Large-scale Enterprise Resource Planning (ERP) implementation projects are notoriously, almost legendarily, awful for all involved—except maybe for the vendors selling them. What is it about ERPs that cause so much consternation? We’ll address this shortly; the real question is: Is the massive data do-over of a traditional ERP implementation really necessary for your company?
You may automatically respond, “Yes, of course!” Data is the currency, language, and marker of success in a business landscape where digitizing everything has become de rigueur. The promise of overarching, traditional ERPs is also their problem: They try/claim to “solve everything” by tearing down all your inefficient, hard-to-access, and non-communicating data systems; they rebuild everything from the ground up.
Traditional ERPs are too often built atop poor underlying data architecture; this tends to make them bloated and inefficient from the get-go—and making small changes within them requires huge efforts. Further, traditional ERP vendors may promise much more than they can deliver, especially if their ERP design is based on a company’s poor scoping around what’s required and why.
For over a decade, we at 3AG have been helping organizations pull insights from their data systems, including ERPs. In our experience, ERPs don’t usually become the master program running all other data systems they may be presented as. Too often, people end up using ERPs as just one of several data systems; and the longer an ERP is present (ERPs typically live in a company for a decade), the more likely this is to occur. The result? A lot of time, disruption, money, and frustration spent on a solution that doesn’t do what it’s supposed to do—make data access and analysis easier and more accurate.
What contributes to this miserable experience? At 3AG, we see 4 common issues associated with traditional, large-scale ERP implementation:
- Applying ERPs to systems that don’t require them
- Poorly planned outcomes with no clear goal in mind
- Insufficient project management and resources
- Lack of training
1. Applying ERPs to systems that don’t require them
Organizations most often consider ERP implementation when their operations are struggling with
- planning issues
- data silos
- reporting delays
- reporting quality
- too much or too little inventory
Companies unhappy with their current data systems become convinced their reporting, integration, or efficiency problems arise from the software they are using. Hoping to solve such problems, they embark on a large, risky, and expensive ERP replacement project.
Yet, a simple tune-up of their current system, or a small add-on application like a better reporting system or employee portal, would address the problem at a fraction of the cost. Even reimplementing the same software can be less costly than switching to another software solution and vendor.
Before discussing ERP implementation with potential suppliers, ask these questions: What specifically is your company looking to achieve with an ERP project? Are you looking to simplify integration between systems? Automate? Improve reporting?
If you don’t know exactly what staff will use a new ERP to do, you won’t know if you can do that until implementation is complete—which might be too late. Simplifying and specifying project goal(s), and/or restricting scope are critical for ERP implementation success.
2. Poorly planned outcomes with no clear goal in mind
One of the many risks associated with a big engineering project promising to solve all your problems—besides disruption, going over budget, and data loss, to name just a few—is you begin visualizing how easy life will be with all corporate problems solved. With your guard lowered, you may not spend nearly enough time doing critical analysis to determine exactly how they will get solved.
Vendors have an easy solution to this problem—just add more features and use cases to the implementation, as needed. This is such a common type of “scope creep” that it has its own name: kitchen sink syndrome (not to be confused with KISS). This occurs when project managers, afraid of saying no, allow the explicit (or implicit) introduction of new features to a project, regardless of usefulness. This is both expansive and ironic as the original point of adopting a new ERP system is to not have to deal with a corporate data system totally disorganized and overfull with basically everything but the kitchen sink.
If a project team and its executive sponsors haven’t properly fleshed out the specific goals for a project and explicitly identified how specific issues will be addressed, there will be a gap between expectations and results. (Having an executive overseeing, but not really managing, an implementation project may look good on paper or for political reasons; however, executive sponsors are only rarely qualified to provide the kind of deep understanding and attention ERP implementations require to succeed).
Tight scoping is key to any ERP implementation worth its salt (and company money). A properly defined scope not only increases the likelihood of successful project completion, but it also ensures the work will be performed at the agreed upon price. German discount grocer Lidl infamously ended up canceling a 7-year project after sinking over €500 million into it. One of the issues, according to Lidl leader Jesper Hoyer, was that “the strategic goals as originally defined were not possible at an acceptable expense.” This is an unfortunately common scenario with enterprise-wide, traditional ERPs.
