According to McKinsey, a staggering 75 percent of ERP transformation projects fail to remain on track or within budget, whereas two-thirds of them have an unfavorable return on investment. The truth is organizations have wasted millions of dollars and countless labor hours on ERP systems that just don’t work. And most of these failures are a result of ineffective project management.
ERP projects are highly complex, costly, and notoriously difficult to implement not because of the functionality of the ERP software but because of the implementation process. Given the high stakes, how do you avoid ERP implementation failure? Well, any successful ERP project starts with building a team with the right people in the right roles.
Because of the unyielding interest involved, you have to get it right the first time. And this starts with understanding why so many ERP teams fail.
Why ERP Teams Fail
Having the right people with the right skills on an ERP implementation team is crucial to successful deployment. Knowing this, why do so many companies fail to deliver successful ERP projects? Here are the three biggest reasons.
1. Core team members don't have enough time for the project
Typically, because ERP systems are company-wide solutions, ERP teams tend to be cross-functional and cross-departmental. ERP projects can span anywhere from a few months to years and require a considerable amount of commitment from employees who also must deliver on their day-to-day tasks. ERP projects must develop a comprehensive human resources capacity plan if they’re to be successful.
2. The wrong people are assigned to the core team
Many ERP projects fail because management fails to commit their best people to the implementation. Predictably, this results in sub-optimal implementation, which can be costly to correct.
3. The right people are on the team, but there's a skills gap
Digital technologies are ever-evolving. It's inevitable that your core team members won't have some of the skills required. And this is why intensive customized training should be a fundamental part of the implementation process.
With this in mind, how do you go about building an ERP implementation dream team? Let’s run through the basics.
Essential Team Elements for Successful ERP Implementation
In addition to having the required experience and the proper skill set, your ERP team should be agile and adaptable to change.
First, you should assemble your implementation team based on competency, not status. What competencies are a must-have? Communication skills are essential, as are decision-making skills. You need people with both technical and soft skills to accomplish the task at hand.
Here are the key players.
1. The Executive Sponsor
A lot of projects fail because senior management isn't involved enough. An active and engaged sponsor ensures a top-down focus on the project and can sign off on important decisions quickly, eliminating the bureaucracies that sometimes hinder projects.
An executive sponsor:
- Ensures the ERP project is aligned with the overall company strategy
- Provides ongoing direction to the project team
- Gathers support and is key to overcoming resistance from senior executives
2. Project Manager
Project managers are your star players. Their job is to keep the project on track. They are the central figure handling the day-to-day management tasks. To ensure project success, project managers must have the necessary skills, background, and qualifications. Your project manager can make or break the implementation process.
3. The Superstar End-User
They ensure that the implemented system works the way it's supposed to. They champion the project to other colleagues and encourage the adoption of the project within the organization. They are your points of contact with the rest of the business.
4. Core team members
Depending on your business, you’ll need to have technical experts from all departments on your team. They are responsible for breaking down the technical aspects of the software to the non-technical end-users.
5. The implementation partner
When implementing an ERP project, you'll find the consulting partner you select to be just as important as the software you choose. The implementation partner is usually a native from the software provider and offers a depth of knowledge that reduces your core teams’ learning curve.
Should You Outsource ERP Implementation?
It's entirely possible to deliver an ERP system in-house. But technology is advancing rapidly, which probably means you don't have the right expertise within your organization to implement a major ERP package. It’s advisable to outsource ERP implementation when your internal resources are lacking. Realistically evaluate your team and their competencies. Do they have the skills to deliver? The skills they lack are the ones you should consider outsourcing to an ERP consultant.
Another factor to consider is sometimes you cannot spare people to work solely on implementation. And let's face it, business must go on. Who will handle the day-to-day operations as your internal team is busy with the ERP project? Be careful not to underestimate the time requirements involved. It’s best to decide up front how you’d like to proceed and budget for outside resources, whether that’s working on the implementation or stepping in to assist with day-to-day work to keep business operations on track.
Outsourcing can be cost-effective. Unlike your in-house teams, ERP consultants are experts who bring their extensive knowledge of similar projects to the table. Odds are your team will require extensive training while on the job resulting in a trial-by-error process which can be costly and time-consuming. Working with an experienced consultant simplifies operational efficiency by resolving issues before they become real problems.
Talk to a staffing expert. Determining the aptitude and proficiency needed to implement an ERP project successfully is a huge challenge. A staffing expert will help provide you with the appropriate consultants for your implementation.