Five steps to avoid a costly ERP project failure

Implementing the right ERP system can enhance efficiency and control, yet it carries significant risks like budget overruns, scope creep, and project delays. To ensure your ERP project stays on track, on time, and within budget, we'll highlight five common pitfalls that can catch businesses by surprise.

A right-fit ERP system can boost efficiency and give better visibility and control – but it can also come with some sizeable risks too. From budget overruns to scope creep and project delays, implementing a new ERP can go off the rails when it’s not managed properly.

So, let’s show you how to keep things on track, and make sure your ERP project stays on time, budget, and scope so that you get the results and ROI, by going over five big mistakes that catch businesses off guard.

1. Set clear objectives and goals from the start

The foundation of a successful ERP project is having clear, well-defined goals and objectives you can use to measure success against. Without clear objectives and goals, the entire ERP project will lack direction and purpose, making it prone to delays and cost overruns.

Establishing objectives early on not only helps in aligning the project team's efforts but also provides a roadmap for decision-making throughout the project. Specific KPIs and metrics enable the project stakeholders to monitor progress, identify areas of improvement, and ensure that the ERP system is meeting the intended business outcomes. It's a bit like building a house - you need to know how many rooms you need before you start to pour the concrete foundations.

It’s crucial to outline the scope and purpose of a future ERP system before the work gets started. This step involves considering which business functions and processes will be automated, what data needs to be integrated, and which key performance indicators (KPIs) are essential for tracking and reporting. It’s all about understanding the specific needs and requirements of stakeholders. This makes sure the proverbial rooms are going to be big enough for everyone who’s going to be living in them!

Having a clear vision for your ERP project ensures that every team member is aligned with the project’s objectives and reduces the risk of misunderstandings and creeping budgets down the line.

2. Be realistic about what is required from Day One

Realistic expectations are fundamental to the success of an ERP project. It can be tempting to want to enter an ERP project with plans to change the world – but really, it’s better to focus on doing a few things exceptionally well to avoid stretching too thin and missing the mark.

Avoid the temptation to rush into implementation without a comprehensive understanding of what is required and the potential for future phases. Unrealistic expectations can lead to aggressive and impractical timelines, as well as inadequate planning – and that’s not going to do anyone (or any budget) any favours.

Start by aligning stakeholders with your organisation’s strategic goals, and understanding how ERP technology can support these objectives. Then you can develop a robust business case that will inform how you will grow out the project.

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3. Resist unnecessary changes that cause scope creep

Scope creep is an all-too-common pitfall that can seriously derail ERP projects. It’s when you get a bit down the line of an implementation – and then a new requirement for the project appears, and you have to reevaluate the scope. And then it happens again, and again… and then you pass your original deadline, and you’re left with a mostly implemented ERP with lots of half-built features, a blown budget, missed deadlines, and some pretty unsatisfied teams. Not ideal.

To prevent scope creep, it's crucial to establish specific criteria for success and failure, set predefined goals and benchmarks, and transparently communicate with your ERP partner about additional costs and timeline adjustments. And the great part is that you can always expand your ERP later – but let’s make sure the building is sound before we look at adding a pool in the backyard.

4. Stick to the plan

Disorganisation and chaos can plague ERP implementations without a clear plan and timeline. You’ve got to know where you’re going before you set out – then stick to your guns.

Ensure that your project stays on track and is completed on time by having a detailed plan in place – and the more detailed, the better. This plan should cover every aspect of the project, from the initial phases to post-implementation support, and every hurdle that might pop up in between.

One of the best ways to do so is with consistent tracking, including keeping an eye on those KPIs as part of your objective and goal setting. Consistent tracking of progress helps identify and address potential issues early, ensuring that the project stays on course – and lets you know when you need a bit more help to get things back on track.

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5. Have dedicated and aligned resources

Commitment from your businesses leaders and allocating necessary resources are vital for ERP project success. Not everyone may be on board with a big change of operations, but you definitely need the buy-in of the senior leadership team and some key players throughout the business to lead the charge.

Without this commitment, it’s going to be a big challenge trying to get the rest of your organisation to buy in to the idea. (Little wonder that change management is a role in itself!) Ensure that executive management supports the project, allocates resources, and has the flexibility to re-allocate them as conditions change – and that you have a dedicated team manager to coordinate efforts and provide regular updates to executive management and a steering team.

Additionally, insufficient team resources, both in terms of quantity and expertise, can hamper your ERP project. While your internal team might have the best intentions, getting some outside expertise can support the execution of a big project like an ERP.

Fusion5’s expertise in ERP implementation, backed by over two decades of experience, can provide you with the guidance and support needed to ensure your project's success.

Bringing it all together

Remember that strategic businesses make changes because older processes can’t keep up with future demands. New ERP projects have their risks and challenges – but staying with old legacy systems are also risky , keeping you stuck in the ways of yesterday.

Don’t let your ERP project become a costly failure; instead, let it be a testament to your organisation's commitment to efficiency and growth.

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