What Goes Wrong with ERP Implementations?

Ann All

Not long ago, I likened ERP to the crazy relative that disrupts family gatherings. You know the guy I mean. He's the one who pick ups a woman in the checkout lane and turns up the next day in a police station two counties away when sent to the store with a $20 bill to get whipped cream for the Thanksgiving pumpkin pie.

 

Like that guy, one of the few predictable things about ERP systems is the regularity with which they fail to meet expectations. According to an often-cited Panorama Consulting Group study, 93 percent of ERP projects take longer than expected, 59 percent of ERP projects exceed original budget expectations and just 21 percent of companies report receiving 50 percent or more of ERP's projected benefits.

 

ERP is like that relative in another way. Folks expend a lot of time and effort trying to figure out what went wrong in the hopes that some day this analysis can be used to help make it better. Keeping that in mind, I like this silicon.com piece in which several analysts weigh in with their opinions on some of the biggest stumbling blocks for ERP projects.

 

One big issue is ERP's complexity. ERP systems tend to encompass lots of users scattered throughout an organization, which creates "a lot of distributed responsibility," says Christian Hestermann, research director for ERP at Gartner. Other issues:

  • ERP projects tend to require major changes in business processes, with folks gaining new duties and responsibilities.
  • It can be a challenge to find consultants or other experts that have experience leading large ERP implementations. If you do, they'll charge a premium for their services.
  • Due to project length and complexity, requirements often change.
  • Data from multiple internal and external sources must be integrated into the system. According to a survey conducted by software provider GXS, 34 percent of data in ERP systems originates outside the enterprise.

 

As you can tell from the list, troubles arise more from people and process than technology. The money quote from Gartner's Hestermann:

It's more things like poor planning, unclear responsibilities, people pointing at each other. These implementations look like a technology project but it's much a business and people kind of thing.

What can you do to keep that cousin's mind on the pie, or users' eyes on the ERP prize? Much of the advice in the article seems fairly obvious, such as ensuring you have management buy-in and clearly defining your objectives. My favorite tip, from Ovum Butler Group analyst Angela Eager, is to take an incremental rather than a big-bang approach to implementation. I shared some more good advice on ERP gleaned from a project at Peet's Coffee and Tea in a post earlier this month.

 

Editor's Note -- Due to repeated violations of our terms of service, we have turned off the Comments feature on this post. Regrets to our readers who have contributed constructively to the conversation.



Add Comment      Leave a comment on this blog post
Sep 30, 2009 1:28 AM Proamerica Proamerica  says:

Did you trip on the step of the short bus when you were young?

You're shilling for India. I hope they paid you quite well for your anti-American stance. Indian H1b's are the bane of the civilized world It is the most racist country in the world and people like you are trying your best to bring their culture to this country. Hundreds of thousands of American IT workers are unemployed and; yet, thousands of 22 year old H1's are brought into theis country with a college degree and 5 years experience.

A pox on you!

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Sep 30, 2009 3:29 AM debug debug  says:

What racists comments?  The main reason for failed ERP implementations are because of the fake qualifications of consultants.  Sad to say many of them are Indian.  Companies then hire small consulting implementation partners which in turn hire H1-b consultants. 

Ann, that is a fact, and you cannot turn it around by deleting comments.

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Sep 30, 2009 6:15 AM Fired by an Indian Fired by an Indian  says: in response to Ann All

Unemployed in Detroit  says:

Indians prefer to travel to the US and study at US universities because we have a superior education system. It is a myth that India "invests" in their education system; in reality Indians have to come to the US to get training in skills that are not present in the Indian education system. More proof of that is obtained from reading stories about the H-1B program where Americans have had to train Indian IT workers because they did not have the qualifications for the temporary positions they obtained, many times obtained through the use of fake resumes and fraudulent qualifications. The myth of the "educated Indian" is, as has been stated many time before, nothing more than a propaganda smokescreen meant to cover over the fact that the real reason Indians are bought into the US is to pay them wages lower than their American counterparts.

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Sep 30, 2009 9:42 AM Ann All Ann All  says:

All comments on this post were removed, as we will not tolerate racial slurs on this site. We are open to reasonable discourse. We are not open to insults and profanity. Discussion of H-1B visas, outsourcing and other issues are obviously relevant to IT, so we welcome discussion. But only if it's respectful  .

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Sep 30, 2009 9:56 AM tunnel rat tunnel rat  says:

"Ann All" is a shill for India, Inc. and needs to STFU.  We American techies have had enough of people like her throwing us under the bus.

The only racists here are the Indians that are trying to take over the whole I.T. industry, with the help of collaborators like this skank.

Reply
Sep 30, 2009 11:05 AM sanjay sanjay  says: in response to Ann All

Respectful my a$$.  India Inc thugs' denigration, discrimination, and displacement to American workers on American soil are outrageous.  If you are respectful to the thugs, you are one of them. 

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Oct 3, 2009 10:15 AM Street Smart ERP Blogger Street Smart ERP Blogger  says: in response to Fired by an Indian

Back to the real topic...ERP fails because of the lack of internal project ownership and relying too heavily of outside consultants and software vendors. Organizations simply need to get more ERP Street Smart with project managment insight that can be understood and acted upon by the non-ERP professional.

http://it.toolbox.com/blogs/street-smart-erp

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