After all these years, ERP implementations still fail…

The last three months I spotted five articles in the business press of failed ERP projects. Names of companies, involved project leaders, CEOs, CIOs and lawsuits are all mentioned without camouflage; this might be the top of an iceberg. It is remarkable but all major ERP suppliers and consultants are involved. It is certainly not a one actor concourse. Off course it is very difficult to reveal the exact causes of these failures, since both parties, customer and consultant (or supplier) are making their points of defense or complaint.  But there are some common components involved as we shall see. Let’s first review in short the five cases.

Case One. The plaintiff (customer) complains about the consultant lying about his skills to manage the project. The consultant will continue to defend his work vigorously. (lawsuit claim = $90 million)

Case Two. An ERP supplier cannot deliver on time making the customer to delay its financial filling. The consultant didn’t respond to  the claim. (lawsuit claim unknown)

Case Three. After a formal selection, the customer discovers that the proposed ERP  is dated and that the users find it hard to change to the ‘new’ system. The consultant was taken away from the project. (lawsuit claim = $33 million)

Case Four. A customer decides to halt the roll-out of an ERP due to massive budgetary over spendings. The consultant didn’t respond to  the claim. (lawsuit claim = $2 billion).

Case Five. A customer was proposed a vanilla implementation of an ERP. However the implementation took massive customizations to make a fit with the organizational needs. The consultant will continue to defend his work vigorously. (lawsuit claim = $102,000)

The customer organizations in all of the former cases are in no way small and medium-sized enterprises (SME), but well staffed organizations with IT capabilities, and the consultants and the suppliers tend to have a proven (?) track record. This raise questions on the approach of such projects. Can we still use the well known techniques of project management if it turns out that we constantly ran out of time and budget? Isn’t it time to rethink our current models of governing these large complex organizational and technical projects?  Is ERP really a solution or is it the problem? Maybe we should start all over again with the implementation of information systems and start to make an organizational architecture from which we can derive a workable system instead of doing the opposite. All too often ERP is proposed as a solution to avoid the difficult and often tedious exercise of making an enterprise architecture. In such a context ERP vendors make sometimes expensive promises to bridge fit-gap analyses and bring themselves in defense positions. Indeed, the most compelling factor in all cases is that the plaintiff is the customer.

jan devos

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About jangdevos
I'm an IT/IS professor, a late Baby Boomer, married with Ann and father of Hélène and Willem, a Stones fan and interested in almost everything. I work at the UGent (campus Kortrijk), Belgium. My research domain are: IT Governance in SMEs, IT/IS Security, IT Management, IT Project Management, IT Trends and IT/IS failures.

4 Responses to After all these years, ERP implementations still fail…

  1. Interesting article. It is true that an ERP system is sometimes introduced as THE solution for a business but most of the time it needs a lot of customization before it can actually be used in a company.
    I’m in the middle of an ERP system upgrade but we have a lot of customizations so we are obliged to start over and do a total new implementation. We will try to use less customizations, but this often means that certain handlings will take more time in the new system. Try explaining that to the user…

  2. Peter Van Mol says:

    For 25 years I used to be part of these ERP implementors and the last decade I am working at the customer’s (the receiving) site. I have developed a double feeling about this issue: there are very few customers “ready” to implement ERP and ERP implementors are too eager to do business while they should refuse more often customers, so can one blame a single party here?
    I also noticed that often a driver for customers to implement ERP is their effort to improve their organization’s efficiency while too few ERP implementors are capable (or allowed ) to focus on the business process improvement part instead of “product” implementation. Again: can one blame a single party here?
    I don’t think that these failures are due to inappropriate methods and techniques, the root cause is “cultural” related.
    If we run these projects in a detached “customer-supplier” business mode we often will end up in court, which is most likely the case in all of the cited examples. If we run these projects in a “partnership” mode, we will end up with a lasting relationship, provided one executes the true sense of partnership (mutual respect, be honest, dare to say “no”, open for criticism, no we-them discussions,….). I can show many cases which were (and still are) very successfull.
    One last remark: many of these projects are named “implementing ERP” while this better should be “implementing change”.

  3. MvanWunnik says:

    Unfortunately indeed that the customer is almost always the plaintiff… although we have to take into account possible “scope creep” in some cases.

    And, yes, customizations (or “extreme parametrisation”) can surely bring havoc to the implementation process and more important to the ACCEPTANCE by the end users…

    I also agree that ERP means change (of business processes, working habits etc), and if there is one thing that many people do not like, well it is change.

    To conclude, I believe not much has changed since 1999…still the same myths one decade later…

    http://arsimaprojects.wordpress.com/2012/05/23/myths-new-software-1999-2012/

  4. Bhupinder Garg says:

    I feel that before embarking on ERP journey, it is important to determine whether the organisation is ERP ready. This entails looking at various business processes and seeing
    1. Which processes have the potential of improvement?
    2. Which processes have the need for improvement? i.e whether they are critical for the environment in which the organisation operates?
    3. Whether there is anything which can be done within existing setup or indeed a new business software is going to add value?
    4. What are going to be the metrics of evaluation of ROI on ERP?

    Once the organisation has quantified these things, it can look for vendor interaction etc.

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