How to Turn an ERP Implementation Failure Into a Success

In a rapidly evolving business technology landscape, the need for tightly integrated systems, centralized data, and automation capabilities that make companies more productive and efficient are no longer a competitive edge – they are an operating requirement. Enterprise Resource Planning (ERP) systems have become the backbone for many organizations, integrating critical functions such as finance, supply chain, human resources, and customer relationship management into one cohesive platform. An effective ERP system enables businesses to streamline operations, improve efficiency, and make data-driven decisions that can enhance competitiveness in the marketplace. However, despite the significant advantages, ERP implementations are complex projects that often face major hurdles, leading to failures.

A large percentage of ERP projects fail to meet expectations due to a variety of challenges, including poor planning, lack of user adoption, and underestimating the scope of change management required. ERP implementation failure can result in severe repercussions, such as operational disruptions, cost overruns, and a lack of return on investment (ROI). These issues not only affect day-to-day business processes but can also erode employee morale and damage the credibility of management.

We’re going to delve into how you can recognize when an ERP implementation is going off track and provide actionable steps to recover from these failures. Whether you're struggling with an ongoing ERP project or looking to improve an existing system, this guide will help you achieve a successful ERP implementation.

ERP projects are known for their complexity, and with so many moving parts, it’s easy for things to slip through the cracks. Early identification of potential issues can be the difference between salvaging an ERP implementation and letting it spiral into failure. Here are some of the most common red flags that suggest your ERP project may be headed off course:

Missed Deadlines 

One clear sign of trouble is when key milestones are consistently delayed. ERP implementations typically have strict timelines tied to specific business outcomes. If your project team frequently pushes back deadlines without clear reasons or resolutions, it’s a strong indicator that the project plan is not well-aligned with reality.

Budget Overruns 

Budget overruns are a close companion to missed deadlines. As deadlines slip, project costs tend to balloon, especially if you’re forced to bring in additional resources or extend third-party vendor contracts. Consistent overspending is a serious warning that your project may be poorly scoped or mismanaged.

Poor User Adoption 

No matter how powerful or advanced your ERP system is, it won’t deliver value unless users adopt it. Poor user adoption often stems from inadequate training, resistance to change, or a mismatch between the system’s functionality and the end users’ needs. If employees are bypassing the ERP system or relying on old processes, your project is in danger. 

If you’re experiencing any of these issues, it’s time to make a change in your approach. However, you can’t make adjustments if you don’t understand the cause of the issues that arise. Let’s quickly go over the root causes of a bad ERP implementation. 

Every business and ERP system is different, but the root cause of failure is typically the same. 

Poor Planning and Unclear Goals

Creating unrealistic goals is essentially setting your project up for failure. Plus, if those objectives are unclear, it causes confusion and misunderstandings between those who are involved in the implementation project. 

Over-Customization

Typically, you don’t need to customize every single aspect of your ERP system. Prioritize what areas need some custom configuration, but also determine which areas you can simplify the development process. Over-customization can be the culprit of poor user adoption, process inefficiencies, and high costs.

Unaligned Vendor Partnership

It’s crucial to find an implementation partner that aligns with your business needs. Without this key component, your project can fall short and fail to help you achieve your goals. Research customer stories and previous projects the potential partner has completed and whether or not their work fits well with your industry. 

Wrong Technology Solution

It’s easy to choose the wrong technology solution since there are so many different options available now. That’s why we urge you to conduct research into what your needs are and what system can cater to those requirements. This goes hand in hand with finding the right implementation partner since they can also assist you in determining the right technology for your company. After all, if the functionality doesn’t match what your business needs, your ERP system will only get in the way rather than be a useful tool for its users. 

Now what can you do once you sense the ERP project is getting derailed? Follow these steps to get it back on track:

1: Reassess Your Current Situation

Conduct a project audit to identify the key issues that are causing inefficiencies or problems for your ERP implementation. By taking the first step to revisit your project goals, you can then organize a “conference room pilot” where you bring people together in the organization to look at current processes, map those against desired outcomes, and perform a gap analysis. 

If you spend a few days together establishing a baseline of where the business is, how existing processes work, and what’s missing, you can develop new requirements and build the proper procedures to reach the right business goals in the most efficient manner possible.

You will also want to revisit what reports and dashboards you use now and what you’ll want based on your new goals and processes. Ask yourself what key data points should you check every day. What reports can be pre-defined? And what can be ad-hoc or available when needed? These questions help determine your system architecture. Take a cautious approach to legacy data because it’s expensive, difficult, and largely unsatisfying once ported into your new system. You’ll want to take the direction using the least amount of legacy data that can be migrated.

2: Realign Project Goals

Once you’ve spent a significant amount of time evaluating all aspects of this project, you map out an alternate approach that solves the initial inefficiencies. Make sure all relevant stakeholders are involved in this process so that you don’t make the same mistakes twice when you’re revisiting the implementation process.

