How Does ERP Go So Wrong? The Early Warning Signs

Written By: Wayne Holtham
Date: June 25, 2021

Digital transformations are one of the more extensive projects a company can take on. From the time, energy, and money that goes into these projects, there is a lot of pressure on the core project team to deliver a successful ERP Implementation. Companies bring in experts from the field, from the system integrator to third-party consultants, to help them steer the ship. They pour ample amounts of resources into delivering a final product. Yet, even with these resources and efforts poured in, a majority of companies don’t fully reap the benefits once it’s all said and done. Many even deem their project as a full-on failure.

The biggest challenge is being able to identify when the project is at risk of deviating outside of the guardrails in real-time. In an ideal world, you would be able to course-correct as the warning signs show themselves. Let’s cover the most common early warning signs of ERP failure.

Becoming too reliant on your partners

Oftentimes, companies put too much trust in their partners and find themselves nearly dependent on their recommendations. Being too reliant on your partners, whether it’s your system integrator or alike, can pose one of the biggest risks to your digital transformation project. Why?

Well, they don’t know you as you know you. The ins and outs of your processes, the company culture - these are all elements of your company that are unique to you. Yes, of course, they can do their due diligence and learn about your business, and they all will. However, they don’t have the same skin in the game as you do. Although your partners may provide interesting insights and help share helpful context when making a decision, your internal team needs to be the one behind the steering wheel.

Keep your partners in a supporting role. They should be there to provide new angles, new perspectives, and spark ideas you may not have thought of yet. They should not be the ones making decisions on your behalf.

The other big risk you run in giving them that much control is opening the door for biases and skewed influences that would guide your project. By putting too much weight on their suggestions, you run the risk of making decisions that are outside of your own best interest. System integrators are typically compensated for suggesting certain add ons and software improvements, and they also get paid the longer they are on a project. Your loss in project overruns is their gain. Take off the rose-colored glasses and own your project.

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Failure to plan

Another big red flag in a digital transformation project is the lack of a detailed, integrated project plan. Everything from data migration to organizational change management should be well thought out well in advance.

Without an intricate digital transformation strategy, you’re missing the point of reference that could help guide decisions and ultimately, the delivery of your project. It’s not something that should be done at the beginning of the project, it should be done before the project even begins. If you are even 6-8 weeks into your project and you still don’t have a project plan, you may be in trouble.

Unrealistic expectations

Expectations play a huge role in the success of a digital transformation, and it comes into play in various ways.

The first and most important element that you need to address is the expectations of the core project team. System integration is a lot of work, and there are a lot of moving parts. It could very quickly take over someone’s day to day depending on that person’s role. It’s important to ensure the project team understands how much time and energy it will take to successfully reach the finish line.

The next expectation that needs to be managed is that set by the system integrator. When a software salesman comes into the room, they are going to sell you their software. They often avoid discussing the downfalls of their software, they sometimes brush over just how much customizations will cost, and they will do what they can to get your team excited about the software.

Make sure to ask the right questions during the software evaluation process and get a good grasp of what it will take to get the results you need with the prospective software. No one wants to end up at point C when they were targeting point A.

How’s your project doing?

If you would like to explore a project health check or would like guidance on how to properly plan for your upcoming digital transformation, feel free to reach out to me. I am always happy to be an informal sounding board for your efforts.

Wayne Holtham
With strong background in the functional application of efficient process and systems alignment and over 35 years of management and consulting experience, Wayne is able to both define the feasibility and impact of transformation benefits to the bottom line as well as justify a technology initiative through value and benefits realisation.
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