So maybe not of “all-time,” but certainly close. If you are considering one of the top ERP systems in the market, you will want to learn from the mistakes of others.
Listed below are 5 actual case-studies of enterprise software selections gone wrong and examples of how NOT to select your ERP, CRM, HCM or any other form of enterprise software:
1. SAP all-the-way
A mid-size home goods manufacturer with roughly a hundred employees had brought on a new CFO to help manage their finances as they were launching new product lines and navigating new markets. In order to accurately track metrics across these changing dimensions the CFO proposed a new ERP system would be needed. He had recently come from a multibillion-dollar company that had been using SAP, and was convinced SAP would do the trick here, as well.
This was not the case. The company ended up purchasing SAP Business One simply because they couldn’t afford ECC. The system never worked as intended as it was not designed for their particular needs and they ended tying in a mess of siloed sub systems. Though their ERP failure was not the only reason, it is worth noting that they are no longer in business. Bringing executives on-board who have prior ERP background can be extremely helpful, but be careful in navigating personal experience and bias.
2. Year-end “Shelfware” Discount
Anyone considering new software near the end of the year has certainly heard the pitch for “year-end” discounts. This is certainly worth looking at if you are ready to purchase a particular software, but definitely not worth forcing a software purchase if you are not ready.
Years ago, we had begun talking to a process manufacturer about helping them with an ERP software selection. This was mid-December and they stated that they would like our help and would touch base at the beginning of the year to get started. We received a call on January 2 stating they had received an offer from a particular vendor that “they could not pass up” and had signed a contract on December 31. They were excited with their purchase and ready to implement.
Fast forward 3 years and we received a call that they still had not implemented the software and needed help. Yes, 3 years later and they were still sitting on their shelfware. They now questioned if they even had the right software to begin with, they were several releases behind and still paying for it. In addition, the software they had purchased did not even run on a calendar-end fiscal year.
3. “Yes, absolutely” said the software vendor
If you understand nothing else when selecting software, understand that software vendors are incented to say “yes.” Very few will flat out lie to you, however, if there is any possibility of a “yes” you will get a “yes.” So is the case for a small commercial products distributor. Years ago, their sales team had purchased a well-known CRM solution as they did not have CRM functionality in their legacy ERP. It was a bit overkill, but was a good system and did what they needed.
The company continued to grow and a few years later determined the need to implement a new ERP. Instead of going through a proper selection, they reached out to their CRM provider for advice. Well, as expected, their provider had the perfect solution for them. They had a recently integrated an “ERP” platform that according to them would work perfectly. The solution was purchased, implemented and never really worked. It required excess customization and struggled with financials. A couple years later they decided it was again time to select a new ERP.
4. The Easy Fix
Eric Kimberling recently blogged about the LeasePlan SAP Failure. While improper selection is often an issue with most of the massive ERP failures, it is rarely the core issue. In LeasePlan’s case, however, an improper section drove LeasePlan’s implementation into the ground. LeasePlan was somehow sold on the idea that SAP S/4HANA could seamlessly integrate functionality across 35 different systems into one.
Additionally, SAP did not really align with their industry specifics or business model. We see it often when a company runs to the Tier 1 space hoping for an “easy fix”. Regardless of your size or industry, a company needs a proper software selection when targeting a significant digital transformation.
5. Anyone can, but not everyone should select software
Our final contender for the worst software selection is a case where an unsuspecting company hired an “independent” consultant group to select a software for them. We usually recommend this approach, but make certain your consultant is independent. In this particular case, it was later learned that the consultant was not independent.
The client was a small manufacturer of medical devices. They were moving into their first real ERP system and had no established processes or understanding of what they were doing. The product selected for them was Microsoft Dynamics AX.
While a very strong and robust system, AX is not the first system that comes to mind for medical device manufacturing, and definitely not generally a recommended system for smaller, less technically experienced companies. As the system is very flexible, it is also not recommended for a company that has not yet thoroughly defined its processes. (For more on this topic, see our recent article about Microsoft Dynamics implementation readiness).
To top it off, the success of a Microsoft Dynamics implementation is dependent on the capabilities of the implementation partner. There are Microsoft Dynamics systems integrators who have expertise in the medical device arena, but the firm that was recommended did not bring such expertise. Needless to say, the project was an absolute failure from the start and is a strong case study for finding a truly independent ERP consulting firm to handle your software selection.
Lessons from these ERP software selection mistakes
There are a number of lessons to be learned from these ERP software selection mistakes. It is important to have independent, objective, and big-picture advise to help guide your evaluation process. Contact us to discuss how to jumpstart your ERP evaluation process – we are 100% technology-agnostic ERP experts who are happy to help!