A more sinister possibility is that companies contract with ERP vendors who, happily or unknowingly, take advantage of people exhibiting the human tendency to skip details on topics they’re not experts in. With all the moving pieces involved in ERP implementation, and a wide range of departments and individuals affected, some or all employees won’t explain everything they need from an ERP; software vendors, either careless or amoral, may take advantage of this by neglecting to demand more specific guidelines.
A vaguely scoped project to which everyone agrees (while silently filling ins in the blanks with what they want to see) is too easy to sign up for. Debating every possible feature of an ERP will not be enjoyable, which is part of why this happens; but it will be even less enjoyable for everyone later, when the ERP doesn’t perform the way everyone imagines it will.
3. Insufficient project management and resources
Those involved in executing an ERP project will do almost anything to maintain momentum. Given how complicated traditional, all-encompassing ERP implementation can be, especially when it’s not going smoothly, this will be a tough slog.
Many companies try to manage this unmanageability by making ERP projects a part-time responsibility, particularly when oversight comprises executive sponsorship. This can be a huge mistake, especially if the person responsible is isn’t knowledgeable about this space or has never successfully launched such a project.
Driving a complicated project forward requires careful balance between seeing the big picture and relentlessly focusing on small details. Particularly when a project or any of its supporting tools encounter an obstacle, someone at your company needs to be both qualified and willing to mediate and/or make difficult decisions.
Having stakeholders present from teams using the final product is also critical. Since ERPs affect finance, account, and operations processes, end users and future administrators should be included not only in requirements gathering, but also in project execution and final testing.
4. Lack of training
If your organization survives the hype, scoping, and execution of a massive, old-school ERP project, the employees involved may try to move as far away as possible from this career sinkhole. This is not just personal exhaustion: Any association with such a large-scale project unlikely to meet either executive or frontline expectations can feel like a millstone around an aspiring executive’s neck. Upwardly mobile subordinates, involved or not in the ERP implementation, will also probably be aware of ERP difficulties and try to avoid involvement in future projects of similar size and nature.
It’s at this stage that an ERP project’s success or failure will be determined. If the team using the final product isn’t properly trained to use the tool, there’s no possibility of the system living up to its promise. Most ERPs are neither simple nor intuitive to use, which means users require extensive training to understand how to enter and extract data properly.
Scale also becomes a major issue at the end of the implementation process: Because most major ERP systems affect many people from various departments, the impact of replacing a tool so many teams use will be particularly painful, if they all can’t use it properly.
Since most ERP implementations manage to touch so many departments and are effectively core to underlying corporate business processes, if even a few employees reject the tool, they could trigger a mass withdrawal. In other words, losing your frontline for an ERP project may kill not just the ERP, but also result in extensive, company-wide damage.
Why even bother with an ERP?
It’s a good question. Perhaps a better question is, why would anyone bother with a traditional ERP implementation? It’s an overly hyped, bloated piece of software that requires dedicated resources just to keep implementation, never mind normal day-to-day functions, on track. And if employees aren’t properly trained, organizations that go this route run the risk of losing much more than their original financial and human resource investments.
All this said, if properly scoped and implemented, ERPs can give real-time, strategically useful insight into company operations; they can also identify opportunities for financial and operational efficiency.
At 3AG, we believe in the promise of good ERP implementation. Our issue is with the costs, both upfront and (much more) later, companies pay to achieve this. The fact that no one ever seems happy about having to do a complicated, confusing, long-term, and disruptive ERP implementation speaks volumes for the experience—and too often the underwhelming benefits accrued post-implementation.
3AG approaches ERP implementation in a modern, non-intrusive, efficient, and effective way. We pare ERP down to its core functionality to meet your company’s particular requirements (e.g., managing organizational operations, inventory, or whatever you need most to happen with your data); then we deliver a service that’s quickly integrated and easy to make changes to. If you don’t have a tight value proposition associated with corporate ERP implementation, we’ll help you define its very specific parameters before we start building anything.
ERP projects only really work when they’re custom-designed and custom-built; one-size-fits-all ERP implementations are like one-size-fits-all suits bought off the rack: they’re uncomfortable to wear, don’t look good, and reflect poorly on the seller. 3AG will help you define and adopt an ERP solution as unique as your organization.