What are the Causes of ERP Implementation Failure?
20 May, 2021 by
What are the Causes of ERP Implementation Failure?

What are the Causes & Reasons of ERP Implementation Failure?

ERP Implementation is a game-changer for enterprises, but unfortunately, it fails due to various  causes & reasons. Some of them are. 

Technically Focused Plan

Poorly Defined Objectives

Imperfect Project Management

Under Defined and Hidden Costs

Hiring Non-competitive Resources

Poor Team Communication

Fear of Change

When ERP implementation fails, businesses try to find the answer to the question, “Whose fault is it?” instead of answering, “What was the root cause of ERP implementation failure in my business?”

Here, we will discuss what problems are associated with ERP implementation that causes its failure and ways to prevent it - Read on to find out.

7 Reasons for ERP Implementation Failure

ERP systems don’t fail in the designing phase or due to functionality. Most of the time, it falls into the implementation process. Here are the six reasons that cause an ERP system to fail during implementation.

Technically Focused Plan

The moment you shift focus from business to technicalities, you put the ERP implementation at risk. Successful resource planning consultants try to meet business needs, not the technical ones. 

ERP systems are not random few GBs of software that has no impact on business efficiency. It will revolutionize the business’s strategy, way of working, and employee efficiency.

But if ERP software centers around the technical aspects, business goals will be compromised. Stop worrying about technology and automation. Think about the employees who will be using this software throughout their working schedule so they can benefit the most from it.

Poorly Defined Objectives

ERP software won’t magically solve all of your business problems - Although it might fix most with time if its scalable, some of them have nothing to do with ERP software in actuality.

Every business needs improvements in different areas and has specific technical requirements, and that’s entirely okay. When contacting ERP vendors, have clear business goals in your mind and ask a few questions yourself.

What is my business trying to accomplish?

What are my business’s measures of success?

In what areas ERP can help my business?

Here are a few examples of the areas where you might need improvement.

Smooth workflows

Automated lead generation

Useful business analytics

Better service optimization

Improved team working

Fast processing

Improved productivity and efficiency

More data security

Imperfect Project Management

Project management is the backbone of enterprise resource planning success. Without a qualified project manager, ERP implementation will be disastrous.

An ERP project manager will:

Create a realistic timeline for the whole phase

Take notice of the current working system

Minimize the disruptions in the ERP implementation process

Delegate tasks for the specific roles

Ensure proper data migration and integration

Ensure the operations running smoothly

Remember the business goals

Align ERP implementation with the business objectives

Under Defined and Hidden Costs

Few ERP vendors undermine the costs for their interests. Enterprise organizations can’t take into account those expected costs hidden by ERP vendors. Hence, this situation results in ERP implementation failure in the future.

By aggressively optimizing the ERP software with lots of customization and features, you’re making way for more costs to hit you back later. If the ERP software is designed based on your business's critical success factors, it will be realistic and less-challenging to build.

We have seen tons of examples when ERP systems couldn’t survive because of significant hidden costs popping afterward.

Hiring Non-Competitive Resources

Your ERP implementation success relies on the software consultant and ERP vendor. If they’re experienced in your field/domain, they’re more likely to keep you away from risks.

Having previous experiences, an ERP vendor can quickly identify what features and equipment will work for you.

Some vendors won’t have any experience in ERP implementation, but because of excellent marketing skills, they might sell you their product. You have to stick with your business plan and ask the vendor's past experiences to judge if he is the right fit or not.

Poor Team Communication

An ERP implementation process will suffer to the core if there is a lack of communication between the team working on it. The management, developers, employees, vendors, and consultants; should all be on the same page.

Open communication between the ERP implementation members ensures smooth workflow and maximum project transparency. It helps avoid disruptions, rumors, negativity, and misunderstandings during the processes.

There are multiple ways of successful open communication. However, the best is the proper documentation of each step accessible by all the persons involved. The docs will help track the progress of ERP implementation, resulting in fewer chances for failure.

Fear of Change

Fear of change in any organization disrupts the process of evolution. Many enterprises resist change in their working ways, automation systems, and processing methods. 

Your employees might suffer from the same thinking too. They might not be very excited about the fact that your company is trying to get a new ERP system just because they’re used to old fashion.

Therefore, the new system’s benefits should be conveyed to each department using the ERP system. Let them feel secure and comfortable about the change and express how it will help them use less energy to get more results.

What Percentage of ERP Implementations Fail?

A recent analysis found that about 75% of ERP implementations fail to cause huge losses and damages to the bearing companies. But this ratio can be significantly improved by hiring experienced ERP vendors and consultants.

Here are some examples of drastically bad failures of ERP in some industries.

1. HP lost 20% of its orders soon after the new ERP system was put into place.

2. Nike recorded an estimated $100 million loss in sales after implementing the new ERP system.

3. Revlon faced several service disruptions when using the new ERP software.

Final Words - Experience Can Save You from Huge Losses

There is no way through which you can escape the complexities and substantial budget expenses when implementing an ERP system in your business. But an experienced ERP vendor can make things easy and fast-going.

Are you wondering about getting a neutral ERP selection consultancy? Our ERP experts can help you find the right ERP solutions with full customization and business-oriented features.

If you are looking for professional ERP developers in Singapore, feel free to contact us.


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What are the Causes of ERP Implementation Failure?
ODES 20 May, 2021
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