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Causes of ERP Failures

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ERP integrates a number of functions such as purchase, inventory control, order tracking, material management, sales, marketing, HR, SCM, distribution etc. ERP can enable an organization to function properly on time, speed up the production process, enable easy communication between the departments, provide customer satisfaction, enable easy management of various departments, provide accurate information and reports, and give competitive advantage.

But there are hundreds of stories about the failure of ERP implementation. There are many reasons for ERP failure and if the organization is aware of the causes of ERP failure, it can prevent it. Some of the common causes for ERP failure are -

Failure caused by inadequate planning - Before investing in ERP the organizations should form a team that can analyze the needs and search for vendors which can meet the requirement of the company. Inadequate planning may cause delays and breakups in later stages.

Failure of code - Failure in hardware implementation is easy to identify and fix and therefore, it cannot be a cause for ERP failure. The main cause is poor selection of vendor. The organization going for ERP implementation should be aware of its requirements and try to get a vendor which can satisfy the needs.



There are many pre-packaged software available in market at a low cost. Customization helps the software to be designed as per the requirements of the organization.

Sometimes the prepackaged software is changed to meet the requirements of various departments and sometimes it happens due to power struggles within the organization. The use of inappropriate methodologies and techniques to customize the software can cause errors in various integrated modules and it can result in breakup. It is very important to define the customizations and see if the software can support the customization without breaking the project code.

Failure caused by changes in business processes - During ERP implementation many organizations evolve as complete data of the organization is scanned under the system and sometimes, certain business processes are changed to meet the requirement of the software which can include changes in strategic planning, operational control and management control but it can happen that the software is incapable to evolve as per new trends. The market is evolving at each stage and when software has not evolved to meet the latest modification, it can be rendered unproductive.

User not accepting the new system - Organizations tries to get immediate ROI on ERP implementation but the employees take time to adjust to new software. In fact employees involved in execution have already worked hard to make the new software work. The employee take time to understand the new system and they may need training. Adaptation to new system, the change of the new code and the new processes sometimes makes the user get nervous. It is very important for the user to be able to run the software and understand its functioning to enable successful ERP implementation.

Failure caused by inadequate support from the top management - Some software providers feel the power struggle or unsupportive behavior of the staff in the organization can not only cause delays but it can even cause breakups in the system. The process requires support from senior management group to get successful.





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