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What Are the Reasons for ERP Failure?

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Many organizations are spending on getting ERPs and these companies expect more than what a system can deliver, which has been a main cause for ERP failure. It has been found that ERP implementation may need more resources in the form of time and money as presumed by most to the organizations. Companies are not satisfied with implementation because many believe it to give a high ROI and the many companies suffer issues during implementation because of the clashes with management or misunderstandings within the organizations.

The new form of ERP SaaS is also considered difficult to satisfy, although, it takes less time for implementation and it does not require the resources like other systems because its business value is less as compared to traditional form of ERPs.

Common Causes for ERP Failure

Unrealistic ROI: Many companies are not satisfied with the new application as they wish to get the investment back in the year of implementation. The new system can delay everyday job of the organization and it can cause delays in achieving the target which were easy before the implementation in the first few months. The end users should not be pressurized to deliver high performance immediately as the process completes. It is a steady process and it may take a few months for the company to get back to normal business, and targeting a high ROI can be very unrealistic approach.

There are also many organizations that are not satisfied with the way the software works and sometimes the expectations is different than what the vendor delivered.

Selection of wrong software: Before going in for implementation it is necessary for the organization to estimate its needs and priorities. The companies should always keep a backup plan in case of failure. The selection of incorrect system can damage the complete system. Allocating at least four to five months for selection of software is a feasible process.

Miscalculations of expenses and weird cost cutting methods: The worst cases of failures are reported when a company buying the software underestimates the total costs of implementation. During the process the vendors realize the loopholes in the system and it fulfills the requirements the process extends beyond boundary in many cases and the buyers are not ready to pay for the new extensions. Taking short cuts to reduce effort and cost can damage the system.

Last minute changes: Sometimes the business processes are very complex and it cannot be integrated in software in the way it is practiced by the company - changes in last minutes and disagreements over the changes can cause failure.

Communication: The team working for implementation should have proper communication with the user to ensure that every minute detail is provided to them because for very minute issues the process can come to an end.

Not providing training and education: Sometimes the users are scared of using the new system and they want the old tab method of working, because they are not given training to use the new wireless systems. It is very important to provide proper training to the end users to ensure the software is used without creating errors.

 Read Related Articles

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