The Three Critical Success Factors for Successful ERP Deployment
Over the last two decades, the ERP market has grown by leaps and bounds. The ERP system has become an integral part of any large, successful enterprise. Analyst reports suggest that the ERP market is currently about $40 billion in total revenue, consistently ranks among the top IT spending priority for enterprises, and is expected to grow to over $50 billion by 2013.
Yet many analysts and data indicate that more and more ERP implementations are failing to meet their stated objectives. According to the Project Management Institute (PMI), nearly 70% of all ERP deployment projects fail, are late or go over-budget. Panorama Consulting, in its “2010 ERP Report,” found that 57% of such projects take longer than planned, 54% go over-budget, and 41% fail to realize at least half the expected benefits.
ERP deployments are large in scope and have many moving parts, impacting nearly the entire user community within a company. Business considerations include stakeholder management and clear definition of ERP success criteria. Technology considerations include diligent selection of the product and the Systems Integrator (SI) and robust enterprise IT architecture. Scope considerations include using the appropriate ERP deployment approach and well-rehearsed mock conversions.
According to Nikhil Kumar of Infosys, however, the success of any ERP deployment primarily comes down to three criteria:
- System adoption and continued use by end-users
- Within-budget capital expenses
- Overall business value delivered
Because I work within the corporate training industry, I’m very glad to see user adoption at the top of the list, and I’m not surprised. A growing number of Fortune 1000 companies are looking to us for the development of a robust training program for their user community. As Nikhil puts it:
ERP applications are typically pretty sophisticated and can overwhelm the business users to the point of inspiring a phobia. Thus user training has to be contextualized and comprehensive for each and every user group to increase their system adoption and continued use. Training sessions should be planned and executed with user input at all times. And training must be repeated and should include hands-on testing as well for the learning to really sink in.
The majority of ERP deployments rarely meet user expectations, frequently run over budget, and often do not meet the stated business benefit metrics. Every ERP deployment is different, and the challenges and implementation of these best practices will vary from situation to situation, which is why custom training is a necessity. Off-the-shelf training cannot be relied upon for quick and continued system use by your user community. The same goes for training developed by in-house instructional designers with expertise in sales training, conflict management, or other soft skills. Use trainers with expertise in ERP deployment.
Plan and execute a comprehensive plan for user adoption and the chance of success is likely to increase!