Ten major failures in ERP

Ten major failures in ERP
(2003.06.12) from: IT manager world Clive Weightman
 
 
 

 
---- The region that causes the ERP project to fail often has another person.
---- Running a large ERP project is difficult to climb the Mount Everest. Many insurmountable obstacles often make the project final. Public opinion believes that the results of most ERP projects are very different from expected. These projects may be unable to achieve measurable commercial benefits, or worse, which may threaten the company's economic strength.

---- Is it exaggerated to compare the ERP project with the mountain? Maybe so. However, it emphasizes the huge obstacles in the implementation of ERP projects. It is these obstacles that greatly enable enterprises to use ERP projects to effectively integrate their business processes. The final result is expensive expenditure and disheartened. Although people always blame the problem on technical defects, to be honest, the cause of the problem is often someone else-for example, the people who use ERP programs have little knowledge about the functions and running of the system.

---- It is true that, just as climbing Everest, difficulties are everywhere. However, the success of the ERP project brings sweetness to the company, and people are still looking forward to this tough journey. ERP systems are the pillar of an enterprise-both internal and external-from effective integration of internal financial information and business performance data to future extension enterprises and collaborative business platforms. These are the foundation for the long-term development of enterprises.

---- The consulting company's experience and lessons learned through years of practice may provide some useful references to help enterprises eliminate the resistance that causes the failure of ERP projects. No "ERP textbook" can make every project perfect, but it is beneficial to hear the experience of "Veterans. The following lists the top 10 failed ERP tasks in descending order of severity.

---- 10. Use "launch" as the end of the project

---- The implementation of ERP is not just a simple project, but a new journey. In general, the initial investment in ERP projects is very large, and the expected application life cycle is also 10 ~ About 20 years. An enterprise organizes a team and uses 15 ~ After 30 months, the project was finally "launched". How can I leave my group one month after it was put into use?

---- Imagine a large-scale factory that has been built for three years and has spent millions of dollars, and will soon release their engineers. This is impossible! In the years to come, the factory will depend on these engineers for continuous development. Retained the key personnel of the ERP project implementation team, including business and technical personnel, to ensure the application of ERP, handle bottlenecks in the application, improve the system, and continue to look for ways to increase productivity.

---- 9. Lack of psychological preparation for the temporary low tide performance after the system is enabled

---- Most ERP projects are revolutionary to the change of enterprise architecture. Sometimes more than half of the enterprise's background transaction system is replaced, thus affecting 90% of business traffic. This is not just a technological transformation. It has greatly changed the business process, culture, knowledge, and environment of an enterprise. Therefore, the adaptation period following the launch of the project is inevitable. Research shows that even those projects that are very smooth during the implementation phase cannot avoid the adaptation period after the new system is started. For example, the transaction processing efficiency may decrease from 98% to 90%, and the processing speed of sales orders or goods warehouse receiving may slow down.

---- Enterprises must reduce the possibility of such a situation through a series of measures such as detailed plans, pilot trials, internal education and risk analysis. However, enterprises must fully understand the existence of the initial adaptation period of the project launch. If executed properly, this negative effect can be minimized and eliminated in the shortest time.

---- 8. It is difficult to balance the needs of business integration and the pursuit of short-term performance

---- Today, every CEO must make achievements as soon as possible, rather than after a year and a half. Due to the huge challenges faced by a complete ERP project implementation, it is difficult for them to make a commitment to the board of directors ~ The specific cost that may be saved within three years is an immediate return.

---- In this case, the challenge for implementing the ERP project is: how to plan the project scale and Implementation sequence, so as to quickly obtain the maximum commercial return, at the same time, it does not compromise the best effect of ERP integration.

---- 7. Data-related work started too late

---- Data consistency and accuracy are crucial. The investment in the ERP project is huge, but remember that the effective use of the system depends on the accuracy of the original input data. The problem often exists here. The survey shows that most companies are too late to realize the quality and accuracy of data.

