Companies complain that ERP implementation failed when the software does not provide the features that it promised. The whole process delays if the implementation schedule or the startup dates delays. A number of implementations run over budget and sometimes the new system may delay activities instead of making it fast and accurate. The major drawback of ERP failure is that it may delay production plan and even halt the processes, and prevent the company to delivering customer orders on time. Unsuccessful implementation can cause huge losses to the company.
Time and cost are two major causes for the failure of ERP and it has been found in a survey that more than 50% of the projects take longer time than expected and cost also goes beyond the expected budget in half of the projects.
There can be a number of projects which may get delayed, and some of the causes for delays are frequent customization, change in management, delays in decisions making by the management, problems at user levels etc. Sometimes it is very difficult for the implementation team to tell what is the main reason for delays because there can be a number of reasons.
Change in business processes: The major hindrance during implementation is the difficulty caused by the change in the business management procedures. Automated system requires a number of changes in the business management and half of the companies find it difficult to deal with the new changes in the business procedures.
Communication: The lack of frequent communication can cause failure of project and therefore it is important for the vendor to stay in touch with the team members, hold regular meetings with the top management and also meet the end users to get successful results. Around 50% of the project suffers from delays caused by lack of on-time communication.
Poor visibility of data: It can result in the failure of ERP implementation and if the new system is not able to provide an integrated solution to the old application - it may not be accepted by the user. Integration is a big problem and it requires highly capable and experienced project managers to handle such problems.
Inadequate planning: Failure can also be caused by the inadequate analysis of requirements and planning before the start of the project. Poor planning may lead to poor selection of package, which may not satisfy the company's need. Sometimes some IT executives working in a company suggest going for ERP package because it was working in their previous company, and selection of a package on such basis may cause problems in the later stage. The package may not fulfill the needs of the new company because it is not based on the requirements and it may take longer time for implementation. Selection of inappropriate application software and business plan - can cause delays.
Company facing problems within: If a company has been suffering from some major problems in it various departments, it may not be benefited from any software package. Some companies have unrealistic expectations from the new system and they do not find the package efficient as per their demands and they complain about it. Automated system requires the company to follow standard methods of working and if a company allows too much flexibilities, it may raise complexities and cause failures.