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6 Common ERP Pitfalls

        posted by , April 09, 2011

It seems like every year there is a fresh batch of high profile ERP failures. When ERP projects fail they fail big — often resulting in a pink slip for the CIO.

This does not mean that ERP is a bad idea — it just means that people are bad at managing ERP implementation projects.

Here are a few pitfalls to avoid.

7. Optimistic business case

Your ERP initiative needs to start with a few simple questions:

Do we really need an ERP?
Will the ERP investment pay off?
Do ERP rewards outweigh the risks?
Are we capable of implementing a ERP?

ERP business cases should understate benefits and overstate risks. There is no room for bright-eyed and bushy-tailed ERP business cases.

Business cases based on the flowery promises of ERP vendors is where ERP failure begins.

6. Lack of user engagement

Ultimately, your ERP's success depends on one thing: user acceptance.

People don't like change. Don't underestimate the ability of your users to derail your ERP project.

Communication, relationship building and training are all key to user acceptance. Involve users early and frequently. All users need to feel engaged and counted.

5. Lack of insight into your own architecture

ERP implementation is all about data and business architecture. Understand your enterprise architecture inside out before you even think about ERP.

4. Skin in the game

ERP implementation is first and foremost a business transformation project.

Executives need to make sure that business teams and key individuals are given performance targets that will drive the success of the ERP. Incentivize ERP success for both IT and business contributors and measure performance.

3. The big bang approach

ERP licences represent a significant capital investment. The pressure to utilize this capital leads to ugly big projects.

Consider licensing your ERP bit by bit. It is often possible to licence ERP components one by one.

As a rule of thumb you want to give yourself 5 years to implement a complete ERP solution. If you can minimize up-front capital spending there will be less reason to rush to failure.

2. Clinging to legacy processes

In your business case you probably said that you want to leverage the best practice processes provided by the ERP vendor. So leverage them.

Often business teams want to customize the ERP to support legacy processes — don't let them do it.

1. Try something new

It is common knowledge that ERP projects often fail — it is time for a new approach. ERP projects are typically big waterfall projects focused on IT. This approach is broken.

Consider a agile approach focused on business transformation.

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