Avoid these 7 pitfalls on the narrow path to a successful ERP transformation

Almost 50% of the ERP projects companies introduce fail at the first attempt. You read that right, that's nearly every second organization. Don't worry, we didn't intend to demotivate you right away with our entry into the topic. This is more of a wake-up call.

A successful ERP transformation doesn't happen by itself, not from one day to the next, and is above all not a given. It's the product of a well-thought-out strategy that includes a series of very conscious decisions about the goals pursued, the methods chosen and the partners involved.

In this article, we go deeper into what can make the difference between a successful and a failed ERP transformation.

Does an ERP transformation process even make sense?

Given the high failure rate, one question naturally arises at first glance: why do companies even expose themselves to the risks that a process as profound as an ERP transformation brings? The answer is simple. The potential gain on the other side of the equation is even more convincing.

A study by the Panorama Consulting Group from 2018 found that the main motivation for organizations to introduce a new ERP lies in increasing their performance.

The expectations were confirmed by the survey: 49% of participants stated that, after introducing a new ERP, all essential business processes improved. So if implementing a new ERP system succeeds, considerable advantages arise from it for the entire company.

Transparency, simplicity, digitalization, better interfaces – the list of the added values of ERP software is long and makes clear that it forms the foundation for a resilient and future-proof IT and business architecture. This prospect of better overall performance, and the hope it awakens of long-term competitiveness, are reason enough for many companies to attempt a transformation process.

On top of that comes another factor (which half of all organizations unfortunately disregard): the risks of an ERP introduction failing can be significantly reduced.

7 typical mistakes you should definitely avoid in your ERP transformation

For us humans, change has always been a challenge. Most of us find it rather hard by nature to engage with new situations and accept changes. The power of habit, individual inertia and comfort zones are, unfortunately, no great help here.

Since the corona pandemic and the digitalization it rapidly drove forward, it's also becoming ever harder, especially for leaders, to deliver transformations sustainably. Innovative tools, remote work, hybrid solutions and volatile conditions bring new challenges – not only of a technological, but above all of a human nature.

Even if, against this backdrop, every company is its own little world and has to master entirely individual challenges, in practice one and the same strategy usually proves itself:

Applying a well-thought-out change management that, besides technological and structural aspects, also takes into account the change in ways of working and work culture.

That also includes avoiding typical mistakes made in the introduction of ERP systems:

1. Only starting transformations when release changes are due or ERP support is discontinued?

Not infrequently, companies initiate a change of their ERP software only when the support or other services of the previous provider are no longer available. In other words – far too late.

By waiting too long, you lose valuable time in which you could prepare and structure the change. Your employees need enough lead time to adjust to the new systems.

This way you avoid possible productivity losses and disappointments that are pre-programmed with the mantra „It'll work out somehow”.

2. Planning transformations without including „best practices“.

Establishing new systems requires appropriate expertise. On the technological as well as the human side.

So don't save in the wrong place and invest in seasoned external advice in initiating, preparing, delivering and following up on your ERP switch.

This way you enjoy two advantages at once. On the one hand, you get professional and interdisciplinary know-how that's often hard to cover with your own staff.

On the other hand, the more objective external view of your own company structure can prove very useful. It lets external experts recognize optimization potential that, for you yourself, are like blind spots in everyday business.

3. Not choosing the right implementation partner that fits your own company.

An ERP transformation isn't a project that can be done casually on the side. Nor is a timeline of one week enough for it. On the contrary, switching to a new ERP software is multi-layered and lengthy.

That's why, tying into the second point just mentioned, you should choose implementation partners who support you efficiently and reliably throughout the entire duration of the transformation process.

Ideally, besides the system integrators, you'd bring in another independent party that, among other things, doesn't profit when your transformation drags on (unnecessarily) or implements solutions that result in lasting dependence.

Instead, your partner should understand what your company's individual needs are, communicate transparently from the start, keep time and financial agreements, and proactively accompany you at all levels of the change process.

4. Not carrying out an analysis of the impact of the changes.

Changes in a company's core processes are very complex matters. Even modifying a small part of the structure can have a considerable influence on other departments, workflows and products.

It takes enough time, when introducing a new ERP software, to define how these various end-to-end business processes are mapped, connected to each other and configured.

That's why you have to ensure that the integration into your organization's processes not only works in the context of the project, but is also continuously tested in the overall context. Only this way can you make sure the ERP solution really does justice to the complexity of your requirements in practice.

5. Approaching training the wrong way.

Don't view the training of your employees on the new ERP system as just technical training. Far more important than learning how to use the new software is conveying an understanding of the development and change of daily tasks and workflows.

What will processes look like in the future? Which new responsibilities and roles will your employees have to fulfill in the future? How do the actions and tasks of individuals pay into your company strategy? You should work these points out with your team with enough lead time already during the transition phase. After go-live, it's too late for that.

6. No coordination of communication and training.

Missing and incomplete information around a transformation initiative can quickly lead to teams viewing it skeptically or even rejecting it entirely.

To reach your employees and get them on board with the upcoming developments, you should therefore create a detailed communication and training plan.

It's important here to tailor each message to the different interest groups, departments and target audiences, in order to increase your employees' acceptance of the changes in their areas of responsibility. In addition, training and courses should be announced early and accompanied by contacts for any questions.

7. Communicating counterproductively.

In your internal communication, you should rely on quality alongside quantity. An ERP transformation is a major upheaval for your staff that turns previously followed routines upside down. That holds great potential for hidden power struggles, resistance and frustration.

You can counteract this by communicating openly at all times why you're carrying out a switch, what benefit it has and why that matters for everyone involved. Include all your employees in this, regardless of hierarchies or departments. Make progress visible and celebrate project successes together.

This way you create a kind of cognitive consonance among your employees. That is, their respective expectations and attitudes are better aligned with the events, which removes possible points of friction.

Admittedly, an ERP transformation may seem overwhelming at first glance. The right decisions have to be made and the change well planned, communicated and sustainably established. Most likely, you'll encounter resistance and situations you weren't prepared for.

All the more important is that your change process is well-founded. On the one hand, by really aligning IT and business functions as well as the human aspect of your company with each other.

On the other hand, by bringing in implementation partners whose expertise means even unforeseen pitfalls present no obstacle whatsoever. A partner who recognizes fields of action early, brings enough courage for progressive decisions and tells you openly when the path needs to be adjusted.

And who saves you from making unnecessary mistakes, so that at the end of the transformation process you belong to the 50% of successful companies.

We'd be happy to take on this part for you! Get to know us in a no-obligation first conversation, so we can tell you more about our approach to ERP transformations.