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What’s a more common mistake: pulling the plug on an ERP implementation too soon or not soon enough?
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4 Answers
Not soon enough. The industry is littered with failed ERP projects. Most often the only "successful" installation is the Finance department because their process is so similar to all Finance departments that there is virtually no variance from the "standard" product. Every other department, especially Operations, are red-headed step children. Modification and integration in these parts of business place so much risk, cost and disruption into business as to diminish any chance of success.
Ideally, ERP implementation plugs are pulled even before the project starts. Finance already has everything they need - Operations is going to get cold cocked or have to fight a political storm that results in succession from the corporate plan (dangerous to careers) or assimilation to the corporate plan (dangerous to companies).
David,
I think the percentage of ERP projects that are stopped mid-stream is probably fairly low, however, I don't have data or research to back up that assumption. Most companies that embark on an ERP project want to see it through to completion, which is exactly what happens.
The risk of pulling the plug too soon is prematurely ending a project that could be successful. On the other hand, terminating a project too late means you have wasted much time and money on something that ultimately brings no value.
Timing the decision to terminate requires balancing such factors as:
-- How severely wrong is the project?
-- Does the business still need whatever it hoped would come out of the project?
-- Is the project only running late and over-budget, or is there is some deeper issue that would prevent it from ever being completed successfully?
-- Has the business environment changed so that perhaps the project is no longer needed at all, regardless of whether it is late or not.
Every situation is different, but even asking the question is a healthy start to addressing the issue.
Implementing ERP system is one of the change management processes that high number of the firms ignore it or not recognize it at the beginning.
ERP system is a key to connect and integrate the organization towards generating good governance as well as assisting in taking business strategic decisions.
Pulling off the project post the implementation start is one of the most undesired decisions that any management could think of.
However, it depends on the organization size and strategies, but ERP systems may required some organizational restructuring, or processes and responsibilities review, therefore good analysis and process mapping is required prior to the system adaptation. Accordingly, it needs to be discussed and agreed cross functionally before the start of the implementation at any time.
Some of the functions will not be considered as optical as per what Steve explained, but other functions could create big scandal as there management is not ready yet to implement such approach.
Therefore, project implementation should be reviewed, encase any of the required preparations not fulfilled, and a complete diagnostic report should be submitted to the management for decision making.
I'm not recommending pulling off the project completely, but some contingency planning should be in place in order to mitigate the risk of wasting time and money as per what Micheal stated.
At the end, ERP system implementation is one of the key change management approaches and needs to be managed that way for business success as well as project success.
David,
You ask a tough question! The last 20 years has been littered with examples where in hindsight it would have been better to have pulled the plug sooner - it's just nobody realised at the time.
What I can say is that I encourage my clients to have a very strong business case supported by measurable business benefits. At key stages in the project the business case needs to be reviewed to ensure that the benefits are still achievable. If they're not then that's the time to raise the red flag and consider pulling the pin.
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