How and why of ERP failure - issues and challenges of ERP Implementation by Jyotindra Zaveri who has hands-on experience of fifteen years

1. ERP Implementation
How and why of ERP failure & tips
for successful ERP
implementation
BY
Prof. Jyoti Zaveri
Freelance ERP Consultant
J. Zaveri ERP Implementation Issues and tips 1

2. Need for training. Education
Not understanding what the new 'system' is designed
to achieve. At least 100 hrs of training is required for
key users. Preparing masters / transaction on practice
databases to get the comfort level and singing off is
highly recommended. The CEO can make this
happen, if he / she personally take interest, otherwise
if left to users, the quality training does not happen and
then chances of success are reduced.
In one company, the training was given after the
system was ‘live’. Users were busy with ISO
implementation and most people saw the data entry
screen for the first time when the legacy was removed.
ERP training is required.
J. Zaveri ERP Implementation Issues and tips 2

3. BPR and ERP
It may be
necessary to
change your
current business
process
• Do BPR
J. Zaveri ERP Implementation Issues and tips 3

4. Lack of Top Management commitment (management
being involved but not dedicated).
If the owner is not spending enough quality
time, then the ERP project is likely to be
unsuccessful. In one organization, the MD
hardly took part in the discussion with ERP
vendor and delegated the task to the General
Manager, who in turn never wanted the ERP
system, so he created all the roadblocks, and
the vendor got frustrated and finally left
J. Zaveri ERP Implementation Issues and tips 4

5. SRS
Inadequate SRS or System Requirements
Specification: Current processes are not
adequately addressed. User must write down
the requirements, which means taking out time
and extra effort. The user usually explains
casually, verbally, and hurriedly, then how the
ERP can succeed
If sufficient time is not given for preparing the
SRS, ERP is likely fail
Chopping and changing of program codes after
the ERP goes Live is observed, if SRS exercise is
not done properly.
J. Zaveri ERP Implementation Issues and tips 5

6. Poor ERP Package Selection
The package does not address the basic
business functions of the client
The package should be totally integrated,
including accounts
Some organizations are so comfortable with
their cheap account-centric package that they
do inventory and other functions in ERP but ask
for data transfer from ERP to such accounting
package!
J. Zaveri ERP Implementation Issues and tips 6

7. Internal Resistance
Resistance to changing the 'old' processes. This is
perhaps human nature
Unless proper confidence building is done (during
training) the user will still want to use the old
method (or the legacy way)
One ERP user (in a Mumbai based company) was
so adamant that the MD had to ask him to resign
(and he was the works manager who was expert
in fire fighting, but MD wanted to prevent fire
altogether).
J. Zaveri ERP Implementation Issues and tips 7

8. Give me moon
Unrealistic Expectations of the
Benefits
A user starts expecting moon
One must draw a line, be
satisfied, at least in the first
phase, and let the system take
off.
J. Zaveri ERP Implementation Issues and tips 8

9. Return on investment. ROI?
Unrealistic Expectations of the ROI. People forget
to quantify the intangible benefit or they simply
expect returns overnight
Most users do not know even, what the ROI is
For example
• ROI can be reducing inventory level by x percentage
• or ROI can be preparing of Excise (TAX) Invoice quickly
and accurately
• or ROI is to get the correct material requirement
planning. JIT.
J. Zaveri ERP Implementation Issues and tips 9

10. Time Frame
Unrealistic Time Frame Expectations.
ERP is like changing the wall itself (and
not changing merely the paint of the
wall)
CEO / CFO expect things to happen
overnight when they have not taken
trouble to define (in writing); to what
extent customization will be allowed
One has to learn to put a full stop to
chopping and changing.
J. Zaveri ERP Implementation Issues and tips 10

11. TCO - Money
Another issues is that the Total Cost of
Ownership (TCO) is not understood
ERP vendor / implementer money is not
paid in time
The ERP implementing company is
treated like any other supplier and ERP
project goes into a kind of negative cycle
E.g., Think of a mobile phone:
• When the SIM card charge is over it stops
working and needs to be charged by paying
additional amount.
J. Zaveri ERP Implementation Issues and tips 11

12. “….By-the-way, we will do ERP also…. “
User / top management safely assume that certain
procedure should be present in ERP. If the procedure
is not explained in the beginning, legacy is not given
which it may not reflect in the Business Blueprint
(these reference guidelines) or in the POC
If it is not in the Business Blueprint, it will not be there
in ERP program
TIP: ERP project is taken as ‘by-the-way’ project;
whereas in true sense it should be the only priority
during implementation phase.
• Do not take ERP casually
J. Zaveri ERP Implementation Issues and tips 12

