Why Enterprise Resource Planning Projects Fail?
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- Enterprise Systems For Management
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Why Enterprise Resource Planning (ERP) Projects Fail?
Adopting an ERP system has become a norm in most multinational industries in today’s competitive market. Organisations have recognized the potential benefits of implementing an ERP system so as to gain competitive advantage and improve their business strategy. Nevertheless ERP project has an infamous reputation of failure as most projects become over budget and delayed.
Umble et al (2003) based on their research identified various reasons why ERP implementation project fail. They argued that the main reasons for failure can be grouped into ten categories as listed below:
1. Obscure Strategic goals
2. Top management is not committed to the system
3. Implementation project management is poor
4. Lack of organisations commitment to change
5. Incompetent implementation team not selected
6. Inadequate education and training
7. Data validation is inaccurate
8. No performance measures
9. Improper resolution of Multi-site issues
10. Technical difficulties
Umble et al (2003) further reviewed the case of an ERP implementation at Huck International Inc, a design and manufacturing company. They identified that though the company successfully implementation an ERP system and achieved some of their benefits, they underwent various challenges such as; lack of complete top management and implementation team involvement during the implementation phase of the project. This resulted in the company going over budget during the course of the project and exceeding their initial time plan.
An organisation that plans to implement an ERP system needs to understand its complexity and consider all possible factors that determines its successful implementation. Careful analysis and planning must be carried out at all the different implementation phases (before, during and after implementation) so as to avoid a project failure.
Various other real life case studies of ERP implementation that shows that factors above influence the success and failure of ERP projecthas been reviewed in Motiwalla & Thompson's book referenced below.
Book: Motiwalla, L. and Thompson J. (2009). Enterprise Systems For Management. New Jersey: Pearson Prentice Hall.
Article: Umble, E., Haft, R., and Umble, M. (2003). Enterprise resource Planning: Implementation procedure and critical succes factors. European Journal of Operation Research, 241-257.
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