There can be many causes which may lead to ERP failure out of which few can be eradicated at any stage while some become unmanageable after a stage. The causes which are extremely hard to correct are major causes of ERP failures. Hardware malfunctioning or poor IT infrastructure sometimes does not allow the proper functioning of ERP or its optimum utilization which may be interpreted as ERP failure. Though this is one of the most common causes but can be corrected even at a later stage, causes which occur due to negligence or over doing certain steps are hard to over come.
Too much customization is one of the causes of erp failures commonly evident in most of ERP failure cases. Customization is an important step which is needed to be taken in all the ERP implementation as there can be no ERP solution which can fit in the requirements of an organization as it is. Customization tailors the ERP to suit to the requirements of the purchasing organization. But due to poor selection of ERP or lack of functional knowledge and communication, ERP is loaded with too many customized applications which may disrupt the normal functionality of ERP to cause logical problems and data mismatches, it may even slow down the software and may make it too much hardware hungry. These problems occurring due to over customization cause run time errors which lead to failure of ERP.
Scalability and flexibility of the ERP becomes very important and it is better that management realizes this during the implementation process before they have selected an ERP and has given it a go. Lack of flexibility and scalability in the ERP software leads to serious operational problems as market keeps on changing and eventually companies are pushed to adopt changes in the business processes to cope up with the market needs. If ERP is unable to handle these changes it becomes impossible to work with that system which leads to its failure.
Data conversion and integration with legacy systems is another important factor in successful ERP implementation and utilization. If the any of these tasks have not been done properly may not allow ERP to function properly at later stages. The legacy systems are easy to use as employees are already well versed with the system, lack of integration with the ERP will need them to understand the new system quickly which may not be possible in every case. Such a situation causes lack of cooperation and trust on the ERP system which leads to its failure, employees treat the new system as something which has been thrust upon their shoulders.
Lack of training and change management may also cause mistrust amongst the employees for the new system. ERP automates the processes to save time and money which also reduces flexibility in working, if employees have not been given proper training and understanding of the software they find it hard to adjust according to the system. Over expectation from the new system or early expectations also cause mistrust, all of these issues can be handled by training and proper change management to ensure successful ERP utilization.