Enterprise resource management (ERP) systems will make a big impact on organizations. With its real-time data access, sophisticated business process tools, and powerful predictive analytics, an ERP like SAP S/4HANA should provide tremendous visibility into your operations and go a long way toward transforming them to deliver more value to your company.
But let’s not get ahead of ourselves.
Despite these potential gains, businesses often struggle to realize the benefits that were used to justify an ERP implementation. In a 2018 global survey of 300 organizations by Colorado-based Panorama Consulting Group, the vast majority of respondents saw 80 percent or less of the business benefits they had projected when the implementation began. In addition, almost half of those polled said that the implementation delivered on 50 percent or less of desired outcomes.
A 2018 global poll of 300 organizations revealed that most ERP implementations fall well short of delivering the anticipated benefits.
When you consider that a company typically invests millions of dollars in a new ERP, those don’t sound like great results.
Why do ERP implementations often under deliver?
Software and hardware are not the problem. In fact, it’s all about people. Seven out of 10 projects and changes fail because of organizational change management (OCM) issues rather than technology, Deloitte found in a recent survey of chief information officers at Fortune 500 companies.
The top three reasons cited:
- Resistance by employees
- Inadequate sponsorship
- Unrealistic expectations
In a recent survey, chief information officers said that resistance by employees is the No. 1 reason projects and changes fail.
To maximize outcomes and deliver desired results for stakeholders throughout an ERP implementation, set and manage realistic expectations from the start. From the executive team to front-line workers, businesses typically don’t understand the amount of energy that goes into an ERP project and how much change it will involve—at all levels of the organization.
During an ERP implementation, few organizations focus intensely on change management, according to a recent global survey.
In the Panorama Consulting Group survey, more than a quarter of respondents said that their organizations put very little or no focus on change management during an ERP implementation. Just 13 percent of those surveyed said that the focus was intense.
Lack of attention to OCM is a recipe for disappointment.
This blog post is excerpted from a thought leadership paper found on our website. You can find the entire paper here.
For Part 2 of this article, check back soon.