ERP implementations are seldom straight forward but here is how to avoid underestimating the ERP project challenges…
Budget and schedule slippages seem to be an endemic problem across all types of ERP implementation. A report last year by Panorama Consulting Solutions surveyed 172 companies of all sizes and showed that 53 percent of their ERP projects had run over budget and 61 percent ran over deadline. This is just part of a pattern of persistently high overrun rates in the last few years.
|
Year |
% of cost overruns |
% of duration overruns |
|
2012 |
53% |
61% |
|
2011 |
56% |
54% |
|
2010 |
74% |
61% |
Being late and over budget is an all-to-common aspect of ERP implementations today, but with a good dose of prior planning and common sense, failure can be avoided.
Firstly, consider the entire environment. An ERP implementation isn’t just a technical initiative; there are significant political, financial, emotional, structural, strategic, process and people-centric implications of such a project within an organisation. You need to consider how such a major change will affect the established systems within your company. For example, some departments may already have their own procedures that they are comfortable with and may not support an ERP system implementation. Such a lack of enthusiasm can easily translate into budget and schedule slippages, so getting buy-in from key stakeholders is absolutely essential for success. But be warned: do not mistake enthusiasm for ability. Successful adoption of the new system will only be assured once employees are able to use the system proficiently. Only professional training can guarantee that.
Secondly, you will find that customisation is key. A common mistake is to buy a well-known ERP product because its name makes you feel ‘safe’ and then try to make it fit your requirements. Don’t. You will do better to analyse your specific requirements in as much detail as possible first, and then find a suitable product using a fit-gap analysis. Don’t forget to factor in regulations such as the Sarbanes-Oxley, HIPAA and Frank-Dodd etc. It’s always better to customise your chosen product to meet industry and regulatory requirements than hope that off-the-shelf products will dot the ‘I’s and cross the ‘T’s.
Finally, be realistic. If the budget and schedule are unrealistic in the first place, overruns will be a given. Implementations rolled out in companies of similar size and complexity to yours are a good guideline for determining your project’s deadlines and projected costing. Remember, however, each company has its own requirements (and problems), so use examples from other companies in conjunction with the advice provided by your IT partner, your research and your in-house expertise, to determine the final budget and timeline.
