Manage-Wise

Why ERP implementations fail?

We have seen that many ERP implementation fail and many more fail to deliver the promised results. What is behind ERP disasters? Most implementation experts have pointed out that the main culprit of failed ERP implementations is the end-user training. Experts say that the technical training of the core team of people who are installing the software is done properly and there is no problem in that aspect. It is the education of the broad user community of managers and employees who are supposed to actually run the business with it that is not done properly resulting in the wrong and improper usage of the system.

Many studies have revealed the fact that as few as 10-15 percent of ERP implementations have a smooth introduction that delivers the anticipated benefits. The remaining firms either experience teething problems or a significant shortfall in delivered benefits and the difference between the successful 10-15 percent and the rest is better training.

ERP vendors understand

Everyone knows that training is important, especially the ERP software vendors. They earn handy revenues from “design once, recycle many times” training courses. The third-party training firms, who conduct courses on how to operate an ERP vendor’s system, also know the importance of training. The variety of training formats available is amazing—on-site training, Web-based virtual classrooms, computer-based training, knowledge warehouses, video courses, self-study books, context sensitive help screens—an almost endless menu to suite almost every need and budget.

ERP training has become a giant business in its own right and the training business is expected to grow exponentially. The logic is inexorable—the better the training, the faster you will see the business metrics move in the direction you are looking for. But the problem with such training is that it is not good enough. It is just a walk through of the system and teaching the users on what to do. This will not help the users to understand what they are doing and why.

Emphasis on education

The education should impart to the users the ability to figure out the underlying flow of information through the business itself. The program should explain the ERP basics, the business processes, how the ERP system functions, how it automates the business processes, how the action of a user affects the entire organization and so on. The focus should shift from mere training to providing education and with greater emphasis on education. Education will tell the users why they are doing it and will help in winning support for the project as it will enlighten the users, whereas training will only tell them what to do and how to do it. There is a tendency for companies to fall into the trap of putting employees through training programs that are too software-specific. This kind of a training program will ignore the fact that ERP systems are designed to operate by codifying a set of business processes.

Another problem is that the training typically occurs at the end of the implementation cycle, when activities are often running late and being compressed. So training, too, gets squeezed in as a last-minute activity. So, it is important to start the training program so that it will be nearly over by the time the system goes live and then continue for a few more sessions to clear the issues faced during the actual interaction with the ERP system. One of the results of not providing a proper training program is that users fail to appreciate the consequences of their actions, often with disastrous results. Informal practices that worked fine in the era of paper procedures or standalone legacy systems can have catastrophic effects on an integrated ERP environment.

Training in how to operate the system will not however help, the middle manager sees far enough down the road to decide to forgo the short-term benefit of shipping product come what may. Only a broader-based, holistic education in the company’s ERP-mediated business process will do that. If end-user and middle management training is so important, why it is not given more priority? Companies have begun to wake up to the fact that training is a key requirement.

Training phases

The training strategy should include two phases of training—one before implementation and the other during and after implementation. The implementation of the project commences with the training of the project team so that they are able to carry out their tasks. During the implementation and after the implementation the end-users are trained on ERP basics, process changes and how to use the ERP system.

Pre-implementation training

Implementation of the first phase of the training strategy is the training activity that relates to the training of the project team and the system administrators. The focus of the training for the project team will be upon understanding the functionality of the software. Training on such subjects as best practices, process mapping, training skills and documentation may be provided by the vendor, but this will vary from vendor to vendor.

A local higher educational establishment or other training organization may be able to fulfill any gaps. The training of the system administrators will focus upon technical aspects of system installation, maintenance, report writing and any other identified issues.

The objective of the training is to transfer knowledge and skills about the application, implementation practices and operational best practices from the external trainers to designated internal personnel. Whilst most of this will be done in more formal proceedings, the transfer of knowledge about the software functionality tends to be done on a more informal basis. However, since this transfer of knowledge about the functionality need not be effectual, it is worth examining this specific area more closely.

The team members’ understanding of the application functionality is critical for the effective development and introduction of new processes. Without it, it becomes impossible to make the most of what is an expensive investment. While the pre-sales demonstrations will promote the merits of the functionality of the software, its drawbacks may be withheld.

Excerpt from ‘ERP Demystified’ by Alexis Leon. Reproduced with permission © 2007, Tata McGraw-Hill Publishing Company Limited. Price: Rs 425. E-mail: Vishwanath_Ghanekar@mcgraw-hill.com