The practice of paying ERP software and their partners to implement ERP systems has proved to be an expensive exercise that has not yielded satisfactory results for the majority of organisations and arguably all organisations.
An ERP project is more complex than just implementing a piece of software. The acquisition strategy is critical to establishing what the expected outcome is for the technology. If there is no real strategy and objectives for acquiring and implementing ERP, what are the directives passed down to the people implementing the technology?
A full understanding of ERP and what it can do and cannot do is an essential element in the successful implementation of the technology. This information cannot be learnt by pressing buttons to perform a function in the software but must be obtained through an education program that gives the bigger picture of what the technology capability is. Included in this education must be details about the total ERP project not just software in order to prepare management and employees for the path ahead. Remember more companies fail to achieve the outcomes expected than succeed.
According to numerous surveys 55-70% of organisations fail to obtain the benefits from the technology with many companies abandoning the project altogether and some even being bankrupted by the process. For those companies that do manage to finish the project successfully they only report 50% of the benefits expected.
For many ERP projects failure is set in place at the very beginning of the project in the acquisition strategy of setting budgets and live running dates that are not based on the quantum of work to be done.
The lack of education starting with senior management is a major blunder organisations make on their journey into ERP. Companies should be aware of the totality of the many nonsystem issues that will cause major issues if not addressed.
Many organisations we visit have had an ERP system for some years and do not understand the capability or how to use the technology to gain the best advantage.
The simplistic view that ERP is a computer technology project that can be simply passed to the IT people for implementation misses the point entirely! An ERP project requires diligent attention from all parts of the company as it requires massive change to procedures and decision making processes that may have evolved over many years.
The ignorance of the full impact of the changes required and the pitfalls that will bring the project undone will ultimately be reflected in the project outcomes. Companies simply cannot simply ignore the facts that ERP is very challenging for an organisation and for a small investment in education, as opposed to training, the payoff in results and avoiding the traps can run into millions of dollars of benefits.