6 Reasons For ERP Failure (And How To Avoid It)

The ERP application is essential for large and small-size companies. We can say that it is the backbone of a company. Many ERP implementation failures are responsible for massive losses that can lead to the complete sinking of companies.

Many companies offer ERP software in the market, but the most popular ERP software includes SAP, NetSuite, and Microsoft Dynamic. The basic ERP implementation failure reasons are poor planning and lack of coordination. Excellent planning and coordination can be the best way to build well-maintained software to be implemented. If a company succeeds in implementing ERP software in the best possible way, it makes the business much easier and at, the same time, saves a lot of time.

The most common reasons in which ERP software suffers from failure are misalignment of technology, and business objectives that lead to ERP software can’t work properly and becoming useless.

Altamira is going to tell you about the reasons that cause ERP software to fail in an organization and how to avoid them.

The set of points we are going to discuss in this article:

• Implementation of ERP software
• Strategy
• Technical team
• Size and scope
• Alignment
• Change Management Strategy

IMPLEMENTATION OF ERP SOFTWARE

Reason of failure

Implementation of ERP software in an organization is an important task for any IT project management company. However, it has been observed that in most of the cases in which custom ERP software is being implemented, the project owner does not provide basic data and resources, which leads to ERP system failure.

How to avoid it?

The implementation of the ERP system may require hardware components, dedicated servers, and cooling systems as per project requirements. Software and its licenses are also very significant for the implementation of ERP software. For the successful implementation of custom ERP software, basic data and resources must be provided by project owners.

STRATEGY

Reason of failure

One of the main reasons for the failure of the ERP system is the lack of strategy. In addition, not being aware of the risks which your organization may face regarding ERP software. It can lead to failure in the application of the ERP system. These failures can occur anywhere, anytime. These failures can even arise when you are processing sensitive business.

How to avoid it?

It is important to formulate a strategy with proper planning before implementing the ERP software. Develop rules and roadmaps and choose the necessary components for the implementation of the ERP software. Apart from this, the IT and business strategies of the industry should also be taken into consideration while formulating the ERP strategy.

TECHNICAL TEAM

Reason for failure

One of the common misconceptions about the failure of the ERP software application is that it lacks experienced professionals. Many businesses fail to implement custom ERP software simply because they do not have a technical team that can manage the risk of how to handle it if something goes unexpected.

How to avoid it?

It requires that you have a technical team that can manage the risk and not let the loss of changes affect your organization. The technical team is also significant for the big decisions that can be made when a worse situation arises and the most important questions can be answered. Project Managers, End Users, Core Members, and Implementation Partners play a vital role in the implementation of custom ERP software.

SCOPE AND SIZE

Reason of failure

One of the main reasons for ERP systems’ failure is that companies are not aware of their size and scope from the beginning of the project, which results from they don’t secure enough budget for the implementation of ERP software.

How to avoid it?

Before implementing ERP software, you must know the size and scope of your business from the beginning so that you can set a reasonable budget for the implementation of ERP software and such timelines. Choose the ones that are closest to reality.

ALIGNMENT

Reason of failure

One of the main reasons for the failure of ERP software is improper alignment. This is because if your IT project team does not know how to align the off-the-shelf software package with the business process, they will miss-align the ERP software, which can lead to failure.

How to avoid it?

For the ERP system to be aligned optimally, it must be aligned with the business process, and its implementation must test that its works properly with the business process. In addition, before the project is rolled out, it is important to change the management and provide regular training to the employees.

CHANGE MANAGEMENT STRATEGY

Reason of failure

If you are going to implement an ERP system in your company, but you have not yet made any plans to change the management, your ERP system may fail.

How to avoid it?

To implement the ERP system, it is important to develop a management change plan and inform vendors, suppliers, and customers so that they are aware that you have incorporated it into your supply chain management system. Significant changes have taken place.

 
Summing up

ERP implementation is very complex, but with complete planning, good strategy, and vision, it can be transformed into a successful project. To avoid failure in the custom ERP software implementation, it is important to check the system requirements and assess the availability of adequate funds before starting the project. For the implementation of an ERP system, it is necessary to select a leader who is experienced in the implementation of an ERP system and can provide realistic timelines for the project. Implementation partners also play a key role in the success of the ERP system, so such partners must be selected to be the right ones.