chance of dissatisfaction and related problems,” Hughes says. Spending time on business analysis at the beginning is one way to address this issue. If the ERP system has to address the needs of multiple user groups, take the time to address those needs as well.

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