Wednesday, 03 February 2010 10:26

Common Pitfalls to ERP Project Success

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As we are beginning to emerge from the recession, I've noticed that there has been an uptick in interest for ERP implementations. Of course, we are nowhere near the interest levels of pre-2000; however, businesses are beginning to think about investing funds into systems, at least from an upgrade standpoint. Throughout my career in almost every business function in multiple industries and in working with multiple countries and cultures, I've seen a common misperception hundreds of times in the last several years: the thought that the newest, brand name system or the latest system functionality will "solve my pressing business issues". Yet, I haven't seen it "work" once.

So, what are the common pitfalls to ERP project success? And, is there anything that has proven to "work" to address them? The three most common pitfalls are as follows:
  1. Trying to Solve Process Discipline Issues with Systems

    By far, this is the most common mistake! It is much simpler to think you can resolve business issues by implementing a new system - after all, exploring a new system sounds far more exciting and requires much less work than developing processes, implementing disciplines and establishing and tracking accountabilities.

    For example, a common misconception is "if I implement the latest and greatest system functionality, my inventory levels will drop and everything will be fine." Reality becomes a disappointment. Actually, what typically occurs is the opposite since process disciplines haven't been the focus while system implementation complexity has been added into the mix. After all, just as the saying goes with MRP systems, "garbage in, garbage out", the only thing accomplished by implementing a system prior to establishing process discipline rigor is receiving "garbage sooner".

    Thus, clearly the solution to this dilemma is to spend the time and effort up front implementing the appropriate process disciplines. Then, you will find that you can leverage already-existing functionality to take your organization to the next level or you will be prepared to take advantage of the benefits of a new system.
  2. Focusing on Bells and Whistles instead of Core Functionality

    The second most common mistake is to get caught up in bells and whistles (exciting system functionality that might be interesting but only a "nice-to-have" for your business requirements) and overlook the unique functionality which is the cornerstone of your business. As far-fetched as this might sound, it has occurred in almost every ERP selection and implementation project I've participated in. Typically, whatever latest and greatest functionality the new system has is what is focused on, regardless of the fit with the company requirements.

    Since this is a common occurrence, a way to avoid this pitfall is to focus up front on identifying functionality unique to your business and then stick to it. I've found the 80/20 to success is a rigorous focus on unique, core functionality. For example, in an aerospace metals service center, item number functionality incorporating multidimensional specs and characteristics is the cornerstone. On the other hand, in the windows and doors manufacturing industry, configurator functionality is key.
  3. Focusing Too Much Effort on System Cost instead of Implementation Cost and Risk:

    Since there is typically a significant focus on software selection, the focus tends to be on software cost. Additionally, it is easier to compare software costs since it is clearer than understanding the implementation requirements. It always sounds easier to implement than it turns out to be!

    And, if you haven't focused on the unique business requirements, your implementation costs are likely to skyrocket. Once you are partially into the implementation, it can become a perpetual sinkhole of money and resources as you must find a way to address critical functionality to support core business functions. Although it is a challenge to interview implementation partners upfront and to dig into enough of the critical details without getting sidetracked with standard implementation questions, it is the only route to success.

    Aside from finding a resource who is expert in business processes for your industry and who also has expertise in systems analysis to focus on analyzing the implementation requirements (cost, resources, time), your best bet is to spend the extra money for a proof of concept on critical functionality. Once key business users are focused on a proof of concept, they will uncover the hidden complexity in implementation whiich can be utilized to build the optimal implementation plan.

Many times, knowing where the rough spots are on the road is half the battle to success. Therefore, focus extra resources on theseareas, and you'll be one of the few companies to achieve the expected implementation results within budget. Why bother going through the implementation nightmare to hope you'll get back to where you started?

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Lisa Anderson

Lisa Anderson, President of LMA Consulting Group, Inc., www.lma-consultinggroup.com, is a senior supply chain and operations executive and management consultant. To sign up for her free monthly newsletter containing tips and techniques for improving business performance, click here. She can be reached at 909-630-3943 or landerson@lma-consultinggroup.com

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