ERP Implementation

Success Factors for ERP Projects

Lesedauer: 8 Minuten

14. December 2020 von Felix Hasenbeck und Kilian Nickel

Success Factors for ERP Projects

The selection and implementation of an ERP system poses a major challenge for companies: In addition to the large quantity of vendors and systems, there are many possible approaches for project implementation. Some problems are particularly common, such as exceeding budget and time requirements. The problems are not always of a technical or organizational nature – the human factor also has a notable influence on the success of an ERP project. In the following, typical obstacles are highlighted and the associated success factors are presented. For executives and project managers, a good understanding of these correlations offers an optimal starting position to meet the challenges.

ERP systems are the heartbeat of modern corporate IT. An ERP selection and implementation thus resembles “open-heart surgery”. It inevitably means an enormous change for the company, since the work of many employees is affected. Negative impactsAffects on theto ongoing business operations should be minimized as much as possible. At the same time, the planning and implementation process nevertheless occupies binds internal capacities. It is almost always a future-critical, challenging, and expensive project.

The implementation of ERP is usually preceded by a longer selection phase. A fundamental challenge in the selection phase is that the ERP system must perform provide a large number of functions throughout various departments of the company. The number of requirements that are brought up during the performance specification is accordingly high. Furthermore, companies have unique aspects in their structure and process organization. The need to proceed in detail at this step in the process carries the risk of  too overloading the project with too many requirements overloading the project.

To complicate matters further, the ERP market is very diverse. Small and medium-sized companies in particular are spoiled for choice when it comes to selecting system and vendor. The larger the company, the smallermore the selection pool of systems that are ultimately viable to said company shrinks, since there are greater functional requirements to be fulfilled.

The technical aspects are only one part of the challenges. An ERP vendor will even try to fulfill requirements beyond the standard possible for a company. This is primarily a question of effort and cost. The human factor in the company is almost always more critical than the technology when it comes to the success of an ERP implementation. In addition to the project team, management and specialist area subject matter experts, the stakeholders also include other parts of the workforce. The decision as to which messages are communicated to which stakeholders is of paramount importance. It is not uncommon for stakeholders to have reservations or conflicts of interest, such as bad experiences fromon previous projects, which must be addressed. The ERP selection and implementation thus becomes a sociological and group-dynamical playing- field.  of sociology and group-dynamics.

Figure 1: Success factors and their frequency of mention from a sample of 74 companies [2].

Obstacles in ERP projects

The obstacles which face the project team faces can roughly be briefly divided into five categories:

  • The ERP system doesn‘t function work as expected. A suboptimal functionality can have technical reasons, such as inadequate hardware or an unsuitable software configuration. It is also possible is that the technology works, but the IT support in the company is not up to speed. In this case, either the requirements for the system have not been ascertained assessed precisely enough or the employees are insufficiently familiarized with the standard processes of the system.
  • The project takes longer than planned. This obstacle is often caused by an inadequate planning phase. Realistic benchmarks and the incorporation inclusion of buffers are essential for effective planning. Another possible reason can be insufficient boundaries to the project frameworkscope, which overloads the project with requirements that are not within its focus.
  • The project costs more than planned. The reasons for this obstacle are in fact usually the same as those for the project taking longer than planned.
  • The employees are dissatisfied. The reasons for dissatisfied employees are as diverse as the human psyche. A certain amount of dissatisfaction is almost unavoidable over the course of the project because an ERP project always engenders a significant disruption and change in everyday work. The effort invested in adjustingment does not bring satisfaction per se. Often, however, dissatisfaction in ERP projects has something to do with suboptimal communication, i.e.. the right messages are not being sent at the right time.
  • The executives are dissatisfied. This group has a prominent position in ERP projects. The reason for dissatisfaction is often a lack of understanding regarding one‘s own role. This too can be attributed to poor communication.

Although the reasons listed above are not exhaustive, they provide a guide for analyzing the obstacles.

