High-Risk ERP Implementation Strategy
Posted: 2020-03-04 Edited: 2022-12-04
Top-notch enterprises always avoid adopting this strategy.
At the time of this article's publication, the vast majority of large companies have been implementing their ERP or digital transformation projects with this outdated and high-risk strategy. Its steps and risks are as follows:
- Do market research and choose an ERP software.
Risk: As mentioned earlier, enterprises have good chance of selecting high-priced but inferior ERP software.
- Sign a contract with a software maker or consultant to purchase ERP software and implementation service.
Risk: If you buy inferior ERP software, you cannot refund. It is not easy to write down the details of the project's failure identification method and responsibility attribution in the contract.
- implement the ERP project
- The consultant collects and understands the business processes and requirement of the enterprise:
The consultant interviewed the end-users of the enterprise and asked the end-users of the enterprise to deliver documents.
- The consultant adds or customizes software applications:
Risk: If the ERP software is inferior, the following situations are most likely to occur:
At this time, the consultant (or software maker) may initiate these measures:
- The consultant is unable to deliver the software features required by the customer on schedule.
- New applications output a large number of errors.
- New application software is complex and difficult to use, reducing the productivity of enterprise end users.
- New applications run slowly and do not respond to users for long periods of time.
These measures can open conflicts between the enterprise and consultant. If the conflicts are so severe that they cannot be compromised, the project fails at this stage.
- Add fees to companies to increase the size of consultants or programmers.
- Ask the enterprise to extend the operation period of this stage.
- Ask companies to hire additional IT staff to support consultants in developing software.
- In the name of "process transformation", requires end-users of the enterprise to change existing operations to meet the restrictions of new software.
- Ask your business to buy more expensive hardware and networking equipment.
- Ask the enterprise to increase budget to buy special software or plug-ins.
- Negotiate with end-users of the enterprise, citing "you don't need these features" as an excuse to get the opportunity to deliver software features at a discount.
- The consultant trains enterprise end-users to use new applications:
Risks: If the ERP software is complex and difficult to use, which reduces its work efficiency, the end users of the enterprise will be disgusted with the software, and they will reject and resist. This will cause the training completion date to be repeatedly delayed, and the new system will be abandoned by the user. Both enterprise and consultant escalate conflict at this stage.
- New system is launched:
Risks: Software applications are still incomplete and unusable. The enterprise may struggle for years without a chance to reach this stage. If the new software is barely pushed online, the new software will begin to output incorrect data, which will hurt the operation of the enterprise and put the enterprise in an operating crisis.
- Obsolete legacy system:
Risk: The new system is unusable, but the old system has been eliminated, resulting in the inability to determine the correctness of the outputs of the new system, which will bring disaster to the enterprise.
High-Risk ERP Software Selection Model
The first step in determining the success of an ERP project is the selection of ERP software.
In the absence of solid technical experience, the basis for information decision makers' decision making and expert advice is derived from market surveys that any part-time student can do - Investigate software market share, software maker's popularity and stock market value, which software most benefits my career, which software has the highest success rate, and which software has the best word of mouth. The findings of these zero-tech, zero-professional, superstitious, and severely biased surveys often run counter to the interests of enterprises and government departments where information systems decision makers serve.
Anyone who understands the fact that the quality of the ERP software determines the success of the ERP project, affirming that technology is far more important than management in ERP projects, and information systems decision makers who agree that the technical profession affects the quality of IT decision making are unwilling to play only the role of part-time student in the ERP project – performing market research. They decided to work hard to find the ERP software most suitable for the organization for the ERP project, and to dig out the ERP software most suitable for the organization.
The author was also one of them. In order to select the "best" ERP software that best meets the needs of the company I worked for, I used the following software selection method, whose results were zero:
- Extensively collected software makers' promotion catalogs, brochures, and proposals. Carefully studied compare those materials: All the well-printed software makers' promotion catalogs were all empty diagrams and concepts, and their content contained no substantial technical details at all. It could not convince anyone: How the software would realize those great concepts, how the information staff should cooperate to realize the goals depicted in the materials, and whether they had the ability to achieve the great undertakings described. As for those proposals, they were more like the composition of various prize-winning works by software makers. The author seriously doubted whether the software had reached the level described in those proposals.
- Listened to the software maker salesperson's briefing: The content of the briefing stayed at the level of the promotional catalog of the software maker. The author's level of understanding of the software had no difference before and after listening to the briefing.
- Invited software makers to demonstrate the software:These problems occurred during the demonstration were: (1) The software popped up some error messages I did not understand. (2) The demonstration moved quickly. The author had not yet understood the details of the screen. The operator switched between screens so fast that I could not catch up with. (3) The functions that the author hoped to witness were not demonstrated by the operator. After watching the demonstration, more questions were raised than before the demonstration. Because I did't understand the software, I did't know what questions I should ask the operator. This is the exact reason why the IT staff and representatives of various departments in the enterprise are completely confused after the software demonstration is over, and all the people are silent.
- Visit software maker's "successful" customers: The software maker may decline to arrange. In fact, the author knew well: to thoroughly understand a piece of ERP software, you must invest in the days and even weeks to actually test that software. Therefore, even if the software maker arranged for the author to visit their "successful" customers, I would suspect that I could only see the surface that may be false, and the "success" would be more likely to be superficial drama performed by the software maker and their customers.
Even if researchers are completely selfless, commit to public interest, and do their best, but because they only see the surface propaganda and do not see the truth about the quality of the software, the effectiveness of this ERP software selection method is usually zero. This method cannot make scientific and objective findings, and is worthy of reference for ERP software buyers.