why do erp systems fail?

Enterprise Resource Planning (ERP) is much talked word in the board room of an organization looking to optimize its resources for a healthier bottom line. In the current business scenario an ERP systems affects every aspect of a company,be it a completely new system from inception to implementation, or some major upgrade. In every case there are a number of common pitfalls that an organization can avoid.

The journey of an ERP implementations implementation always begins with the expectations that their businesses will be transformed along the way, with the implementation of the ERP system. There has been various case studies floating on web, that exemplifies that that majority of organization fail to realize even half of their anticipated business benefits. AS per an research organization, IT Cortex, revealed in their research reports that over 50% of surveyed industries could not meet the expectation as expected post implementation of the ERP system. Implementing an E.R.P. system without following some basic guidelines can seriously damage the balance sheet of an organization due to multiple failures, resulting in excess costs, loss of revenue, and c an even result in loosing some prime customers. The complexity of the system, various risk with integrations and business automation are some of the failure cause of implementing an ERP systems.

Some common reason or Causes that results in Failure of an ERP Systems

Scanty Planning:   A weak foundation of a structure can always have catastrophic instances at any stage of the work. Similarly improper or a wear planning of an ERP system can have a similar effect on an organization eyeing to opt for an ERP system.  Proper planning in a phased manner should be chalked out with prime goal as the objective of the ERP system being implemented in the Organization. The goals and target should always be planned with prime focus on anticipated deviation as business process is prone to change with time and technology. The planning of an ERP system an importance to BPR (Business process Re-engineering) should always be considered while planning a ERP system. The plans should be deeply studied and reviewed before passing the resolution for implementing the ERP system.

Selecting a Right Platform: Selection of a right platform is an major constraint that can be the cause success or failure of ERP systems. Many a time big corporate house do get impressed with high pitched sales team of the major Player of the ERP software easily convince the board members or the higher officials. Selection of platform can be choosing a big names like SAAP or Oracle Applications looking into the brand name established, the management is easily convince if they have a budget that can really dig a hole in their wallet. Other constraints of the platform can the database used, application tools for various development work. Since hardware cost have dramatically decreased over a decade, it has lesses impact on selecting the platforms. Decades back, hardware constraint was considered imposrtant with time the techonlogy has changed with hardware prices falling  so it does not has a major role in deploying a new ERP system. Hardware cost can play an important role if ERP is deployed over web ( most marketing staff call it with the HYPE WORD CLOUD ). The cost and management of web server can be pretty expensive as compared to a LAN or WAN based server and its managements. Selecting an optimum platform for the ERP system is important as post implementation is the maintenance and management of the complete ERP system. So post implementation is like the honeymoon tenure is over and the real life start…

Incompetent Team:  As frequently quoted  “  It’s not the machine but man behind the machine” also applies to the success or failure of ERP system.  The team of professional associated with the development and implementation of an ERP system also plays a major role in writing the success story of an ERP system. The team members should have a through domain knowledge of the system and process flow with some knowledge of the overlapping system. Since ERP is an integrated system the overlapping knowledge is always helpful to avoid the failure of an ERP system. The management should always deploy individual with deep knowledge of system and each team members play an important roles, lack of knowledge by any member will result in total failure of ERP system.

Struggle to accept change: The complete roll out of an ERP system can face a major hurdle like a culture shock. This is one reason that can even result in failure of an ERP system even in the early stages of ERP implementation. The myth among the employees that the new system may jeopardize their job makes them more resistant to accept the new ERP system resulting in failure of the system, even in longer run, despite successful implementation. Educating the employees can always be beneficial for successful ERP implementation. Make the employees more excited about the new system by educating them how the new ERP system can actually reduce their work load and increase their productivity resulting in brighter future of both employees and organization.

Rushing for implementation: Organization have deadlines for ERP implementation. In order to keep the cost down the ERP vendors also quote a deadline (they hardly meet). Many a times these deadlines fail to be meet due to various reasons: like deviation, add on feature request by the users, even the cosmetics changes of user interface, etc. Vendors will never guarantee they can get the implementation done with the days they quote, but press them to be up front with what it really takes to get their system up and running throughout your shop.  This leaves you with buyer’s remorse when you learn you must spend more than you expected in order to fully exploit the software – not to mention the cost of a delayed or failed implementation.

There can be myriad of reason, that can result in failure of ERP Implementation and covering all the reasons and  causes is beyond the scope of this article.