---- Data should be considered at the beginning of the project, instead of waiting for the first two months before the system went online. It takes a lot of time to clean up and transfer existing data to determine the new data standards to be adopted. This ensures that important information about customers, suppliers, and accounts is consistent with future business development.

---- For example, suppliers are more clear about the customer's procurement situation than the customer himself. This situation is not surprising. Suppose you purchase products and services from a major chemical manufacturer, which provides services for you in 32 countries. If this is a well-functioning manufacturer, they may know more about your global purchases than you do. The implementation of ERP can give you technical advantages and offer more discounts. However, only when the data in the system is consistent and updated in a timely manner, and you can immediately obtain the data, can you win the price advantage.

---- 6. the "core team" lacks top-level business personnel and technical personnel

---- This may be a huge challenge. Your project requires the participation of top experts-not only technical stars, but also business experts. Even if you have to sacrifice the quality of a certain aspect, you cannot give up on the top of the business. On the contrary, you may sacrifice technical expertise because the consultants you reserve can bring skilled technical personnel.

---- These experts should be more closely around the project manager than other members in any team. Do not include them in the team because Michael Jacob or James is idle. This may be difficult, because your best subordinates are undoubtedly busy with other tasks, and some large ERP projects require 200 ~ Participation of 300 people. However, you must release some of your best players from daily affairs and join the ERP project team.

---- 5. The project started, but was not supported by the senior management team

---- Any large ERP project involves complex business processes, roles, responsibilities, standards, and data definitions, which cannot be implemented from the bottom up. An effective management team is especially important, and it is also critical that a senior administrative staff lead actively and effectively. The ERP project will trigger some difficult and sometimes even vicious problems, and the responsible senior manager can promptly handle them and observe whether the Headquarters can understand and accept these decisions.

---- The management team can meet every month for one hour, encourage the project manager, or spend more time to understand and guide the project process, make important decisions, and plan the future of the company. There is a world of difference between the two.

---- From a business perspective, this senior manager is usually the chief financial officer or Chief Administrative Officer, especially projects that involve key business transformations and the future success of the company. If the ERP project affects sales and distribution, the lead should be the vice president of sales and marketing. The "patron saint" of the ERP project must be a member of the group's leadership, and it is best not to be the chief information officer. Unless the CIO is also an outstanding business manager and can influence other senior business managers. Otherwise, other managers will not participate actively, and the ERP project will become a task for CIOs and Their technicians.

---- 4. ignore the advice of a strong System Integration Team

---- Companies often spend a lot of time and money selecting a strong system integrator Team (SI), but they are at odds in the project process. If we always question Si, or think that his suggestion is just to generate more income, why do we need to spend huge sums of money for the consultancy? Si should be your right arm, Because ERP may be your first or second contact, and Si may have experienced similar cases dozens or hundreds of times. Why are we still skeptical about Si?

---- Mutual respect and partnership are key to the success of the project, including respect for every partner and software supplier. Similarly, Si cannot preempt customers from providing strong consulting advice.

---- When selecting Si, the company should:

---- First, consider compatibility. Do you want the consulting company to complete all the work for you from the sky, or do you want to work with you to solve the difficulties? Some Si companies prefer the "cooperation" attitude, while others like to say to you: "This is an instruction for you. This is the future. Let's get started ."

---- Next, you can decide which work method to choose based on your company culture.

---- Review Si's work records carefully. In addition to Si packaging, it communicates with software vendors and industry analysts to hear their opinions.

---- Finally, spend time investigating every team member who will work side by side with you. Remember that in the contract, project leaders and partners should always be around you during the project.

---- 3. Try to create solutions that are incompatible with the company culture

---- In 1990s, the survey found that many companies conducting ERP projects regard it as a panacea-even if the "Style" of the solution is incompatible with the company's cultural traditions.

---- Managers may want to work in a centralized global business environment. Like Walmart, global headquarters has unquestionable power and discipline. However, if the company's culture advocates a decentralized entrepreneurial spirit, the Walmart style is not suitable. You cannot use technology to forcibly change the company's culture. Therefore, if the company's structure is very discrete, you 'd better choose to install a decentralized ERP application or face the huge changes that will come.

