Failure Implementation of ERP PDF

Failure Implementation of ERP SOURCE:HTTP://ERP.ASIA/ERP-FAILURES.ASP Ts. Dr Emelia Akashah 1 Introduction Gartner estimates that 55% to 75% of all projects fail to meet their objectives. Research firm Standish Group published under the title CHAOS, reveal...

Failure Implementation of ERP SOURCE:HTTP://ERP.ASIA/ERP-FAILURES.ASP Ts. Dr Emelia Akashah 1 Introduction Gartner estimates that 55% to 75% of all projects fail to meet their objectives. Research firm Standish Group published under the title CHAOS, reveals some surprising facts. ◦ The CHAOS research and database shows a staggering 31.1% of projects being canceled before completion. ◦ The results also illustrate 52.7% of projects cost 189% of their original estimates. 2 TOP ERP IMPLEMENTATION FAILURE FACTORS 1. Failed cross-representation agreement on enterprise wide business processes. ◦ For a common IS to work across the organization, all users across the organization must adopt, adhere and support common work methods supported by the application. ◦ Any department or line of business which chooses not to conform, emphasize politics over process or engages in sub-optimization will become the weak link that will ultimately break the chain and render the enterprise-wide system ineffective. 3 TOP ERP IMPLEMENTATION FAILURE FACTORS 2. Lack of visible, vocal and meaningful executive sponsorship. ◦ Executive sponsors must visibly, vocally and actively demonstrate leadership, commitment to the project and support of project team members at every possible point ◦ They must quickly intervene to resolve obstacles and champion the projects forward movement. 4  TOP ERP IMPLEMENTATION FAILURE FACTORS 3. Lack of formal and disciplined project management. ◦Experienced project managers leverage their skills, their experience and a proven project management discipline in order to advance projects according to plan and toward predicted success. 5 TOP ERP IMPLEMENTATION FAILURE FACTORS 6. Project team turn-over of key staff. ◦ Losing an executive sponsor or project manager can delay a project’s progress. ◦ Losing these roles multiple times or substituting lost roles with less capable replacements can dramatically increase risk and wreck havoc on the project. 6 TOP ERP IMPLEMENTATION FAILURE FACTORS 7. Inability to identify and mitigate risks or remedy incidents which ultimately escalate. ◦ Project risks and red flags generally occur throughout the project, however, if the project manager or project team don’t recognize or act upon these issues until late in the project the obstacles often compound and become even more difficult to resolve. 7 TOP ERP IMPLEMENTATION FAILURE FACTORS 9. Insufficient training. ◦ Implementation project teams and external consultants are famous for short-changing user training. ◦ It’s also common that during cost cutting sessions, training is one of the first things to go. ◦ Training is essential to leverage the system capabilities and realize the benefits. ◦ Training updates are advised after each new version upgrade. 8 TOP ERP IMPLEMENTATION FAILURE FACTORS 10. Troubled user adoption. ◦ Getting users to accept a new system can be a big challenge. ◦ Eg anxiety associated with change, unfamiliarity for the new system and nervousness ◦ Not only do many users fear change in and of itself, but more often than not the new system hasn’t had the years of tuning to mature like the prior system so users sometimes feel as though they are initially taking a step backward. ◦ Proactive change management can address user adoption challenges. 9 TOP ERP IMPLEMENTATION FAILURE FACTORS 11. Too much software customization. ◦ To many companies, the ERP software is viewed as too rigid or restrictive. ◦ Responding to a lack of perceived flexibility by customizing the software before fully investigating re-configuration options, business process work-arounds or an interim period of trial before committing to customization can violate the integrity of the software, delay project progress, lead to excessive costs and impose significant risk to project success. 10 TOP ERP IMPLEMENTATION FAILURE FACTORS 12. Project viewed as an “IT” project. ◦ Business system implementations should be spearheaded and driven by business leaders. ◦ While IT resources are clearly key participants, ERP systems should not be viewed as IT projects. 11 TOP ERP IMPLEMENTATION FAILURE FACTORS 13. While not a main cause for project failure, dirty data is a common cause for project delays. ◦ Most organization’s do not schedule sufficient time for data cleaning and are not aware of their poor data quality until they retrieve that data for import into the new system. ◦ This is a delay that occurs near the beginning of the implementation project, often lies on a critical path and therefore often pushes back all other tasks for the remainder of the project. 