According to analyst firm Gartner, approximately 75 per cent of all ERP projects fail. Why then with better customer service and advanced IT systems, do we continue to get ERP implementations so wrong And what can SMEs do to ensure their experience is a happy one
Despite the industrys focus on simplifying IT, findings from a new independent report commissioned by us at K3 FDS suggest that there is a continuing disappointment among medium-sized UK businesses with their ERP implementations. The report firstly showed that importance of ERP is almost undisputed; it’s the cornerstone of business and IT operations, handling everything from payroll and accounts to logistics, warehousing and inventory so unsuccessful roll outs have the power to cause disruption to these smooth-running of the organisation.
Yet it revealed that 79 per cent of IT and finance directors were not totally satisfied with the roll-out of their ERP project, while just eight per cent deemed their new system easy to use. Given the significant investment made to implement ERP, particularly at a time when access to cash is in such short supply for businesses, there is no room for error.
So whats the cause A lack of transparency appears to be at the heart of things, with 71 per cent believing that technology partners could be more transparent when it comes to the total cost of the project; while a third admit they are unsure about the level of honesty offered by their partners. Businesses are also exceeding their original budget by almost a fifth (18 per cent), costing the average mid-market UK business an additional 76,000. This poses the question how can businesses gain more transparency from their ERP projects and more importantly stay within budget when rolling them out
A companys ability to see a return on an ERP project often depends on how quickly it can deploy the new system, and whether it’s in line with what was promised at the outset. Given ERP is one of the biggest IT investments businesses make, particularly for mid-size organisations, any delay or overspend can have a massive impact. It seems the industry still has a long way to go in delivering the transparency customers are demanding.
One of the answers to the overruns and overspends more standardisation may seem obvious, but many companies still insist on overly complex and unnecessary amendments to the core platform chosen. When customisation increases, so does the cost and complexity of ERP projects, causing them to be delivered late and over budget. Therefore it makes sense to keep implementations as standardised as possible, focusing on the customisations that really add value.
When starting out with an ERP project, business leaders need to invest a significant amount of time to scope out and agree what success looks like. It is also critical that businesses have an on-going dialogue throughout the process with their partner, and are comfortable that they fully understand what is happening at every stage of implementation. This is why transparency is so important.
As businesses look to do more with less, the failure of major business projects is something they simply cannot afford. The costs are potentially great wasted time and expense, resources diverted, damage to organisational culture and even compliance can become a costly issue if controls are not properly implemented and utilised. Investing the time to create a clear picture of how an ERP project will look from start to finish is fundamental to its success.
Andrew Fox is Managing Director at K3 FDS