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Why ERP Software Implementations And Digital Transformations Fail – New Technology



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From modernizing business processes, accelerating workflows, and
increased profitability, there are plenty of upsides to an ERP
software implementation or full scale digital transformation.
However, there are many things that can go wrong during and after
the implementation process that can result in an implementation
train wreck. In the cases we litigate on behalf of ERP customers
victimized by software failures, the reason for the failure almost
always lies squarely with the ERP vendor or integrator.

Failure can take a multitude of forms, from not realizing
expected business benefits, blown budgets, extended timelines, and
the failure of deliverables to conform to agreed upon
specifications. At the other end of the spectrum are production
stoppages, massive loss of revenue and even business failure. The
most common reasons we see for failed software implementations and
digital transformations include the following:

  • The ERP Vendor Oversells the Software: It is
    common for ERP vendors to overpromise and under deliver the ERP
    software’s functionality and exaggerate the software’s fit
    for a customer’s business needs. Despite a customer’s best
    efforts to evaluate and select an ERP system, ERP vendors often
    engage in puffery and misrepresentations to meet sales quotas. When
    this happens, customers are often so far into an implementation
    project they feel compelled to pay for expensive customizations to
    try to save a software solution that is riddled with extensive gaps
    in functionality.

  • The Customer is Provided With an Unrealistic Budget or
    Timeline:
    In order to close a deal, ERP vendors often
    grossly underestimate the cost of the implementation or the time it
    will take to get to “go-live.” This results in missed
    deadlines and the customer paying more to complete the
    implementation than is necessary.

  • Inadequate Project Management: ERP vendors
    often take shortcuts on project management or fail to devote
    adequate project management resources to a project because of
    resource constraints. This results in part-time project management
    or remote project management that is rarely successful.

  • Failure to Sufficiently Test the Software: The
    lack of adequate ERP vendor project management resources can lead
    the ERP vendor to take shortcuts on critical project management
    tasks like conducting proper testing and dry-runs prior to go-live.
    Going live in a production environment with untested or under
    tested software can have disastrous results.

  • Inadequate User Training: ERP vendors often
    fail to properly train users in how to use the software and fail to
    train users using real data and real transactions. Without proper
    training, users are ill-equipped to use the software in a
    production environment.

  • Inadequate Vendor Resources: ERP vendors
    always commit to providing a seasoned team of ERP consultants with
    deep industry experience. The reality can be very different. We
    often see ERP vendors assign consulting neophytes to projects that
    not only lack industry experience but are unfamiliar with the
    software product being implemented. There is often a revolving door
    of consultants on a project with each new person requiring
    redundant training to get up to speed on the implementation
    project. Often ERP vendors and integrators will use a
    customer’s implementation project as a training ground for new
    consultants.

  • Integration Shortcuts: ERP vendors sometimes
    under-test the system to intentionally conceal defects to meet
    milestone and deliverable deadlines. Often this results in a
    failure to perform proper integration testing to determine if the
    ERP system can interface with other non-ERP systems on which a
    customer might depend.

Overall, a digital transformation or ERP implementation can
transform your business positively and provide long-term benefits.
It is crucial to evaluate the business objectives your organization
wants to achieve, understand the implementation/integration
process, and use attorneys with extensive software experience to
negotiate your vendor contracts to minimize the likelihood that you
are the victim of an ERP train wreck.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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