There are lots of ways a digital transformation can go wrong, even with a negotiated contract that spells out in detail what the software vendor and integrator will do, when they will do it, and what they will be paid. This is even more true during a recession. As we have repeatedly said on this blog, implementing software solely because you want the latest and greatest technology almost guarantees failure. The project has to be tied to a business case. Digital transformations that do not add value to the business simply do not make sense. Projects that add value are more likely to have executive and employee buy-in, and are less likely to be postponed or cut during a recession. Even with a strong business case, success is not guaranteed. Recessions put additional pressure on digital transformations.

Below are some signs that you may be headed for an “ERP train wreck.”

  • The Vendor Doesn’t Understand Your Business or Industry: Often vendors use projects as a training ground for incompetent or inexperienced consultants. These consultants may not understand the unique requirements of your business or industry. Sometimes they don’t understand the software they are tasked with implementing. If you were promised the “A team,” but provided with the “D team” because the vendor had more important customers, you could be in serious trouble.
  • The Vendor Misses Deadlines and Milestones: Digital transformations and ERP implementation are challenging. While changes in scope and pushing back deadlines are not uncommon, a vendor repeatedly missing agreed upon deadlines is a sign your project is not going well.
  • Project Status Reports Are Not Provided or Are Incomprehensible: Regular status reports are sometimes the only way a customer can get an understanding of the health of a project, upcoming deadlines, and open action items. If the vendor is not providing status reports, it is a red flag. At the same time, if the status reports hide information, are difficult to understand, or don’t provide meaningful information, your project could be headed for failure and you many not even know.
  • Deliverables Don’t Meet Agreed Upon Requirements: Requirements for deliverables should be agreed upon and documented both in reasonable detail and in a functional design document. While it’s not unusual for a customer to reject a deliverable because of non-compliance with agreed-upon specifications, repeated failure by the vendor to provide deliverables that meet specifications is not normal.

Digital transformations and ERP implementation projects are difficult. Often, one-sided contracts shift responsibility for success to the customer and don’t provide a clear path for managing the project. Without a clear business case, and executive and employee buy-in, the likelihood of success is dim. During a recession all of this becomes amplified. Budget cuts, project delays, and suspensions are more common. Proper change management, project governance, and a clear business case are absolutely critical to a successful digital transformation.