Setting Realistic ERP Expectations
We strongly recommend that you don’t over-promise and tell organizational stakeholders (at any level) only what they want to hear. That said, we help organizational leaders set honest and realistic ERP expectations going into any ERP project.
Understanding ERP Success Factors
In order to accomplish this, we at Nestell & Associates work to help an organization understand the true ERP success factors (the concrete ones as well as more abstract or intangible factors), how much emphasize (or priority) to give to each, when and where to put emphasize on a specific success factor, and to organize the wide array of potential issues common to many ERP organizational change efforts during the project planning phase. This realistic success factors (RSF) approach comes with experience and collaborative learning.
Mitigating Risks and Reducing Costs
ERP implementation projects more often require such a significant amount of time, money, effort, and resources that they also become plagued by poorly anticipated technical and business risks (Hitt, Wu, & Zhou, 2014). At N&A, we mindfully build into the ERP organizational change plan proven methods to construct and manage the RSF process that reduces cost and implementation time.
Financial Considerations and Project Duration
Large-scale ERP projects average $15 million in total costs and can be as high as two to three percent of an organization’s sales revenues. Hitt, Wu, and Zhou (2014) also note that ERP projects can take up to three years, with an average duration of 21 months. However, the performance benefits often don’t start being fully realized until 24-31 months into the project (Hitt, Wu, & Zhou, 2014).
Extended Duration and Organizational Challenges
The reason for this extended (deferred) duration is more often due to organizational changes and managerial challenges that emerge within the culture as the new system is implemented (Hitt, Wu, & Zhou, 2014). Hitt, Wu, and Zhou (2014) further argue that the time requirements assigned to realized performance benefits are both underestimated and fail to include ongoing challenges associated (and inherent in) ERP systems functions which involve the resultant need for substantial business process redesign and re-engineering in areas such as supply chain, operations, human resources, finance, and customer relations.
Building Intentional Strategy for ERP Success
Don’t cut your ERP organizational change effort short. Be cognizant of the true and honest ERP expectations. Understood the real, and not the perceived, ERP success factors and build intentional strategy into your ERP organization change plan in order to account for these true realities of any ERP project. Stay tuned for more to come on ERP success factors.