3: Focus on Change Management and User Training

Your people, not the software, are the catalyst to success, so a top priority should be effective strategies for supporting your team through the change. You (or the right partner experienced in change management) will want to clearly define the change, align it to business goals, and determine the impacts on those affected. In addition to providing adequate training, make sure to include a support structure and, if possible, KPIs to measure the change process.

Similarly, clearly defining the benefits to your team members is critical. Understand that users are correct in their fear that change creates work. Your job is to inspire them to embrace the change. What bright future state do they have to look forward to? What’s in it for them? You have to validate their concerns first, build a future vision that’s worth fighting for, and then inspire the team daily to keep that vision in mind as they put in their work to get there. The vision will energize your team to execute the additional work you need to make the change happen.

Here are a few tips for engaging and supporting your team:

• Ask for their input early in the process and make them feel heard.
• If their request can’t be included, let them know why and if there’s a future plan for it.
• Identify champions within each functional group that can learn the new software in-depth and support their colleagues at go-live.
• Host user acceptance testing (UAT) sessions where staff can attempt real-world scenarios to identify bugs and issues in advance.

Test and Refine

An ERP implementation is rarely a one-and-done project. It’s crucial to conduct regular testing and gather feedback from your users to make sure that the system maintains alignment with their needs. In fact, inadequate testing and process re-engineering are common roadblocks for ERP success. That’s why it’s important to invest in a solution that is flexible for future growth so that you can make refinements when necessary. 

Maintain Clear Communication with Stakeholders 

Communication is key during an ERP implementation process. Create a clear cascading framework on who should communicate with who throughout the project. Establish what responsibilities each stakeholder has throughout the project from start to finish to maintain accountability and clarity. 

Key Strategies for a Successful ERP Implementation

Taking on a new strategy for your ERP project can also depend on what went wrong in the first place. However, here are a few areas you can focus on to help your project run as smoothly as possible:

Set Realistic Expectations

You want to set realistic expectations that align with your project budget and functional requirements. By setting achievable milestones, you can better manage scope creep instead of getting caught off guard by unexpected project setbacks. This sets a clear foundation for successfully implementing new technology that meets the core business needs. 

Continuous Communication

Overpromising to appease key stakeholders will only increase the likelihood of disappointment. It’s okay to clearly communicate where there are potential limitations for the project since it’s contingent on your budget and business requirements. 

ERP projects often involve trade-offs between functionality, cost, and timelines. Explaining this upfront allows stakeholders to understand what is realistic and achievable. For instance, you may need to prioritize certain features while deferring others to future phases. By framing these decisions as part of the project’s overall success strategy, you set expectations that are both realistic and manageable.

Choose the Right ERP Partner

If your current vendor is causing your ERP implementation to go off course, it may be time to reassess the partnership. Choosing the right ERP partner is crucial to the success of your project, and staying with a vendor that doesn’t meet your needs can lead to further delays and complications. 

Conducting thorough research when selecting or switching partners can significantly impact the outcome of your ERP implementation. Look for a partner with proven experience in your industry, a clear understanding of your business requirements, and a track record of delivering projects on time and within budget. The right partner will listen first, work alongside you to deeply understand your business, and carefully analyze your operations and software to date.  Through this approach, they can guide your project back on track and set it up for long-term success.

Monitor and Measure Progress

Consistently track the progress of your ERP implementation to ensure it stays on course. Establish key performance indicators (KPIs) to measure success and identify any areas that may need adjustments. 

By regularly monitoring your progress, you can quickly spot potential issues and take corrective action before they become major setbacks. Staying proactive helps maintain project momentum and ensures that your implementation aligns with your goals.

Turning Around an ERP System for Pharmore Ingredients

Previously utilizing SAGE MAS 500, Pharmore Ingredients needed to make the switch to a more flexible platform that was less costly for their business. Their team discovered Odoo and chose OSI as their partner to make the transition as painless as possible. In a highly regulated industry that also relies on consistent quality, OSI was able to help them achieve these capabilities with their new Odoo ERP environment: 

• Automated and streamlined processes
• Reduced paperwork
• Centralized documentation
• Flexible CRM capabilities

Check out our full case study to see OSI’s full impact on Pharmore’s migration process from an outdated legacy system to a dynamic solution that aligns with their future business goals. 

Take the Next Step to Prevent ERP Setbacks

It’s important to address ERP implementation red flags as early as possible and is crucial in steering the project back on course. Take a moment to reassess the current state of your implementation and pinpoint the factors that are hindering progress. Once you’ve dedicated time to do that, you can restructure your approach in a way that aligns better with your goals. 

An ERP implementation is rarely perfect and requires continuous monitoring and improvements along the way. The right partner will not only guide the project to completion but will also help you implement a system that meets your unique needs and serves the end users effectively. After all, you want to eventually get a return on investment by committing to a system that promotes business growth and long-term success.