---- If you are going to merge 93 warehouses into five or six and "count on" The ERP program to help you complete it. Technically speaking, ERP can do this. However, this is not a simple technical process, but a business/Personnel process. If no one changes their attitude and the company does not understand or support such a merger, your project will be moved to the market.

---- However, if the CEO authorizes a person to thoroughly examine the entire company and its culture, it should be a different story. It should be reiterated that the CEO does not regard ERP as a simple technical solution, but also a business and organizational solution. The CEO should select appropriate candidates from level-1 and level-2 managers, work under a brand new system, and make the ERP project a great success.

---- 2. Failing to make full use of the power of new integrated information

---- Please do not misunderstand that ERP technology is practical, but 30% of the challenges of ERP projects come from the technical level, while 70% of the remaining come from personnel and processes. Few people really like changes, but when companies turn to sap, changes cannot be avoided. In short, the computer screen of employees will change; in general, the whole life of employees will change.

---- Emerging technologies take care of everything and, in general, make information readily available. For example, anyone can obtain and exploit this information when raw materials arrive at the company's warehouse and are scanned into the system. When the product production is complete, it is automatically or manually entered into the system, it immediately becomes a salable product, employees do not have to wait until the next day to obtain this information.

---- Real-time integration and precise data have changed people's work. A traditional order operator can be an all-powerful customer service representative. For example, with the online access to the integrated ERP main system, customer service representatives can immediately retrieve customers' historical records and other important identification contents, you can also view the real-time inventory and future production plans of all warehouses (rather than local warehouses), and freeze some products in the production plan to supply to the customer according to the customer's needs. The new ERP technology affects many people who need to be trained to master the process.

---- 1. ERP business plans are inactive

---- Undoubtedly, ERP projects usually require 12 ~ It takes 36 months to implement it, and usually costs 5 million ~ $50 million is crucial to sustainability. Therefore, you must confirm the reason for carrying out the ERP project, that is, preparing a solid business plan.

---- On the other hand, without a real business plan, you cannot get the support of the entire business team. Most of the time, an enterprise implements an ERP project not only to reduce technical costs, because the total technical costs after ERP implementation often increase significantly. The implementation of ERP projects is often for broader business purposes. If you have a thorough understanding of the purpose of the project implementation and have not obtained prior approval of the project content and investment funds, it is impossible to obtain full support from the senior management.

---- Five years ago, although some large companies made business plans for ERP projects and submitted funding applications, these plans were shelved once the project was approved and started. Compared with 5 years ago, the current situation has improved significantly.

---- An ERP business plan is vital and constantly updated as the project progresses. It should set how to track the benefits of ERP applications. It must provide a reference for CEOs to classify cost reduction and revenue growth into the company's annual operating budget and use it as the performance indicator for each vice president. It must clarify the responsibilities of middle-and high-level management personnel for achieving the goal, so as to ensure the realization of the expected bottom-line interests. This practice is still quite rare, in part because many managers have the idea that "at the end of the project, I may not have been working here for a long time.

---- Only technology is impossible to help you achieve your business goals. The success of the ERP project is inseparable from a well-designed and tested business plan. How important is a business plan? We believe that it is important enough to rank it as the top 10.

---- In retrospect to the day that attracted worldwide attention in 1953, New Zealanders Sir edmon Hillary Clinton and Nepalese denjin Norge successfully mounted Mount Everest and became the first group of visitors to the world's highest peak. Does their success give you inspiration and inspiration? They don't rely on novel technologies, but their equipment is actually quite simple. They succeeded because they learned how to succeed to avoid fatal mistakes from the failure of the mountain pioneers.

---- Successful implementation of the ERP project may not be comparable to the world's first peak, but its failure will bring a terrible blow to the company's business. Please learn to avoid the above 10 mistakes and make your ERP project smooth.