13. Tight linking (integration) is good
Another example, one user from marketing,
did not appreciate the link of quotation and
the sales order
• He asked implementer to remove the link. Later,
after six months, he realized his mistake and asked
to provide for the link
Sometime Director or CEO of the company
does not share his or her long-term vision of
the company, with the middle management or
lower management.
J. Zaveri ERP Implementation Issues and tips 13

14. Follow the checklist given below
• What Kind of products?
• E.g., Make to stock or make to order. E.g. Continuous
process production or discreet production.
• What ERP modules are you looking for? Write it
down from the scope list of ERP modules given by
ERP vendor.
• Are you planning on replacing legacy software
applications? Within the next 3 years? Which ones?
Make list and plan to phase out ‘out-dated’ software
ASAP.
J. Zaveri ERP Implementation Issues and tips 14

15. Information Technology and IT
infrastructure
What databases and operating systems do we have
expertise? What will the IT department agree to and
what is the long-term plan? List them
If you are not sure, consult I. T. expert. For instance,
in one corporate company EDP manager was asked to
select ERP. She was trained by Red Hat on Linux. She
insisted that ERP should be on Linux platform. During
the ERP deployment, seven months down the line, she
left the organization for greener pasture. Nobody knew
anything about Linux. ERP project was abandoned
• One year later the company deployed ERP on Microsoft
platform.
J. Zaveri ERP Implementation Issues and tips 15

16. Learn about Technology
Technology has advanced, therefore the selection team
members will need to learn about workflow, TCP/IP, and many
other issues involved. ERP coordinator should be trained in the
following areas: basics of SQL. ERP can give intelligent alerts
automatically by email. This needs understanding of email
management settings (e.g., MS Outlook or MS Exchange
Server settings). It is expected that ERP coordinator or I. T.
support person knows about networking of computers (LAN).
If necessary, plan a separate training for the Information
Technology and new techniques that are akin with ERP. E.g.,
UPS can be connected to Server to shut give messages to
users that battery backup is low, so users can logout and
shutdown properly. E.g., using RFID technology and so forth.
Embrace technology with both hands. Do not be afraid of
using new technology. May be attending seminars and train
people continuously.
J. Zaveri ERP Implementation Issues and tips 16

17. DAILY BACKUP
Make a disaster management plan. Nobody wishes that
accident should happen. Nevertheless, it is necessary to
have a written document in place. Especially, mention about
the backup and restore procedure. Do a rehearsal exercises.
For instance, one factory was near river. Floods came. ERP
server was on the ground floor and was damaged.
Fortunately, backup CD was taken home every day. They
could restore the data on another computer and start the
work.
Selecting ERP.
• Invest lot of time in the ERP selection process. It is not like buying
a mobile. If you do not like a cell phone, you can discard, and buy
new one. ERP is like a long-term partnership (marriage, shall we
say). There are going to be difference of opinion with the spouse.
This can be sorted out. Similarly, one cannot keep on changing ERP.
J. Zaveri ERP Implementation Issues and tips 17

18. DO YOUR HOME WORK WELL. COMPARE ERP MODULES OFFERED
BY VARIOUS ERP COMPANIES
Do not get carried away by impressive PowerPoint
presentations. Marketing people are trained to
give ‘Rosy’ picture. The chief of ERP (main
sponsor) should know the limitation of ERP and its
customization. ERP implementers cannot deliver
Moon. Although sales team will promise Moon
(and Jupiter also). ☺.
J. Zaveri ERP Implementation Issues and tips 18

19. ERP is not bed of roses.
Business transformation is a painful
process. Do not underestimate. It is like
that scene of ‘Jurassic Park II’ movie. She
is amused when she is looking at the
Dinosaurs for the first time. She is told
that in beginning, it is always ‘wah wah’
(great) but it ends up in screaming!
J. Zaveri ERP Implementation Issues and tips 19

20. It is said that
ERP
implementation is
a journey and not
the final
destination
J. Zaveri ERP Implementation Issues and tips 20

21. Additional resources created and updated by Zaveri
to learn ERP:
https://www.facebook.com/groups/discuss.erp Join
Facebook Group ERP.
http://www.facebook.com/dnserp Like Facebook Page
ERP.
http://dnserp.wordpress.com Subscribe ERP Blog.
http://www.twitter.com/followERP Follow on Twitter.
http://linkd.in/lFj98r Join ERP, E-business Forum
LinkedIn Group.
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22. Join Prof. Zaveri on Facebook and LinkedIn
j.zaveri@dnserp.com
Follow on Twitter @followERP
Subscribe ERP Blog http://dnserp.wordpress.com
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