1. ERP Implementation Failures
IST 402

2. Quotation
To err is human, but to really foul things up requires a computer
Anonymous

3. Robbins-Gioia Survey (2001)
51% ERP Failure
46% No improvement
56% had PM office
36% ERP Failure
232 Survey respondents spanning the industry sector
51% viewed ERP implementation as a complete failure
46% didn’t feel their organization doesn’t understand how to use the system to improve BP.
56% had a PM office, of these, only 36% felt ERP had failed.

4. Conference Board Survey
58% Partially Satisfied
40% Failed within a year
Implementation
6 month time-over average
25% over budget
Underestimated Support
Implementation took an avg of 6 months longer than expected
Costs were 25% over budget
Support costs for the year after implementation were underestimated by an avg of 20%

5. Definition of Failure ERP Never Implemented Not used to full Potential
No ROI
Not meeting Triple Constraint
Halted Production

6. Reasons for Failure

7. Mabert et al. 7 Issues Considered 2 Issues Relevant to Failure
Modifications to the ERP System
Use of Accelerated Implementation Strategy
If the vendor ERP system is modified, it will cost more and take longer, but provide a better system. Companies did not take this importance into consideration or did not take the constraint adjustment into consideration.
Accelerated implementation = Implementing ERP on time but not neccesarily with respect to budget.
Olson, David Managerial Issues of ERP Systems pp

8. Willcocks and R. Sykes Technological Determinism
Supplier/Consultant-Driven
Outdated Relationships & Capabilities
TD = view of an ERP system as a packaged solution to all of an org technical and business problems. CIO is to technically focused. This leads to ERP implemented by strict triple constraint, with no regard for the business process and how it benefits the business due to complete handoff to IT. General resistance and high rate of failure.
S/C = ERP is viewed too much as a strategic tool and not enough as an IT tool, therefore no IT consultation happens. ERP usually outsourced and is overrun by cost. Generally, organization does not buy into the system. Implementation is a success, but does not reap the benefits.
OR&C = CIO and IT are not prepared for the new tech. Failure to reorganize business thinking to utilize ERP. Most Common Scenario.
Olson, David Managerial Issues of ERP Systems pp

9. 12 Cardinal Sins of ERP Lack of top Management Commitment
Inadequate Requirements Definition
Poor ERP Package Selection
1 – Top management out of touch with events or lack of understanding of size, scope, and tech aspects, resulting in lack of commitment of time and resources for success
2 – Inadequate definition of functional requirements accounts for nearly 60% of all failures or ERP. This leads to Poor Package selection
3 – No time taken to run screens of the package to match it up with their daily work. Implementation of same system in new companies by executives with no consideration for org. needs. “if it worked for them”

10. 12 Cardinal Sins of ERP 4. Inadequate Resources
5. Resistance to Change
6. Miscalculation of Time/Effort
7. Misfit of App with BP.
4 – Skills not present within the company, working employees overtime. This leads to mistakes in implementation, financial and emotional drain
5 – Failure to build a case for change, lack of involvement by those responsible for changed processes, inadequate communication, lack of top management support, arrogance. GET END USERS INVOLVED EARLY
6 – Simple
7 – The application and Business processes need to be merged to form one entity in ERP. Usually both will have to be changed to work together well.

11. 12 Cardinal Sins of ERP 8. Unrealistic Expectations
9. Inadequate Training
10. Poor Project Design/Management
8 – Software vendors over-tout the benefits and don’t include all costs such as planning and training. ROI then seems horrible to execs.
9 – Simple
10 – Easier to buy the software to try and cover up company BP weaknesses than take the effort to design the project properly and change BP’s and ERP

12. 12 Cardinal Sins of ERP 11. Poor Communications
12. Ill-Advised Cost Cutting
11 – Prevents different parts of the Org. from assessing how they will be affected by the implementation and prepare for it.
12 – Org wide implementation is suicidal

13. Key Notes Modify ERP Reconstruct Business Practices
Not just an IT Project
Key things in successful implementation are: Modify ERP to fit your Business Practices and needs of your Org, don’t just use templates. And Reconstruct your Business Process to be better and more efficient, don’t just try to cover them up with new tech. IT WON’T WORK!

14. References Olson, David Managerial Issues of ERP Systems pp.112-114
“Failure Rate”
“The 12 Cardinal Sins of ERP Implementation”
“No Magic Cure will fix all ERP ills.” R. Michael Donovan

15. Questions?