For any business considering a new ERP system, there are many worrying statistics. For example, a Gartner study shows that up to 25% of ERP initiatives are considered failures and another 55-60% result in significant gaps between user expectations and the actual delivery.
According to the Greek philosopher Aristotle, it is possible to fail in many ways, while to succeed is possible only in one way. Never was this more true than when considering ERP systems.
The implementation of an ERP system like SAP S/4HANA can be considered as new territory for most businesses, even those who would already have experience with large and complex IT projects.
While SAP S/4HANA does have its own foibles, and we will cover these later, all ERP implementation failures tend to follow a familiar path.
The reality is that most ERP projects do not fail because of a flawed selection process or the functionality of the ERP system. They fail because ERP implementations are not seen as a people-centric process rather than a large IT project.
So let’s look at the common causes of failure – and how to avoid them.
Being product-led
In any construction project, you start with the foundations. It is sensible to make sure you have the foundations right. With SAP S/4HANA, the tendency is also to take this from the ground-up approach: ensure the IT infrastructure is sound and fit for purpose; that data can be migrated, and new systems work within given performance parameters.
This leads to the implementation being regarded as an “SAP S/4HANA migration project” rather than the business transformation project it should. “Migration” would imply technical-led while business transformation requires early input from all the business.
Unfortunately, the likelihood of end users being involved at the early stages of a business transformation programme is very small. As a result, some of the most critical strategic steps could be defined at this initial stage – before the business has fully determined what the programme is for.
For example, Hershey tried to squeeze its SAP ERP implementation project into a very short timeline. It sacrificed due diligence for expediency, launched during Halloween and kept Hershey from delivering $100 million worth of candy that season.
What you should do
Consider your SAP S/4HANA implementation as a business transformation rather than a technology project. System functionality is one of the least important criteria for success. Don’t consider SAP S/4HANA implementation as a solely technical problem, SAP end-user training is just as important. Start working on people and processes as soon as possible.
Features over function – don’t believe the hype
While it is healthy to consider your SAP S/4HANA project as one that will transform your business – don’t expect systems to solve all of your problems and turn you into a digital leader. Setting over optimistic and unrealistic expectations is another road to failure.
The failure at Lidl is an example of setting the wrong expectations. Any project has to have a manageable time horizon. It must also align how it intends to work with system capabilities. Having spent seven years and €500m, it became clear that bridging the difference between how Lidl wanted to work and how the SAP systems were designed to work was not going to happen.
What you should do
Project goals have to be realistic and time-constrained. Throw your net as wide as possible to include external and internal experts to discuss and agree on your project’s critical success factors.
Pull in consultants to figure out what has worked for businesses of similar size in your sector and why it would work for you. That way you can set transformational goals that you have a good chance of attaining.
Which brings us on to the next point of failure. Sometimes, you don’t know what you don’t know.
Lacking experience and expertise
It may be that your internal resources and vendor systems integrator can handle your entire project, but how do you know?
Your systems integrator and your ERP project/programme manager should both have relevant ERP experience within your industry. They may be able to design and manage the system build process, but can they handle the more people and process transformative elements that are required?
Organisational change management, risk management, and user adoption are critical to success. Have you gathered sufficient experience and expertise to address them? Without these competencies, the project is again on the path to failure.
Revlon, like many businesses implementing SAP S/4HANA, didn’t seem to understand the risks associated with its implementation. They also didn’t seem to have strategies to mitigate those risks. When it announced its difficulties, shares fell nearly 7% on the day of the announcement.
What you should do
Systems integrators can misrepresent their capabilities, so it’s essential to ask for relevant references.
Work hard to bring in change management and user adoption/training expertise as early as possible into the project team. Consider hiring in this expertise pre-project to ensure you get the most out of them.
Full disclosure: Optimum is an experienced SAP S/4HANA user adoption consultancy, providing bespoke solutions for implementation, upgrade and business-as-usual (BAU) requirements. We understand how the system works, how to best select super users and help train your staff.
An effective training program is key to the success of your SAP S/4HANA system implementation.
Contact us today to ensure a successful roll out.
The Art of Change Management
Change management is more than getting people to do what you want – it is certainly not an end-user training exercise. The best change management links strategy with execution, and deployment with operation to deliver the best outcomes.
Businesses who don’t bake change management into their SAP S/4HANA plans will more than likely fail, According to Panorama Consulting, in each of the 30+ ERP expert witness lawsuits they have been involved in, change management issues contributed to the project failure in some way.
What you should do
Invest in organisational assessments, employee communications and customised training. Ensure you have the best cross-functional teams in place to keep on track.
Cross-functional teams and executive buy-in
Executive buy-in ensures the ERP implementation doesn’t become a technology project but fits your overall digital strategy.
The executive team has to buy-into its strategic role, making decisions on priorities, resource allocation, timelines and budget. They are also crucial in ensuring that the most influential people from lines of business and process experts are given enough time to take part in cross-functional implementation teams.
What you should do
Knowledge of how the business works will be found in pockets throughout the organisation – being able to find it and nurture is a vital factor in project success.
Your user adoption/training consultant can help with identifying subject matter experts and potential super users within your business.
Look to provide taster courses to provide tailored overviews of SAP S/4HANA, to increase familiarity with the new systems, and their relevance to key business areas and processes. Here are some of our own examples.
Best practice versus the way we have always done things
Implementing a new ERP system raises the need to fundamentally address how the business is run now and how it should be in the future.
Many businesses, having been previously burned by over-customisation, begin ERP implementations expecting just enough customisation to suit the business.
What you should avoid is customising functionality which should really be standard. Many back-office processes are not differentiators, so following standard functionality is usually enough.
What you should do
If there is pressure to customise back-office processes, it may be a sign of resistance to change. It may be more comfortable in the long run to decrease user resistance rather than provide costly and unnecessary system customisation. This is where good change management starts to pay off.
Preventing ERP Failure – start early
Although ERP systems are often thought of as a necessary evil, they are here to stay, especially as businesses look to go digital. You can avoid the major pitfalls of the traditional, often complicated, approach to implementation. So plan and gather requirements early, build strong teams and strengthen expertise around process and people-centric issues.
Get in touch with Optimum’s team of experts to find out how we can help perfect your S/4HANA go-live with a tailored, role-based training programme for your staff.
