Exploring the Reasons for the Success or Failure of ERP Implementation

The reasons for ERP implementation failure are numerous, but there is only one reason for ERP implementation success, and that is execution. I believe that most people are aware of this, but why do so many companies still fail in ERP implementation, to the extent that some have tried multiple ERP systems without success?

While most people understand the importance of execution, how many can truly achieve it? Only those companies that persistently and consistently execute can successfully go live with ERP. During the actual go-live process, there are often many obstacles that can hinder execution, leading to a lack of follow-through.

Now, let's explore the reasons behind the failure to execute. Based on years of counseling experience, it is primarily due to resistance from internal employees, sometimes even strong resistance. Why do employees resist? This can be attributed to two main factors.

• The first factor is the need to change certain business processes within the company during ERP implementation. ERP requires workflow rationalization and standardization, which means any existing inefficient processes must be adjusted and changed. These changes can disrupt the work habits that employees have developed over the years, and employees often resist change, especially more senior ones.
• The second factor is choosing the wrong ERP that is not suitable for the company's needs. If the software is not user-friendly or does not fit the company's requirements, employees will be reluctant to use it, leading to resistance. Companies typically spend a significant amount of time evaluating and selecting ERP solutions, but why do they still end up making the wrong choice? The main reason is that during the evaluation process, they only consider the software's standard presentations and demos, and the Q&A sessions are often limited to asking questions and receiving answers. This approach lacks practicality and does not simulate the company's existing workflow processes. As a result, when the ERP is finally implemented, issues such as inadequate functionality, incorrect processes, and mismatched reports often arise. Implementing a comprehensive ERP system is complex, and it's challenging to simulate the entire process realistically. Even requesting a software trial may not provide a practical solution.

Is there a way to address these issues and ensure a successful ERP implementation?

Here, I would like to share an evaluation method that has proven effective in many companies during ERP selection. This method is called 'Operational Scenario Simulation.'
Start by preparing a Bill of Materials (BOM) for a commonly used product, including all the details of the production process. Ask the ERP software vendor to create a full-scale DEMO of the entire ERP process, including functionalities and reports, using this BOM. Invite department heads, key executives, and senior staff from your company to participate in the simulation. The DEMO can be conducted in several sessions, covering different modules of the ERP, and it may take several days to complete. By engaging in this kind of hands-on simulation, you can proactively identify the challenges that may arise during the actual go-live, preventing issues related to the ERP's suitability.

As for the first factor mentioned earlier, addressing the resistance of employees to change their habits, i-TEC ERP's professional consulting team has developed a five-stage implementation methodology called IPTEC. This approach gradually introduces ERP changes in a way that minimizes employee resistance and increases their involvement. With a success rate of over 80%, the remaining 20% relies on strong determination from company leadership to ensure a smooth transition to ERP.

Below is an outline of the five stages of the IPTEC implementation process. If your company is struggling with ERP implementation or is in the process of selecting an ERP, please feel free to reach out for further details on the implementation process. It can make a significant difference in your ERP go-live success!

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