Top causes of ERP failures: not understanding what you bought

If you’re a small business considering ERP, this article is for you.

I have become my business for the last 18 years to help small clients (less than 100 million in sales) here in Ontario with ERP. Over the past 5 years our business has become increasingly geared towards one where we sell Microsoft Dynamics GP rather than simply servicing aftermarket ERP systems. Over the years, I have seen many, many failed ERP implementations. Most of them have been from other providers (besides us), but I’ve had my own ups and downs.

I think there are many reasons for those failures. This is my opinion on one of them …

Not understanding what you have bought

Many companies go into buying a system like Great Plains or a CRM system with the same expectations they have for buying a new server or upgrading a bunch of PCs. Despite many caveats and frequent meetings on the subject, they simply cannot visualize the “real” complexity of what they have purchased. They’ve done IT projects before, and the vendor has always managed to just “make it happen.” It is difficult (sometimes impossible) for them to understand why this time is different.

Usually when you buy new hardware, you are just updating something you already have to a newer and better version. It doesn’t change the way you do business. This is the key difference. The complexity of ERP systems revolves around “changing your business” and most small business owners don’t understand how complicated it really is.

“Dynamics GP has thousands of features and screens. How complicated could our business be compared to that?”

Your business IS that complicated. It has taken years and years to build, and it has happened totally organically with little to no planning. You are not simply buying another piece of software to improve some task or tasks that you already perform. You are buying something that replace a lot of tasks and activities that you take for granted. The change is significant and often shocking.

As a result of this, almost every customer I have encountered (while selling ERP) has thought that they can let the vendor figure it out. It is very difficult to understand the idea that the effort to implement an ERP requires even more of your own time (as a customer who buys it) than the time of the supplier. In fact, there is a point where you have the vendor execute the job (assuming you are willing to pay) it will still completely fail!

To put it another way, this is not a situation where we (the supplier) can design a process change in our office, “build” it as if we were building a server, and implement the finished project in a weekend at their offices. .

This seems really obvious at first glance … but it is very difficult to understand. Make sure you understand this before purchasing your ERP system and you will save a lot of pain and money!