12 Early Warning Signals ERP software implementation failures do not occur without warning. Here is a list of red flags that can act as a wake-up call if recognized early. ◦ No milestones. ◦ Key implementation deliverables and milestones are needed to measure progress, identify stalls and ensure a smooth conclusion. A lack of checkpoints with periodic deliverables is a sign of future trouble. ◦ Missed milestone and deadlines. ◦ Project deadlines can slip for many reasons, such as staff turnover or unforeseen events. However, a team that repeatedly misses its deadlines exhibits a lack of discipline which dramatically increases project risk. 13 Early Warning Signals Here is a list of red flags that can act as a wake-up call if recognized early. ◦ Shifting priorities and specifications. ◦ Scope creep and shifting requirements will affect the project's timeframe, cost and risk. ◦ Infrequent or weak executive sponsorship. ◦ Employees take their cues from the leaders of the company. If the organization’s leaders haven’t demonstrated the project is a priority, it isn’t a priority and user adoption will be extremely difficult. 14 Early Warning Signals Here is a list of red flags that can act as a wake-up call if recognized early. ◦ Staff turnover. ◦ While some project team turnover may be unavoidable, repeated or constant turnover can cause doom for the project. ◦ Poor incident management and spotty reporting. ◦ The inability to recognize and resolve issues or an absence of management reporting tools almost guarantees that problems are not being reported or are not being communicated to the extended project team. 15 Mitigation Plan 1. Clarify Your Business/digital Strategy All stakeholders should be involved in this process, including executives and department managers. Everyone should fully understand two key points: 1.Your business objectives 2.How a new ERP system can support these objectives 16 Mitigation Plan 2. Set Realistic Expectations make realistic estimates based on your organization’s unique situation. May start by conducting industry benchmarks. How are others in your domain/business meet their enterprise software needs? What types of solutions are they investing in? How much money are they spending What are their average turnaround times? While every business is unique, this data can be used to mitigate the risk of unforeseen cost and budget overruns. 17 Mitigation Plan 3. Prioritize Organizational Change Management Org needs to address change resistance early by helping employees understand and adapt to the change (aka organizational change management ). change management plan includes nature of the change and the reason behind it has various organizational assessments. Ignoring this change resistance can lead to: Implementation delays Quality issues Decreased productivity 18 Mitigation Plan 4. Optimize Your Business Processes Eg : Identify which workflows are frustrating your employees and hindering their productivity ◦ Inefficient processes should not be automated without first being improved. Start mapping the existing workflows while outlining how information travels from one department to the next and the resources required to facilitate this movement. Then, determine where any pain points exist and map a more optimized future state. It’s important to conduct business process reengineering or improvement to evaluate solutions based on org’s future state. This reduces the risk of needing to perform costly, labor-intensive customizations to make the implemented solution works. 19 Mitigation Plan 5. Prepare for Data Migration Data migration is a critical step of ERP implementation. Org might not move all data to the new platform, but must ensure that the data is clean, reliable, and actionable. Most business leaders will find that their legacy data is nowhere near ready to be moved. it’s spread across multiple locations where it’s stored in various structures and formats. Create a data strategy defining how you will manage the data that currently exists in your organization. How will you cleanse data to resolve duplications and other quality issues? What nomenclature will you use to define items, item descriptions, and units of measure? Data owners The functional team The data migration team The ERP project team 20 Mitigation Plan 6. Be Cautious With Customization Software customizations can add significant time and costly Ideally, avoid customization altogether, but if there is a change request, be sure to only approve it if it will add real value to the organization. Establishing strong project governance provides the foundation for responding to change requests whether they involve customization or simply configuration. 21 Don’t forget to do the pre-class activity  22