Number one reason why ERP projects fail

Unfortunately, most ERP projects fail. People attribute such failures to many things - unrealistic timelines, limited budget, wrong application, bad implementation partner, shortage of internal resources, etc. Yet, the most important reason is the lack of executive support. You may think it is easy to blame executives for such a failure, but let’s look at the fundamentals.

Each ERP project is in fact a large-scale change management initiative. The new system is the most tangible asset that upper management can hold onto to drive much-needed process improvements across the entire organization. These improvements require people to change their behavior - which is not an easy thing to do. Breaking old habits that formed over many years is really hard. When faced with such a challenge, people follow their leaders. If the executives’ skin is not in the game, the initiative is pretty much doomed to fail.

Here is why. As we all know, there are hundreds if not thousands of decisions to be made in a typical ERP project. Some of these decisions are controversial. Due to their integrated nature, ERP systems tend to require consensus among diverse user groups. For example, sales order management touches sales, credit, customer service, planning, logistics, accounts receivable functions to name a few. How the company manages the customer returns going forward would require consensus among all these functions. Well, what does happen when consensus cannot be reached? Project stalls. Timelines shift. Budgets get burned. Resources are wasted. Indecisiveness is cancer to the project. This is why executives play such a crucial role. They need to make tough decisions, remove the roadblocks, drive the organization towards consensus, motivate everyone along the way, and lead others by example. So, how do we ensure executive involvement throughout the project?

The most basic thing we can do is to establish regular steering committee meetings (minimum once a month). Getting executives’ time and commitment for such regular meetings may be tough, yet it is absolutely worth it. It does not need to be a long meeting. It is amazing what can be accomplished in an hour. It is much more important to decide how to conduct these meetings. They cannot just be project updates. They should rather focus on asks - specific requests to executives that demand their action - basically their to-do list. An executive cannot ignore a well-articulated request and will most likely take the necessary action to resolve the escalated issue. Thus, our main job is to decide which problems to escalate and which ones to handle ourselves. We cannot overwhelm them with many insignificant requests. Their time and attention are precious and deserve the few hard ones.

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My name is Cem and this has been another gem.