How Your Business Can Recover From A Failed ERP Implementation

Leaseplan, a vehicle management company, rolled out a systems applications and products-based core leasing system (CLS) in 2018. It was intended to transform its IT across 32 countries. Although auditors suggested IT controls and governance improvements, Leaseplan ended up abandoning the CLS, acknowledging the staggering loss of $100 million in project costs.

Enterprise resource planning (ERP) applications are crucial to the processes of any business. An ill-fitting system, overburdened project leaders, or delays in deployment can derail an ERP implementation, creating a series of costly problems. But a failure of multi-million dollar magnitude is not merely about cash flow and bottom lines; a botched implementation can damage a business’s reputation, affecting customer relationships.

How do you salvage a failed ERP implementation? Start with the key areas that likely led to the breakdown.

Key Areas to Look Into

In Leaseplan’s case, the ERP they chose kept the company from making a series of service and product improvements. This was at a time when technological changes were occurring fast. The expertise of independent ERP consultants would have ensured the best ERP solution for this company by understanding the organization’s requirements.

Go through the following areas to determine what went wrong with your ERP implementation.

• Inadequate Planning

Poor planning and lack of a clear roadmap can lead to unrealistic timelines and resource allocation issues.

• Poor Project Management

Ineffective project management practices, such as lack of communication and unclear responsibilities, can derail the implementation.

• Resistance to Change

Employees may resist adopting new systems due to lack of training or fear of change, leading to poor user adoption.

• Underestimating Complexity

ERP implementations are complex and can be underestimated in terms of time, resources, and expertise required.

• Inadequate Testing

Failing to thoroughly test the system before going live can result in numerous technical issues and disruptions.

• Vendor Issues

Problems with the ERP vendor, such as lack of support or inadequate customization options, can impede successful implementation.

Steps Project Leaders Should Take to Recover

Recovering from a failed ERP implementation requires a structured approach. Consider the following steps.

1. Acknowledge the Failure

Accept the failure openly and transparently. This helps in addressing issues honestly and encourages a culture of accountability.

2. Conduct a Post-Mortem Analysis

Perform a detailed analysis of what went wrong. Identify specific problems, their causes, and the impact on the business. It may help to seek a third-party perspective to accomplish an effective analysis.

Businesses across the globe normally hire outside experts who can focus solely on a project.

Dubai companies, for instance, bring in business consultants from the UAE to conduct a thorough assessment to identify the root of the failure. This involves reviewing project documentation, conducting interviews with stakeholders, and analyzing system performance.

3. Re-Engage Stakeholders

Re-engage with stakeholders, including employees, management, and vendors, to understand their concerns and expectations. Communicate with all stakeholders about the issues identified and the steps being taken to address them. Build a coalition of support for the recovery effort. This helps in rebuilding trust and ensuring alignment.

4. Create a Recovery Plan

Develop a comprehensive recovery plan that addresses the identified issues. This should include clear objectives, milestones, and success metrics.

Develop a revised project plan with realistic timelines, budget estimates, and resource allocation. Ensure that the plan is flexible enough to accommodate unforeseen challenges.

5. Reallocate Resources

Ensure that the necessary resources—both financial and human—are available for the recovery effort. This may involve reallocating budgets or hiring additional expertise.

6. Implement Incremental Changes

Instead of a big bang approach, implement changes incrementally. This allows for continuous monitoring and adjustment, reducing the risk of further disruptions. Identify and fix technical issues, such as system bugs, integration problems, and data inaccuracies. This may involve working closely with the ERP vendor or hiring external experts, like ERP consultants.

You can also strengthen project governance by establishing clear roles, responsibilities, and accountability. Ensure there is a dedicated project manager with the necessary authority and expertise.

7. Monitor Progress

Establish a robust monitoring and reporting mechanism to track progress against the recovery plan.

8. Foster a Continuous Improvement Culture

Encourage a culture of continuous improvement, and apply lessons to future projects. Invest in comprehensive training programs and change management initiatives to facilitate user adoption. Address employee concerns and provide continuous support.

What Qualifies as a Failed ERP Implementation?

An unsuccessful ERP implementation does not have to be disastrous or as costly as Leaseplan’s experience. In some instances, failure could mean a missed deadline. The implementation did not meet its scheduled timelines, causing delays in business operations. It could also mean an incomplete implementation, when the ERP system was not fully deployed, leaving some functionalities or processes non-operational.

Implementation success, for most businesses, can be measured by meeting its budget and expected outcomes. When the ERP system doesn’t meet the anticipated improvements in business outcomes or processes, it will have failed.

Other indications of a poor ERP implementation are poor user adoption (when employees are unable or unwilling to use the new system effectively) and operational disruptions (when the implementation results in more problems than it solves, reducing productivity and efficiency).

When an ERP project fails, it can lead to significant disruptions and financial losses. Recovering from an unsuccessful project is challenging but achievable with the right approach. Effective leadership, stakeholder engagement, and a commitment to continual improvement are essential for navigating the recovery process and achieving long-term ERP success.