Did you know that 75% percent of all ERP implementations fail? If you want to beat the odds and reach Go-Live nirvana, this article is for you. Failed projects focus on the “what.” What are we going to implement? What are the features and functionalities? What do we solve for in the Fit Gap? But, if your goal is a successful Microsoft Dynamics 365 ERP implementation, focus on the “how” instead of the “what.”
Why ERP Implementations Fail
Even with careful investigation and analysis of a failed ERP deployment, it can be challenging to identify the actual cause of failure. Particularly when attorneys get involved, and the finger-pointing begins, there usually is plenty of blame to go around – together with a list of scapegoats.
Some of the common reasons ERP implementation projects fail:
- Inadequate project management
- Failed organizational change management
- Resistance to change
- Data quality problems
- Poor choice of ERP solution
- Out of control spending on the deployment
- Incompetent systems integrator resources
These are all real problems, but they don’t tell the whole story about why ERP deployments fail.
The Real Reasons ERP Implementations Fail
This all leads us to the critical question: What are the real reasons ERP implementations fail?
The reasons outlined above are not the reasons; they are only the symptoms of the problems. ERP implementations typically fail for three reasons:
Suppose the key stakeholders on your team are not in agreement with what digital transformation means to your organization and how it is a critical part of a bigger-picture strategy. In that case, your ERP deployment is likely to lead to the challenges outlined above.
Without an organization-wide alignment, the implementation project team will lack clear direction and fail to gain consensus on critical decisions.
Internal bias is a root cause of failed ERP projects. As individuals, we all have biases – but the problem becomes exponentially worse when key stakeholders act in their own self-interests. Unfortunately, this is a common challenge in the ERP software industry.
Bias can creep in many ways. Systems integrators and vendors will push their products during your digital transformation, regardless of whether or not the technology is optimal for your organization. For example, if you migrate to SAP S/4HANA, you might feel a strong push in the direction of Ariba and SuccessFactors for your procurement and HCM systems. It makes sense because SEP owns both products. But, does it mean that they are the right fit?
Bias is also a factor in terms of time. Systems integrators and software vendors have a vested self-interest in selling you as much software as quickly as possible, together with a sizable consulting team to help implement it. This trend generally forces organizations into an unclear direction, rushed decisions, and surrendering too much control of the project to your systems integrator.
It is critical to maintain control of your project and set the pace that works best for you – not the one that gives your sales team the biggest commission check as fast as possible.
Ignorance isn’t bliss when it comes to your ERP implementation. The unknown can indeed hurt you. You may think that your ERP systems integrator can handle every detail of the project, but that is unlikely.
Yes, they can design and build ERP software well, but their expertise isn’t to manage the many dimensions of digital transformation. For example, data management, organizational change management, and risk management are common deficiencies of systems integrators. But without expertise in these areas, your project will fail. It is essential to address the needs of your ERP project to minimize the risk of failure.
Working with countless clients over the years, I have realized that there are three critical elements to a successful Microsoft Dynamics 365 ERP deployment project. The three critical elements are people, process, and outcomes.
The people and your Microsoft Dynamics 365 deployment.
The people of every ERP implementation will have the greatest impact on the project. Your CORE team is especially important. Both internal and external team members are of key importance.
From the client perspective, you must have the right people involved. The ideal core team members:
Know the Old: They understand your business inside and out. They know the details. The right team members are superstars who are not only your top performers but are also influential. When they speak, people listen.
Design the Future: The ideal core team members are not stuck on the old, and they can help design the future with the new system. They thrive within your organization and can envision a different future. They adapt processes and reports as well as translate between the old and the new and welcome change and look forward to new ideas.
Quick Learners: The right people are not only open to change. They are also extremely fast learners. Your quick learners are the people that get it in one or two takes.
Receive Internal Support: Ideally, adjust the workload of your core team members to give them time to support the deployment project. It is critical to allocate the required time for your top performers need to support the project.
It is a cliché, but relationships make or break ERP implementation projects. As you select an implementation partner, ensure that your team has the confidence to work with the implementation team. Visualize your internal team working with your implementation partner. Ease of collaboration with the implementation team is a critical decision. If you choose the right implementation team, you are on your way to build trust.
Focus on your people above all to make your Microsoft Dynamics 365 ERP deployment project a success. Carefully consider your options before you commit to an implementation partner.
The process and your Microsoft Dynamics 365 deployment.
Most Microsoft Dynamics 365 ERP projects don’t dedicate sufficient attention to the process. The process outlines the roadmap to client and implementation partner cooperation. Communication during your project must flow in multiple directions: up the chain, because it is the only way management can respond to user issues, horizontal and down, because you have to communicate to those impacted by the new system.
Make sure your project includes:
Steering Committee: Executive engagement is critical for successful ERP implementation. At a minimum, you must have a monthly steering meeting where not only can you review the progress against budget and the plan but get steering involved in important decisions such as whether to do customization and to deal with roadblocks. The steering committee should not be a reporting exercise by a forum to make decisions, and task executive sponsors with taking actions. The single most significant factor that delays a project is the client’s ability to make decisions within the organization. The most critical role of steering is decision-making.
Core Team: Each successful ERP deployment includes a core team that closely work together. Schedule weekly meetings. During critical times such as leading up to a CRP, or when doing data migration or UAT, step up to daily meetings. Every meeting should be organized in a “triage” format to guarantee that key issues are managed to be done.
Extended Team: ERP implementations impact the entire organization. Constant communication with all department heads is crucial to help them understand when change is coming and how they can get their teams ready and participate.
The outcomes and your Microsoft Dynamics 365 deployment.
Most Microsoft Dynamics 365 ERP implementation projects that fail do not achieve enough progress within particular time constraints.
A great example of this is the data migration section of an ERP implementation. Data migration is more complicated than expected. As you are replacing a legacy system with a new system, you should map up to seven years of historical details from the legacy system to the new system. It is critical for you to go through this exercise not just because you understand your data, but because it is a wonderful opportunity to clean up your dirty data. Clarity of outcomes is what separates failed ERP implementation from failures.