The implementation and maintenance of large scale Enterprise Resource Planning (ERP) software can require a million, if not multi-million, dollar investment. Yet many companies invest in an ERP system without adhering to the same disciplines applied to other areas of their business.

      Essential steps such as risk assessment, benefit analysis, performance objectives, and cash flows are typically discarded. In their place, expenditures are made based on naïve assumptions that the computer will magically transform a company into a paragon of efficiency. This misguided approach sets up a sequence of events that often leads to a failure of objectives. The resulting conclusion is that the ERP software was a bad investment decision.

      As a business consultant, I am often asked to review a failed ERP implementation and determine the circumstances that led to its failure. Frequently, company management will conclude that the software doesn’t work or it is too complex to implement in their unique environment. Management further compounds the failure by claiming that the wrong ERP system was chosen, and if it had the right software package it could recapture its initiative and achieve its original objectives. 

      Yet, my experience is that the software itself is rarely the source of failure. In fact, selecting the presumed right software package will most likely result in a second failure – this one more costly than the first.

Best business practices

      ERP packages, even those that are industry specific, are designed for a large audience of companies looking to achieve success by following a template of best business practices. However, software often fails to achieve its promise due to the reluctance to change by people who have a vested interest in existing processes. This leads to costly program modifications to replicate those processes. This, in turn, can result in unnecessary manual tasks and issues of software maintenance, which neutralize the original benefits of the software. 

      When making your ERP software selection, examine the processes encoded in the software. If you can agree to model your company’s best practices based on those processes, you’re choosing the right solution. If you can’t, continue looking.

The project manager

      Once the ERP system is chosen, it’s not uncommon for management to turn the project over to a subordinate to manage the implementation. The problem is that the subordinate, usually chosen from the end user base or IT department, typically isn’t given the authority to implement necessary business process changes...

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