From modernizing business processes, accelerating workflows, and increased profitability, there are plenty of upsides to an ERP software implementation or full scale digital transformation. However, there are many things that can go wrong during and after the implementation process that can result in an implementation train wreck. In the cases we litigate on behalf of ERP customers victimized by software failures, the reason for the failure almost always lies squarely with the ERP vendor or integrator.
Failure can take a multitude of forms, from not realizing expected business benefits, blown budgets, extended timelines, and the failure of deliverables to conform to agreed upon specifications. At the other end of the spectrum are production stoppages, massive loss of revenue and even business failure. The most common reasons we see for failed software implementations and digital transformations include the following:
- The ERP Vendor Oversells the Software: It is common for ERP vendors to overpromise and under deliver the ERP software’s functionality and exaggerate the software’s fit for a customer’s business needs. Despite a customer’s best efforts to evaluate and select an ERP system, ERP vendors often engage in puffery and misrepresentations to meet sales quotas. When this happens, customers are often so far into an implementation project they feel compelled to pay for expensive customizations to try to save a software solution that is riddled with extensive gaps in functionality.
- The Customer is Provided With an Unrealistic Budget or Timeline: In order to close a deal, ERP vendors often grossly underestimate the cost of the implementation or the time it will take to get to “go-live.” This results in missed deadlines and the customer paying more to complete the implementation than is necessary.
- Inadequate Project Management: ERP vendors often take shortcuts on project management or fail to devote adequate project management resources to a project because of resource constraints. This results in part-time project management or remote project management that is rarely successful.
- Failure to Sufficiently Test the Software: The lack of adequate ERP vendor project management resources can lead the ERP vendor to take shortcuts on critical project management tasks like conducting proper testing and dry-runs prior to go-live. Going live in a production environment with untested or under tested software can have disastrous results.
- Inadequate User Training: ERP vendors often fail to properly train users in how to use the software and fail to train users using real data and real transactions. Without proper training, users are ill-equipped to use the software in a production environment.
- Inadequate Vendor Resources: ERP vendors always commit to providing a seasoned team of ERP consultants with deep industry experience. The reality can be very different. We often see ERP vendors assign consulting neophytes to projects that not only lack industry experience but are unfamiliar with the software product being implemented. There is often a revolving door of consultants on a project with each new person requiring redundant training to get up to speed on the implementation project. Often ERP vendors and integrators will use a customer’s implementation project as a training ground for new consultants.
- Integration Shortcuts: ERP vendors sometimes under-test the system to intentionally conceal defects to meet milestone and deliverable deadlines. Often this results in a failure to perform proper integration testing to determine if the ERP system can interface with other non-ERP systems on which a customer might depend.
Overall, a digital transformation or ERP implementation can transform your business positively and provide long-term benefits. It is crucial to evaluate the business objectives your organization wants to achieve, understand the implementation/integration process, and use attorneys with extensive software experience to negotiate your vendor contracts to minimize the likelihood that you are the victim of an ERP train wreck.