Causes_of_ERP_Failures by georgetitan


Causes of ERP Failures

Word Count:

The failures of ERP projects are preventable if we can identify the
common causes of the failures regardless the companies and industries
that implement them.


Article Body:
ERP is the acronym of Enterprise Resource Planning. Multi-module ERP
software integrates business activities across various functional
departments, from product planning, parts purchasing, inventory control,
product distribution, to order tracking. ERP has transformed the way
multi-billion dollar corporations conduct their businesses. Successful
implementation of ERP systems could save tens of millions of dollars and
increase employee satisfactions, customer satisfactions and sustain
competitive advantages in every-changing marketplace. Corporate
executives are often perplexed by the stories that how reputable
corporations (Hershey Foods, etc.) have failed miserably and lost ten of
millions of dollars in their ERP endures.

The failures of ERP projects are preventable if we can identify the
common causes of the failures regardless the companies and industries
that implement them.

An ERP system is the combination of ERP software, the business processes
that the ERP transforms, the users of the ERP system, and the computer
systems that run the ERP applications. The failures of a ERP project is
often the result of the failures in one or more of those four components.
The failures in computer systems (hardware and operating systems) are
much easier to identify and to fix, so we'll examine the failures in
software implementation, business process and user acceptance.

Failure of ERP Software Implementation

Module-based ERP software is the core of ERP systems. Most ERP projects
involve significant amount of customizations. Packaged ERP software
modules have built-in functionality that work in a standard and
simplified enterprise environment. However, every organization is unique
in data requirements and business processes. It is the customizations
that transform packaged ERP software into ERP software that meets
organizations' individual business processes and operations. Long and
expensive customization efforts often result the pass of release deadline
and budget overrun. Customizations may make the software more fragile and
harder to maintain when it finally goes to production. Major changes may
be required in the later stage of the implementation as a result of
incomplete requirements and power struggles within organizations

The integration of ERP systems with the IT infrastructures also
challenges ERP project teams. The use of appropriate implementation
methodologies can often make or break a ERP project.

Failure of Accommodating Evolution of Business Processes

According to Anthony, R. A, business processes fall into three levels -
strategic planning, management control and operational control.
Organizations continuously realign their business processes of all levels
in response to the ever-changing market environment. Many ERP systems
aren't flexible enough to accommodate evolution of business processes.
many ERP system need a major overhaul in every a couple of years.

Failure of User Acceptance

The users of ERP systems are employees of the organizations at all
levels. ERP projects usually modify the company's business processes
which create extra workload for employees who use them initially. They
may not think that the workflow embedded in the software are better than
the ones they currently use. Ongoing end-user involvement and training
may ease the difficult in organization's adaptation of new systems and
new business processes.

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