ERP and MRP Software: Avoid 14 Implementation Failures Part I

14 ERP and MRP Software Implementation Failures to Avoid

When it comes to MRP software and ERP software, far too many stories of implementation failure litter the reputation of these projects that make investing in such change too risky for business owners. There are ERP and MRP software programs that promise big results and produce very little because they are not implemented properly. Pitfalls can be avoided (or at least moderated) by knowing what they are beforehand and not getting blindsided during the implementation process. This article examines typical reasons for implementation failures.  Stay tuned for Part II and III…

First, What Does a Successful Implementation Look Like?

When a business process or software application is successfully implemented in your organization means that it has become a routine, functioning part of your business. For example, suppose you implemented a new weekly management report in your company.1 You could reasonably say it’s a successful implementation when it is published on time every week, accurate and up to date, distributed to everyone who is supposed to get it, reviewed in a management meeting, and acted upon appropriately. In other words, the production, distribution and use of the management report has become a reliable routine in your organization. Conversely, if you have to “manage” the process to make sure the management report actually gets produced and distributed then, by definition, it’s not a successful implemented change.

It’s also important to recognize the need to “implement” the concept and value of a management report, not just the mechanics. If managers do not recognize the value of getting information on key performance indicators on a weekly basis, and/or do not act on this information to correct problems and drive continuous improvement, then the likelihood the report will fall out is high.  This is an example of an unsuccessful implementation because it is not perceived as having any value or functional utility in your company.

14 ERP and MRP Software Implementation Mistakes to Avoid

Generally there is no single reason for implementation failures; rather, a combination of factors is involved.

1. Lack of Skills: Very often implementation failures are blamed on “resistance to change” on the part of organization members who want to continue business as usual and so sabotage the change effort. This may be true in some cases, particularly when an individual’s job is threatened, but a far more frequent cause of failure can be traced to the fact that organizations just don’t know how to implement very well. Managing organizational improvement programs and making sure changes in policies, procedures, methods, concepts, job duties, etc. are put into place operationally is difficult to achieve. Implementation is time consuming, often tedious, requires a great deal of communication and involvement throughout the organization, and is a skill set in its own right. The idea that you can “implement by memo” is naïve and generally no more effective than wishful thinking.
2. Lack of Time and Talent: Many smaller companies, especially job shops, employ fewer than 50 people with annual revenues less than ten million dollars. Smaller businesses don’t have extra resources to devote to organization development projects, so the task of implementation falls to managers and other key people. However, managers already have full-time jobs running the business, and expecting them to take on the detail-oriented and time-consuming challenge of implementing change can be unrealistic. It’s like asking the driver to run the race and tune the car at the same time. Do-it-yourself approaches usually take more time and cost more money than anyone imagined, especially in terms of the opportunity costs associated with delays in implementing improvements.
3. Wrong Solution: Programs can fail because they are based on the wrong solution. This can happen for a variety of reasons such as a rush to action or jumping on the latest management fad. A good example of a wrong solution is an MRP system in a job shop environment where there are no finished goods inventories. MRP software is designed for build-to-stock companies with multiple SKU’s (stock keeping units). These types of companies have a high need to forecast item demand and produce appropriate quantities to maintain calculated finished goods inventory levels. The objective is to have the right SKU’s on hand to fill orders and not lose sales, while not overstocking or exceeding inventory financial investment guidelines. Trying to use a high-powered MRP system in a job shop...if you can even get it to work...will create more problems than it will ever solve because it is the wrong application for a build-to-order environment.

In Part II and Part III of this series we will explore the following top ERP and MRP software implementation failures.

   4. Solution in Search of a Problem
   5. Rush to Action
   6. Overkill
   7. The Program is Manipulative
   8. Lack of Management Commitment
   9. Poor Prior Experience
 10. Lack of Measurement and Feedback
 11. Time Frame Too Short
 12. Decreasing Payoff Over Time
 13. Lack of Agreement Among Senior Managers
 14. Continuous Improvement: Catch 22

If you don’t have the skills, time or talent, or if you have chosen the wrong solution, then an ERP or MRP implementation failure is likely. To increase your odds of success hire and ERP or MRP consultant for a thorough needs analysis before you choose your solution.  You may consider investing in an outside implementation support consultant on a part-time or contractual basis. There are many independent ERP and MRP consultants, trainers, and project managers who can provide this service. However, be aware during your selection process that additional problems can be caused by people who know the human relations side of implementation but don’t understand the business side. The result is you can have lots of meetings, training sessions, and all sorts of organization development activities going on with only a negligible impact on company performance as a whole.

Feel free to CONTACT US at Baesis or call Len Diana at 508-393-9960 x 1011 if you have any questions about this article, Sage 100 ERP or are considering implementing a new ERP systems. We offer a free needs assessment to help you get started.

Baesis was founded with the belief that there was an opportunity to serve the SMB manufacturing community and build a company based on values and a customer first attitude. Baesis specializes in serving the SMB manufacturing community in New England, New York, Ohio, Kansas and Missouri implementing, supporting and training customers on Sage 100, JobOps, Sage 50 for Manufacturing, and MISys solutions.

Today Baesis is one of the largest Sage and JobOps resellers in the United States. Sage 100 and JobOps ERP solutions help Baesis better serve the manufacturing community in New England, New York, Ohio, Kansas, and Missouri by helping customers identify new and improved ways to increase productivity and profitability.

By Frank Leonard

References
1.     "Levi’s Factory Workers are Assigned to Teams and Moral Takes a Hit. Infighting Rises, Productivity Falls as Employees Miss the Piecework System", Ralph T. King, Jr. Wall Street Journal, May 20, 1998, Page 1.
2.    One of the most thorough analyses of ISO 9000 and its implications can be found in Optimizing Quality in Electronics Assembly by James Allen Smith & Frank Whitehall, McGraw-Hill, 2006, Chapter 17 pp. 430-451
3.    For a revisionist view of reengineering, read Beyond Reengineering: How the Process-Centered Organization is Changing Our Work and Our Lives, Michael Hammer, Harper Business Press, 1997

Another version of this blog was posted previously on Baesis’ Tech Tips Blog on March, 01, 2014 - WHY IMPLEMENTATIONS FAIL - by Frank Leonard

Photo courtesy of www.freedigitalimages.com by Stuart Miles