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René Van Someren

Why do so many ERP projects fail?

Highlighting several acquisition and implementation aspects

Posted May 27th, 2013

Why do so many ERP projects fail? Or, more generally: "Why do so many software implementation projects fail?" Four main reasons for the failure of such projects seem to be:

  • Seller - Buyer Incongruence;

  • Wrong selection criteria for products and services;

  • Conflicting objectives of parties that are part of an ERP project;

  • Inadequate Implementation and Change Management.
Seller - Buyer Incongruence
Buyers not always recognize sales advertisements for what they are and they may regard them too much as applicable specifications of products and services. Buyers' lack of knowledge about a product's features and limitations can easily lead to misinterpretation and assumptions of suitability, even without attempts from sellers to seize upon such opportunities. This may place what a buyer believes to have bought in sharp contrast to what actually will be delivered.

Wrong selection criteria for products and services
Product selection may be based too much on a perception of an ERP Vendor's reputation. Buyers can be encouraged to do so by consulting firms, who may also lack actual relevant knowledge, avoiding risk by assuming that copying a decision previously made by others would be better than forming an own opinion. The perception of avoiding risk by doing so, tends to be based on the assumption that the decisions and selections that were copied, were originally made by parties who did have the appropriate expertise and that their selection is universally applicable. This may lead to copying decisions made by others, even if the original decision was wrong, weakly based, or not (fully) applicable to the situation and needs of the 'new' buyer. Some consultants tend to base their reports on the decision that is/will be made, because basing advice and decisions on expert reports, would require specific expertise and the courage to deliver original advice or make unprecidented decisions.

Conflicting objectives of parties that are part of an implementation project
Generally speaking, in acquisition and implementation projects, you may find four parties:
    1. Vendors

    2. Implementation party

    3. Active clients (project members)

    4. Passive clients (future end-users, not project members)
Each of these parties has its own objectives, for instance:
  • Software vendors want to sell. Their may derive their sales figures more from advertisements and other sales qualities than from successful implementation of their products by their clients.

  • An implementation company sells consulting hours. The longer an implementation project lasts, the more it sells.

  • Since the implementation of an information system impacts an entire organisation, those directly involved in the project have an elevated status within the organisation for the duration of the project. While most will work to complete the project as quickly and as well as possible, some may prefer to prolong their elevated status and thus, prolong the project.

  • By definition, organisational interventions represent change. Organisation members have to do their work differently than they did before. End users inherently resist change.

Inadequate Implementation and Change Management
This is arguably the main reason why implementations or other organisational interventions do not lead to the desired goals. Organisational interventions require adequate planning, gathering resources, coordination, cooperation, communication, management, monitoring, assessment and securing. Good 'Change Management' before, during and after an implementation project will prevent many problems before they arise and solve many others efficiently and effectively.


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