The seven success factors

The range of possible countermeasures is almost infinite. However, there are certain success factors which address the aforementioned obstacles. This question has also been dealt with extensively in the literature [1]. A survey by Fraunhofer IAIS [2] among 74 German companies shows the distribution of the most important success factors shown in Figure 1. The most frequently mentioned factors include good project management (33.8%), communication with all specialist departments (23%), support from management (23%) and avoidance of customizing (13.5%).

Based on the survey and experience from ERP projects at Fraunhofer IAIS, seven key success factors are identified:

  • Clear Thorough planning: Before making a selection, an analysis of the current situation and the requirements must be performed. The project phases must be planned thoroughly at the beginning and a program management system set up for control.
  • Avoid customizing: The company‘s processes must adapt to the standards of the system. Customizing should be avoided wherever possible and should only be carried out where it strengthens the company‘s unique selling points on the market.
  • Allow spacefreedom: The ERP vendor should be given freedom in the methodology, planning and implementation of the ERP implementation, especially in regards to training.
  • Precise fit of the ERP vendor: The ERP vendor must present its project team to the company and fit the company in terms of philosophy, personnel and working methods.
  • Test run: Central functions should be tried out in a test system before selection. The use of the system should be assessed by reference customers. Important properties of a system (performance, usability) can only be assessed by trial and improvement.
  • Drive from abovethe top: The management must be in favour of and be the driving force behind the ERP implementation. This positivity must be communicated to the employees repeatedly.
  • A steep path: The management and the project team must be aware that the implementation will cost blood, sweat, tears and a lot of money. Resistance must be minimized at an early stage through change management.

Depending on which obstacle occurs in the course of the project, the project team should focus on the appropriate success factors. Figure 2 makes it clear that there are three factors which address hard, quantifiable obstacles (non-functioning ERP system, extended project duration, increased project costs). “Clean Thorough planning” is part of the basic craft of every good project manager and can be learned. The success factors “avoid customizing” and “allow spacefreedom” are a question of the basic attitude towards the ERP system and vendor. They can prevent excessive additional costs from being caused by a strong adaptation of the system or the implementation partner being influenced too much in their tried and tested approach.

Figure 2: Assignment of success factors (columns) to obstacles (rows).

Three other success factors should be emphasized. Although rather soft and difficult to quantify, these obstacles may arise in the project (dissatisfaction among employees and management). The “precise fit of the ERP vendor” and the “test driverun” can be best ensured through a careful and well-considered selection process. The “drive from the topabove” is essential, because an ERP project and the resulting expenses must always be borne by the management.

The “steep path” success factor may seem trivial. However, it can significantly galvanize the organization when it is explicitly clear that an ERP project is never easy. Thoughtful change management is necessary even in an organization that has a receptive attitude towards a new ERP system.

Summary and conclusion

An ERP selection and implementation is always a major challenge for a company. The bad news is that problems and obstacles during such a project are virtually inevitable. The good news is that these barriers can be counteracted. The first step is to foresee the expected obstacles. The second step is to analyze the reasons for these obstacles. In the third step, the appropriate countermeasures must be formulated and implemented. At Fraunhofer IAIS we rely on seven success factors that should be emphasized depending on the obstacle. This can never replace an individual analysis for the company. However, using these success factors as a point of orientation helps to define the correct framework, from which the project can succeed.

Open Access: https://doi.org/10.30844/ERP_20-4_39-41

 

 

 

 

Change ManagementERP SystemsERP selectionERP-Einführung


[1] Leyh, 2014. „Which Factors Influence ERP Implementation Projects in Small and Medium-Sized Enterprises?“ 20th Americas Conference on Information Systems. Savannah, 2014. 

[2] Nickel et al., 2020. „Wie eine ERP-Einführung gelingt. Einflussfaktoren und Maßnahmen aus Unternehmenssicht.“ Fraunhofer IAIS (Hg.).




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