Lessons Learned From a Failed ERP Implementation

[erickimberling]

We just recently posted a blog entry about lessons learned from a recent ERP failure at now-bankrupt retailer The Shane Co. Although more focused on retail than manufacturing, the lessons learned can be applied to manufacturing ERP initiatives. Click here to read the blog, or click here to register for our free web-cast on the topic.

[dreck]

Eric:

Nice post and the blog entry provides a nice overview. I have no particular axe to grind with any ERP software because I take the stance that the software probably works. In this case, Shane Co. was probably sold a package outside of its realistic price range and it isn't clear how that happened.

As an independent consultant, I've spent a great deal of my career cleaning up botched implementations (use loosely) and to this day, I'm amazed with what I typically find...a system that technically works but provides no utility...what I call the million dollar (or whatever they spent) word processor.

[erickimberling]

I completely agree. Someone in the webinar asked if any one ERP software vendor experiences more failure than others, and I replied that all the vendors have failed implementations under their belt. Even if a company finds a software package that is a perfect fit for them, it's still quite possible to screw up the implementation and blame the software.

[whiterabbit]

Originally Posted by dreck

Eric:
I'm amazed with what I typically find...a system that technically works but provides no utility...what I call the million dollar (or whatever they spent) word processor.

My friend, the most alarming thing is the ideology of the market when acquiring a new erp/crm/ecommerce system. Check out google-ad to see the thousands who search 'ERP Solution' but less than 10 individuals look for ways to help them define their needs.

No wonder most erp implementations are so far from what customers really need. The customers rely on the software company to tell them how to do business. But in all fairness it's not the supplier's role to do so. Battles end up in court and causes a lot of frustrations, loss of business (Since the system does not work as it should) or the customer pays for something they do not use).

The bottom line is, there are clever sales reps out there who could get you to buy something you dont even need. But if no one or nothing is there to help you determine you needs BEFORE you go look for an ERP system, then there is nothing much you can do.

"If you dont know what you want, you end up with a lot you dont"
Follow the link for help with ERP Implementation tools.

[wesdavidson]

I think the key is that they expected a software package to correct cultural deficiencies.

They referenced "overstocks and wrong mix of inventory" this signifies a real disconnect between sales and purchasing.

I would have to say that the advertising was a bit conceited and grating as well. The picture that came across was of a heavy set fellow in a pimped out caddy and a gold necklace selling overpriced flash.

They key to most of these problems has been that the folks buying the software really don't have a clue about the company. They try to push or cram down the implementation.

With high priced items, with a lot of open competition like jewelry, (I manufactured a line of jewelry at one time) it is the customer that has the ultimate power. The relationship between the salesperson, the metal, and the customer has to feel right. If any of the 3 doesn't jive it don't happen. If the salesperson has a bunch of stuff he doesn't like dumped on him, and can't please the customer, well,,, all the software in the world won't help.

[dreck]

Quote: Originally posted by whiterabbit

"The bottom line is, there are clever sales reps out there who could get you to buy something you dont even need. But if no one or nothing is there to help you determine you needs BEFORE you go look for an ERP system, then there is nothing much you can do."

Unfortunately, there are hundreds, if not thousands of "consultants" that supposedly specialize in ERP selection...however, most use a checklist/template approach and don't really look into what the company needs and how they operate. These consultants often make the problems worse, by inserting another layer of biases or limitations into the process. No wonder 65%+ of these implementations are considered failures.

I have always had the attitude of not believing anything the software salesperson tells me about the software - EVER. I only believe what I see. That is why I have always insisted on running a full controlled/planned conference room pilot - onsite during the final selection process. This includes a data load and putting the software through a lengthy trial. (This will also address the cultural issues that wesdavidson mentioned.)

The software companies hate this but aside from getting an iron-clad 6 - 12 month return guarantee, you can't gamble the future of your company on what is shown in a demo or written in an RFP or consultants report. This takes a lot of time and effort on everyones part...there are no easy ways around it. For example - a RFP and selection process should take at least 12 to 18 months.

Getting back to the Shane example...if inventory overstocks and mix were problems, it was probably due to them not using the system correctly - having unqualified (untrained) people working the system...inventory management in these systems are one of the few "standard system" elements (basically the same thing in each ERP - use ROP or MRP logic). You can spend a lot of money on software but be cheap on people - training or qualifications. The answer is always the same.