Why most ERP implementations fail (and how to avoid it)
When companies switch ERP, they usually try to go all in from day one. And why wouldn’t you? You’ve been sold the promise of the new system, so you set about upgrading processes, cut time and waste, and rebuild workflows so you can take full advantage of your shiny new system.
The logic is sound, however it is also the number one reason I’ve seen many ERP implementations fail, well initially anyway.
Where ERP implementations go wrong
Here are the main stumbling points that I see time and time again.
You don’t know what you don’t know
You might think you understand the benefits of the new ERP, however there will be a lot of nuance in how the system actually works. You don’t see these in the demo. Its only when you are poking around under the hood that things start to become apparent. So don’t try to do everything at once. It takes time to navigate these nuances before you can start to take full advantage of your new system.
Automating a process that shouldn’t exist
When using a legacy system we tend to create a lot of workarounds to keep it doing what you need it to do. Copy this data to a spreadsheet, build a pivot table, paste it back into another system. These steps feel “normal” because it’s just the way you have been doing it for years.
In a new ERP, a lot of that legwork should simply disappear. Embrace the new workflows and the efficiencies your system actually enables. I’ve seen many companies spend most of their implementation budget and consultant time trying to automate unnecessary legacy tasks, while their balance sheet does not even balance.
Not enough focus on the financials
Most companies upgrade their ERP for the raft of new smart features that make up the system. Streamlined integration with your website, factory process automation, MRP. All valuable, but regardless of all the new metrics and insights available, the balance sheet is king.
Make sure it is accurate. Make sure you can run income statements right back to the start of the financial year and reconcile them. If the financials are wrong, the implementation is failing, no matter how fancy the features look.
Over-reliance on consultants
While certain consultants have overseen many ERP implementations over the years, and they know the system inside out, it doesn’t mean they understand your business.
You know your margins, customers and the reality. You have to stay in control of decisions. A consultant should support your plan, not define it.
Complications and frustration
A new ERP will almost always take more keystrokes than your legacy system for the same process, and frustratingly it will feel like a step backwards, at least at first.
You need time to learn what to keep, what to remove, and what to change. Getting more information out usually means putting more data in. That is fine, as long as the data is correct.
Don’t automate everything on day one. You installed a new ERP to get better data. Don’t lose that visibility by building workflows that skip past the key inputs that will set you up for success.
Four steps to a successful ERP implementation
While it may seem like a daunting process, the most successful ERP implementations I’ve seen follow these four steps.
1. Go live with a minimum viable product
At go-live replace like-for-like features first. Replace the old system’s features and processes with the equivalent in the new system.
Day one the goal is to be doing the same core work just in the new system, and not trying to redesign the airplane while you are still trying to fly it.
2. Protect data integrity
Confirm you have the correct outputs you need. The balance sheet is perfect, income statements match the old system for the same periods, sales and key operational data is all there and reconciles accurately.
Data integrity is everything. If the numbers are wrong, fix that before touching new features.
3. Don’t over rely on a consultant
Have a key in-house champion who take ownership of the implementation. They should be the one that drives the agenda, owns the project, manages go-live, and keeps everyone aligned.
Consultants can help, but they should not be the ones steering.
4. Learn the system, then build on MVP
Once you are live and stable, start working on version 2.0.
Plan upgrades you can roll out to the wider team within 3 to 6 months. These are the changes that will actually make your team faster than they were in the legacy system.
And yes, at the start you’ll run slower (much slower) that is normal. The point is to come out the other side with better data that informs better decisions.
If you want help planning an ERP implementation that does not derail your financials, reach out and we can walk through it together.