15 Jan ERP Horror Stories, and How to Avoid Being One
Managing your business efficiently is more important than ever in the digital age in order to continue seeing profits. So, how do successful businesses manage their organization efficiently? The answer is enterprise resource planning (ERP) software. ERP software can help improve the management and flow of information both within and outside of your organization.
An ERP solution streamlines all of your backend business processes, assimilates business data from different departments, improves the productivity of your workforce, and increases the efficiency of your staff. A smart ERP solution also helps you manage your vendors and partner relationships. However, this success hinges on how well an ERP solution is implemented into your business. There are enough ERP horror stories out there in the market for businesses to learn from and avoid implementation failure.
Let’s take a look at some ERP horror stories and learn how to avoid those same mistakes.
Examples of ERP Epic Fails
Companies big and small can make ERP implementation mistakes — no one is safe from an ERP blunder unless you are well prepared. Implementation failures can lead to litigations and counter litigations, resulting in serious losses for a company. It’s important to know about previous failures so that you can avoid becoming another ERP disaster.
Consider some of these ERP disasters listed by CIO as examples of what not to do:
MillerCoors — After acquisitions, mergers, and takeovers, MillerCoors in 2014 hired an IT firm to implement a unified SAP roll out to serve the entire company. There were several defects during the first rollout. In 2017, MillerCoors sued the IT firm for $100 million for unprofessional handling of the project. The IT firm countersued MillerCoors for management dysfunction at their end for the hiccups. The dispute between the two companies was resolved amicably in 2018 in court.
Revlon — After merging with another company, Revlon wanted to integrate its business operations across its units. The cosmetics company company opted for SAP HANA, but the implementation process did not go according to plan. Revlon incurred hefty losses, which were claimed as a result of faulty implementation. The stocks of Revlon nosedived, and the company’s stockholders sued the company.
Lidl — A German nationwide grocery chain, Lidl started the project with SAP in 2011 to streamline its inventory system. Later in 2018, the project was scrapped after spending around €500 million. The cause of this enormous expense? SAP had to customize the implementation according to Lidl’s non-industry standard record-keeping requirements for prices, which SAP was unable to accomplish and resulted in major implementation problems.
Hershey —- Hershey opted for SAP’s ERP software, but the project ran into trouble. Multiple issues with supply chain applications resulted in an eight percent stock drop and the inability to deliver $100 million worth of Hershey Kisses for Halloween.
HP — HP faced massive complications from an experimental centralization of multiple ERP systems into one SAP system. While HP was aware of the problems it could potentially face during the implementation, they did not expect all of those hiccups to come at once. The company had to incur $160 million in losses due to a faulty ERP rollout in 2004.
What Can Cause ERP Implementation to Fail?
Today, ERP systems are the backbone of every successful business. The performance of an ERP system, therefore, is crucial to the subsequent success and performance of your business. Whether you are implementing a completely new ERP system or updates to an existing system, it’s important to know what could go wrong and how to prepare.
Be sure to avoid these ERP implementation failures:
Not assessing your needs properly — Often, companies are not satisfied with their existing system and think that a new system will solve most of their reporting, integration or efficiency problems. That is why it is vital to research whether you need a new ERP system in the first place. Implementing a new solution can come with many potential new and unforeseen problems, whereas updating and reinstating your current ERP system may be all you need to fix the issues your business is facing.
Not setting achievable goals — You need to know what you realistically want your ERP system to achieve, or else it will be difficult to gauge the success of the solution. Your team may also encounter difficulty reaching smaller goals along the way towards implementation if there is no clear final goal. All management and stakeholders must also be aware of these goals to ensure that progression benchmarks are successfully being met.
Not having a clear plan — If you want to implement an ERP solution successfully, you need to make sure that you have a detailed plan in place. Your plan of action must be exhaustive, realistic and specific. To start with, you need to know your requirements and the people who will work on the project. It’s much easier to reach your goals when you have a clear, specific plan in place.
Not forming a dedicated team in place for the implementation process — As mentioned earlier, ERP implementation is a tricky affair. You need to have a dedicated team for ERP implementation with experienced and dedicated project managers taking charge of the project. It is not advisable to hand over the implementation reins to the executive sponsor or business owner on a part-time basis. When you have a full-time, dedicated team for ERP implementation, you ensure that a specific team is fully accountable for implementation success.
Misjudging required resources — Resource allocation is an essential aspect of ERP implementation. If you misjudge or underestimate the resources required for proper implementation, the project is bound to run into trouble. You need to know the internal and external resources to complete the project successfully, along with the time required for the implementation and training of your employees. For external resources, you must have an agreement in place with your consultants and contractors regarding duration, skills and quality of resources.
Relying too much on consultants — Consultants play an important role in shaping the course of ERP implementation in every organization because they bring in crucial experience, knowledge and resources. However, relying too much on consultants can make your internal team complacent and lacking in necessary skills. Maintain control of the key business decisions and hold consultants responsible for their responsibilities. This can be accomplished by making sure knowledge is duly passed on from the consultant to your employees so that they use the system properly.
Customizing without understanding — Customization is an important aspect that can make or break your ERP implementation. Customizing an ERP system is risky, time-consuming and costly. Customizations, interfaces and data conversions are the three key areas of technical risk in ERP implementation. Still, it is vital to customize an ERP system to suit the needs of your business, but over-customization can lead to problems. Therefore, opt only for options that are absolutely necessary for the success of your organization. Additionally, keep an eye on the customizations that you have ordered so that there are no major hiccups.
Lacking experience — Experience plays a pivotal role in smooth ERP implementation. It is important to have people with experience working on your ERP project. If you want seamless implementation, you need to make sure that your project managers, consultants and vendors have prior experience in smooth ERP implementation. Hence, it is important to select people who already have proven, successful ERP implementation experience from previous work.
Cutting down on testing — Testing is one of the most important aspects of successful ERP implementation. When you are short on time, you may be tempted to skip testing, but that is actually one of the worst mistakes to make. The purpose of testing is to make sure that the system meets your business needs and produces the desired results. There are many issues that you can discover during the testing phase, which you can then fix before making the system go live. You should never cut back on necessary testing protocols.
Rushing user training — You buy an ERP system so that your employees can use the system. Most of your employees, irrespective of their departments, are expected to work on the system. If you want your employees to be able to work efficiently, adequate training for using your ERP system shouldn’t be rushed. Racing through training periods can result in major issues for your business further down the line due to improperly trained employees.
Reliable ERP Solution
If you want a reliable ERP solution or if you are worried about ERP implementation, consider Virtual Stacks Systems UK for your needs. eZnet ERP, our cloud-based ERP solution, can help improve the efficiency and success of your business. Contact us to discuss your options for a reliable and customizable ERP solution.