Failed ERP software system implementations and integrations happen frequently and the problems are legion. However, there are ways that organizations can avoid their own failures. In a recent Taft Technology Insights post, we discussed how to avoid a failure if restarting a deferred integration during COVID-19.
We are frequently retained by companies whose projects are in such disarray that vendor or integrator relationships are beyond repair and disputes are heading to court. We spend a considerable amount of time reviewing contracts, emails, reports, and memos, and speaking with key figures as part of negotiating a settlement or preparing a court argument. Over the years, we have seen patterns emerge where the reasons behind the failure of the ERP software system could have been uncovered and corrected long before reaching the point of no return.
While not all ERP failures can be avoided, many can be salvaged if the user takes certain steps – often beginning when the project is first being considered.
Mitigating Risks of ERP Failure
Along with working with an independent, technology-agnostic consultant from the outset, a user can do several things internally to mitigate risks or salvage an implementation that is in trouble.
The Boy Scouts’ “be prepared” motto is applicable for ERP projects. The ERP contract should require weekly or monthly project status reports, and include a senior-level contact at the integrator who isn’t part of the project team to review both progress and challenges.
Beyond this, the user should consider having a “go team” on standby to swoop in at the first sign of a problem. The team would conduct an assessment to identify the likely root cause of the issue. Members of the group must be familiar with ERP and the business goal of the new installation or upgrade and might include people from the user’s IT department, plus finance and operations.
Often, the root cause of the problem can be discovered by the go team and fixed by the integrator.
If the first intervention is unsuccessful, it may be time to bring in a consultant to review the project and determine steps to right side the implementation. When an ERP project derails because the actual integration plan bore little resemblance to the project plan, it is sometimes the result of senior management’s inattention. Whatever the cause, it is critical to determine if the project can be saved. Efforts spent on righting the project will cost less and have less impact on the business than starting over with a new software product or litigating the dispute in court.
ERP Misaligned with Requirements
In preparation for filing a failed ERP implementation lawsuit, we typically conduct an extensive review of project documentation. Sometimes the project documentation does not align with the business requirements of the ERP software system. The requirements should be written into the contract and the project plan, so if a dispute arises it becomes part of the legal agreement between a user, vendor, and integrator.
When this information is missing or inadequate, it triggers a variety of issues. As one example, there are occasions when we discover that the integrator staffed a project with unqualified individuals.
Whenever we negotiate and draft a contract, we try include a provision that allows for the approval and replacement of consultants.
Obviously, there is no way to foolproof an ERP software system against failures. It is an incredibly complicated management tool tying together suppliers, factories, inventory and warehouses, invoicing and payments, and employee information. With so many moving parts that all need to work together smoothly, it is not uncommon for something to go wrong.
It is incumbent upon users to not only draft a solid contract but also to draft contingency plans that allow a successful intervention as quickly as possible when an issue arises.
Taft’s Technology lawyers have extensive experience negotiating and drafting ERP contracts with vendors and integrators, and litigating disputes when they arise. Whether you are launching a new ERP initiative, upgrading a legacy system, restarting a project delayed due to COVID-19, or resolving a dispute with a vendor or integrator, we can help.