May 21, 2010 12:00 PM

It’s no secret that the odds are stacked against ERP implementations. As we’ve covered at length in this blog and in our white papers, most projects go over budget, take longer than expected, and/or fail to deliver expected business results. In fact, according to our research, there is a 72% chance that at least one of these outcomes will affect a project and a 34% chance that two or more will do so.

This creates somewhat of a Bermuda Triangle for ERP implementation initiatives. We’ve all heard horror stories about ERP projects that have started the journey toward implementation, only to be lost somewhere along the way. The three forces that contribute to this ERP Bermuda Triangle are:

1. High implementation cost and risk
2. Long implementation duration
3. Low business benefits and return on investment

So how is one able to navigate this ERP software Bermuda Triangle? Below are three tips to navigate each of the ominous forces apparent on any ERP initiative:

• ERP implementation cost and risk. The first step to avoiding the pitfall of high cost and risk is to set realistic expectations. Many organizations fail to adequately budget for critical project activities that will make their ERP implementations successful. While on the surface it may be possible to complete an enterprise software project with limited costs or resources, cutting corners will cost more in the long run. Therefore, it is important to take budgetary estimates provided by ERP software vendors with a grain of salt and make sure that they include “hidden costs,” such as hardware upgrades, training, internal staffing to backfill your project team, and organizational change management.
• ERP implementation duration. An accelerated implementation timeframe may be possible, but it will inherently increase risk. Similarly, an overly optimistic project plan will cause project teams to lose sight of doing more than just going live with the software. For example, any ERP software can be implemented in a very short period, perhaps even days. The question becomes: what do you mean by implementation? If the answer is technically installing the software and perhaps doing some quick configuration, then yes, fast implementations are possible. However, if your definition is business transformation, adoption of the software, and measurable business benefits, then it is important to have realistic expectations for how long this will take.
• Realization of business benefits. The saying goes that if you don’t measure it, you won’t achieve it. The same holds true for ERP initiatives. If you are expecting to see tangible results from your ERP investment, then it is important to not only create a business case to justify the costs, but also to track and manage business benefits going forward. In addition, identifying and implementing business process improvements and executing a robust organizational change management are key contributors to ERP benefits realization.

It’s difficult to make it through an ERP implementation unscathed. However, these tips will help you navigate the ERP Bermuda Triangle and make it through your journey not only alive, but in a way that delivers a high return on investment.

What do you think? Take our poll below and tell us how much business benefit you’re realizing with your current ERP system.

Blogger Profile: Eric Kimberling

With over fifteen years of consulting experience, Eric Kimberling has a wide range of professional expertise in companies ranging from the SMB market to large corporations. Eric’s background includes extensive ERP software selection, ERP organizational change, and ERP implementation project management experience.  Twitter: http://twitter.com/erickimberling   Linkedin: http://www.linkedin.com/in/erickimberling

Posted by Sue Ansell at May 21, 2010 12:00 PM

Categories: Enterprise Resource Planning (ERP)

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