Originally posted on Technology Evaluation Centers (TEC)
While you might be eager to reap the benefits an ERP system will bring to your business, according to the trends found at TEC, buying and implementing an ERP system is one of the most complex projects a business will take on—no matter the size of the company. In fact, nearly 50% of ERP implementations fail the first time around. Many organizations have invested a good amount of time and money selecting and implementing an ERP system more than once!
Every day, companies turn to TEC seeking advice on how to be an ERP success story and avoid being a part of the ERP failure rate. Many inquire about the ERP systems they’ve analyzed and reported on. They also refer to TEC’s customer success stories so they can learn from (and avoid) the mistakes their peers have made.
The infographic below presents facts and stats TEC has collected over the years on the selection, implementation, and usage of ERP systems. These are the trends they’ve seen from interactions with businesses from a variety of industries, client projects, and surveys conducted with their user community.
Avoiding ERP Failure—Learning from Past Experiences
Budget for Success, Not Just to Save Money
Many companies try to stay within budget by minimizing the “hard” costs such as software licensing fees; however, project mismanagement, botched negotiations, and poor user experience are more likely to cause budgets to skyrocket since costs associated with blunders are unforeseeable and unpredictable.
Keeping your budget in check is possible with proper preplanning. Starting by conducting an internal review will reveal exactly what your company needs and not just what’s available on the market, monitoring the entire process will help keep the project on track and within budget, and reviewing the fine print of the contract with the services provider will ensure your company gets what it needs.
Lesson Learned: Become a knowledgeable software buyer to understand where you should invest money and where you shouldn’t. Focus on what is relevant to your business instead of spending money on bells and whistles that you don’t need.
Minimize Disruptions, Embrace Change
The most challenging aspect of integrating an ERP system into your business is managing the changes and expectations associated with the new system. Change management is not part of the service provider’s responsibilities, so you’ll need to find a way to support individuals and teams throughout the process. Ignoring this aspect of an ERP implementation will only create bumps further down the road and can result in implementation failure.
Appointing a project champion or a team of champions will help minimize disruptions and manage expectations. The project champion need not be an IT professional, but an employee who is skilled in project management and people management and who knows your business model and processes well. Often an outside perspective from a specialized software advisory firm such as TEC can help provide clarity on situations, and preempt flare-ups before they happen.
Lesson Learned: ERP implementation is as much an internal project as an external one. Empower a project champion or champions who will manage all aspects of the project, manage the relationship with the external services provider, and handle the changes and expectations the new system will bring.
Adopting New Technologies—Look Before You Leap
When it comes to a major software system such as an ERP that affects the entire organization, you can’t just go for the latest trendy gadgets or features. Emerging technologies offer big promises of success and positive transformation, but unless your company has an unlimited budget or particularly unique problems, it’s typically best to stick to what’s tried, tested, and true.
Understanding your business and what it needs to succeed will help you identify which features are required from an ERP system vs. what may be just nice to have. For instance, if you need maximum scalability because you are growing fast, a cloud-based solution might be a viable, cost-effective solution. However, if you need maximum flexibility because you have some very unique processes, an on-premise solution is typically easier to adapt to your needs.
Lesson Learned: Don’t invest in new technology before you assess it and understand the impact it will have on your company. Businesses can be successful via a regular ERP system with optimized processes and can be highly efficient and competitive without being early adopters of the latest technology.
The Path to ERP Success
Although the implementation statistics and details discussed above may imply that there is a lot of room for error when selecting and implementing an ERP system, there are many steps you can take to increase your chance of success. These include identifying what your company needs from an ERP system and how you hope to benefit from it, as well as monitoring the process closely from start to finish. Throughout the process, assistance from impartial advisors like TEC’s experts can help keep your project on the path to success.
About Technology Evaluation Centers (TEC)
Technology Evaluation Centers (TEC) is a global consulting and advisory firm, helping organizations select the best enterprise software solution for their needs. TEC reduces the time, cost, and risk associated with enterprise software selection with its advanced decision-making process and support application, software selection experts, and extensive resources.
Over 3.5 million subscribers leverage TEC’s industry-leading research and detailed information on more than 1,000 leading software solutions across all major application areas. For more information, please visit www.technologyevaluation.com.