How to Avoid Your Own ERP Implementation Horror Story

Halloween? The Shining? Hereditary? No, there’s only one horror story that truly strikes fear into the hearts of business leaders: failed ERP implementation.
Here’s one: In 2018, the City Council of Birmingham, England’s second-largest city, made the decision to replace their 20-year-old ERP with a new cloud-based ERP. They projected that the implementation would be complete by 2020 at a cost of £19 million ($24 million). Five years later, the city government was on the brink of collapse, paying vendors with credit cards, accidentally allocating billions in transactions to the wrong year, and struggling to make payments to disabled citizens. Birmingham would declare itself bankrupt after throwing over £100 million at the failed implementation project.
What happened? First of all, they chose the wrong ERP, a source told The Register: Oracle Fusion is designed for manufacturers and trading organizations, not city councils. Beyond that, the council itself pointed to a lack of training and experience with the new platform, a lack of trust, and a lack of direction and leadership, according to another article published by The Register.
You might roll your eyes and chalk this failure up to government ineptitude, but the private sector has seen more than its share of ERP disasters. Take, for example, Target’s attempt to launch a chain of stores in Canada, covered in detail by Canadian Business. Target’s US stores used a bespoke ERP, tailored over years of operation to the company’s unique needs. That system was not designed with the Canadian dollar, the Canadian supply chain, metric units, or the French language in mind, so Target Canada went with an entirely new ERP.
The implementation was doomed from the beginning. Check your bingo card: a brand new system that no one in the company really understood; unrealistically tight deadlines; inexperienced entry-level employees manually transferring data devoid of context, making errors like inputting product dimensions in inches rather than centimeters; retail merchandising-focused leadership poorly suited to managing the technological hurdles of implementation.
In the end, Target Canada filed for bankruptcy. Their mistakes cost billions of dollars and over 17,000 jobs.
Horror stories such as these are enough to make any business owner say, “I’ll stick to my spreadsheets, thanks.” These examples, however, illustrate what the kids today would call a self-inflicted “L”: unforced and avoidable errors, the result of exactly the failures the Birmingham City Council identified: a lack of strategy, planning, training, trust, leadership, and institutional buy-in.
While small businesses attempting ERP implementation might not implode as spectacularly as a city governing two million people or a corporation with a net value of $72 billion, these big failures outline the stakes of getting it wrong. But that doesn’t mean you should avoid an ERP altogether! If you want your business to grow, you’ll need a single source of truth for process, data, and communications alignment. You’ll need to centralize finance, inventory, sales, and customer support, and get everyone working from the same playbook. You just need to know the right way to do it.
ERP implementation can be challenging, but your implementation does not have to suffer the same fate as that of these big organizations. Let’s take a look at the most important of those challenges—strategy, selection, planning, and training—and some best practices for avoiding costly mistakes.
Lack of Business Strategy
The Birmingham City Council knew they needed a new ERP to modernize and integrate government financial functions, but it seems they failed in answering basic strategic questions. Primarily, you have to ask yourself what goals you have that your current ERP is allowing you to meet. The answer has to be more specific than “modernization.”
How does switching to an entirely new ERP rather than updating your old one help you achieve these goals? How will it help you make better management decisions and serve your customers (or, in the case of a city council, your constituents)? What is your unique value, and how does an ERP help you deliver it? These may seem like easy questions on the surface, but decisions like this have to be based on data, historical examples, and a deep understanding of your industry, your business, and your customers.
Lack of Strategy in System Selection
One of Birmingham’s major missteps was choosing an ERP more suited to a manufacturing business than a city government. ERP systems are not a one-size-fits-all solution. With your overall business strategy in mind, you first must go through a detailed process of determining what the system must do to achieve your goals. From there, evaluate multiple systems to see which best matches your purposes.
Most ERP systems are implemented with the assistance of a Value Added Reseller (VAR). Finding a VAR that understands your business (and not just the software) is critical. We are a technology-agnostic agency focused on finding the right solution for you, not promoting any particular software. We’ll work with you to understand your business’s needs and match you with a system with the functionalities that will help you meet your strategic goals.
Lack of Planning
A major contributor to the failures of both the Birmingham City Council and Target Canada implementations was a lack of planning. In particular, both organizations failed to recognize just how difficult it is to swap out one set of systems for another.
An ERP implementation is akin to removing the trailer from one truck and attaching it to another while flying down the highway at 70 MPH. If we had the luxury of pulling over and doing it on the side of the road—that is, shutting business down for a few months—it would be a lot easier. But that’s just not an option. We have to keep moving, so every step has to be carefully planned, with full understanding of what could go wrong.
Target had the strategic foresight to recognize that they needed a system designed for the particularities of the Canadian market, but they were unrealistic in setting deadlines and planning for data migration. The company’s optimism may have stemmed from a desire to keep costs down, but the costs of failure far outweigh the costs of setting a realistic timeline and hiring the right people.
Lack of Training
Both organizations failed to properly train their employees on the new system. From the executives who chose the system to the freshly minted college grads in charge of data migration, nobody understood the system in depth. In the case of Target Canada, the only people who understood the system were the inexperienced business analysts who figured out that if they turned off restocking auto-notifications, they would not be reprimanded for their stores having a low percentage of in-stock goods. (The entire Canadian Business article linked above is worth a read, both for its educational and entertainment value.)
ERPs are complex systems with a steep learning curve. You know how frustrating it is when your email client updates and you can’t find the “New Email” button anymore? It can be like that, but with every single function you are used to using. When employees have to perform their day-to-day tasks and learn a new system, they can get overwhelmed and end up rejecting and hating the new system. There is a way to expose people to new information, and it’s not to overwhelm them with features, complex instructions, and a bunch of links so they can teach themselves. As with other types of workplace training and professional development, ERP training is a science built on research-based educational methods.
Just because you see a movie about getting lost in the woods and stalked by a monster doesn’t mean you should never go camping. The right lesson to take is to be prepared for whatever life throws at you. Bring the right equipment, know first aid, always be aware of your surroundings, and get out at the first sign of danger. Put fresh batteries in that flashlight. Maybe get your car’s starter checked out before you go. (For some reason, the car never starts in horror movies.) Above all, make sure you’re only bringing reliable friends, ones that don’t panic and run upstairs when the exit is right there in front of them.
For ERP implementation, you’ll need those reliable friends, ones who know exactly what to pack and exactly what can go wrong, and know what approach will bring the best out of everyone in what can be a challenging time. StrategyWerx has experience with every step of ERP implementation, from vetting vendors to project management to ongoing support. Learn more about our ERP sourcing and implementation services here.
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