Why ERP Implementations Fail?

If I get a dime each time a NetSuite implementation goes wrong … I know it’s a cliché, but I really think I would be able to afford a nice luxury car! Yes, many of them go south and here are some major reasons:

  1. Poorly Defined Goals

Many organizations turn to ERP and expect it to solve all their business problems. Unfortunately, they don’t take enough time to define what they are trying to accomplish and how they will measure success. Furthermore, the project timeline may not be realistic. This can put a serious stress on the project and cause delays or even worse, project failure.

  1. Miscommunication

Frequently, the key business process owners may have a hard time communicating exact needs to the solution provider. Even though they know that what they currently have in their legacy system is inadequate, they instinctively try to mirror their processes and their setup in the new application.

By contrast, the Solution Providers understand what NetSuite can do but either they don’t know how to translate the customer’s requirements or are unable to manage clients’ expectations.

The key premise here is that NetSuite cannot be like a customer’s legacy system, it will be better, but it will almost always be different. This is not always easy to understand, and it may cause some frustration on both sides.

  1. Lack of Management Commitment

The client’s management must provide ample time to the project team for the execution of project-related tasks. It is understood that for a period, some employees may feel like they are doing two jobs. Therefore, it is important that their managers help them coordinate better their workload.

Also, it is crucial that they are actively involved in the implementation. This is because frequently, they will be asked to make decisions that will affect their business processes and therefore the overall company’s future.

Organizations where the project team (involved in the ERP implementation) does not receive the full support and attention from their management team are typically not successful.

  1. Ineffective Project Teams

The previous point illustrates some situations where client’s project team may be ineffective. On that note, the composition of the team may be equally important, if not more so. This is because ERP implementations are almost always very complex undertaking and they require a high-level of industry-specific expertise on both sides (the implementer and the client).

Client’s expertise and their commitment is crucial. Without the help of designated Subject Matter Experts (SMEs) on the client side the project will likely fail. Hence, it is very important that the entire company is aligned around the same goal by the executive team and that the right people manage relevant tasks.

Similarly, Solution Provider’s industry-specific experience is invaluable as it is not enough to know the software or a platform but also be able to master the ways of how they can be molded to wrap around client’s needs with minimal enhancements.

  1. Customization

Speaking of enhancements, the worst thing the company can do when they implement a new business software is to re-engineer it.

When clients are introduced to a new system, they don’t really know it. As mentioned in point 2, they are familiar with the old ways of doing business, so they instinctively try to restructure the system to mimic their legacy application. Hence, the customization ‘inferno’ commences, and it often does not end well. What makes things worse (ironically) is that NetSuite as a platform is very easy to configure and customize. There is therefore a natural tendency to build functionality and less patience to learn what exists natively in the system and adjust it, if required.

Furthermore, the companies would typically hire developers who are not business analysts and have very little understanding of how ERP systems work. Within a year, the environment would be filled with code and workflows that overlap and bog down records and transactions.

It is a duty of the solution provider to warn about the dangers of over-customization and provide adequate training on how to keep NetSuite running optimally.

  1. Inadequate Training

The last reason of why implementations fail is the lack of training. The solution providers are typically at fault here.

Whether the reason is an aggressive timeline or budgetary restrictions, the key users may not receive any training until the end of the implementation. Usually, one or two weeks will be dedicated towards training and then three to four weeks of user acceptance testing (UAT). Based on our experience, this is not enough.

NetSuite implementations are joint implementations. For best results, both client’s and solution provider’s teams must work together. Both parties must execute on various tasks (where appropriate) so that: 1. The solution provider could learn the client’s processes; 2. The client could get used to the system and become comfortable with its user interface and navigation. The training towards the end of the project is there to reinforce certain knowledge that was gained during the configuration phase of the project.

We are of the belief that training should start from day one with the goal that client should fully own the system shortly after the go-live. Only then we can assume that our efforts were not in vain and that our project was a success!

I hope this article helped you with your research. Feel free to comment and share your experiences with us. We would love to learn about your interactions with your implementers and assist you with any project-related questions or difficulties you faced or are still experiencing.

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