7. Who is to blame for ERP failure?
By Barry Calogero. Barry Calogero is executive vice president for Robbins-Gioia,
Inc. He has had extensive experience in program control, financial management and
cost management.
Enterprise Resource Planning (ERP) tools, or enterprise-wide client/server
applications for managing accounting, manufacturing, distribution and human
These challenges have been well publicized in the leading business periodicals,
underscoring organizational frustrations and even total meltdowns. Whirlpool and
Gore-Tex recently blasted SAP and PeopleSoft in separate front page articles in
In reality, however, the software giants are not to blame for these high-profile
failures. The customers are not to blame either. The real culprit is the process.
As showcased in the recent media articles, business evolution to ERP is about more
than software tools. Herein lies the greatest challenge for end-user organizations
To add to the complexity, the software world today is undergoing a significant
transformation, with many vendors adapting the popular Web-enabled Application
Service Provider (ASP) model. ASPs lease software to organizations via the Web.
Although some will try to apply this model to ERP implementations, it may well serve
A roadmap for success
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There are three basic building blocks to a successful ERP implementation: define
the requirements; develop a plan; and implement. The marriage of these three
The first step, requirements definition, is often given the most superfluous attention.
There are a number of different types of requirements, each of which should be
addressed and discussed with key stakeholders. Technical requirements will define
expectations in terms of processing time, reliability, maintainability, and technical
The development and implementation plans should grow from these requirements
and form a lifecycle implementation plan for the technology. Adopting a structured
Common barriers to success
Specifically, the three most common mistakes of ERP implementations are the
following:
1. Focusing on technology. The technology “silver bullet” approach is one that is
2. Ignoring the importance of requirements definition. Organizations too often ignore
the need to define an optimal process and then use the technology as an enabler for
the process. In too many instances, organizations either try to adopt a process that
3. Jumping from the requirements definition to the development phase. Pressed to
deliver systems against pre-defined timelines that don’t take into account all of the
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ERP program remediation is required when an organization has a significant
investment in an ERP implementation that has not delivered the anticipated ROI. In
Looking at the current cost and schedule overruns associated with ERP
implementations, as well as the number of implementations that are abandoned
A November 11 “Computerworld” article recounts the question that haunted
Lockheed Martin Corp.’s aeronautics group, involved in an ERP project similar to
that of Hershey. Anxious about its future, Lockheed Martin recently contacted SAP to
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At Lockheed, business users from its three aircraft manufacturing companies have
been working since 1998 to design common ways to enter orders and process other
transactions—first defining processes, then working with SAP to use R/3 to
There is a clear and pressing requirement for improved program management for
8. ERP MARKET GROWTH
Student responses to this question will vary. Two trends noted in the Garner Group press release
below that would provide a framework for an essay are the move of ERP activity to the cloud and the
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9. ERP CONSULTANTS
Responses will vary. Here are some ideas in summary:
Beware ERP Consultants. Since 1998, K2 Enterprises has documented
10. ERP BOLT–ON SOFTWARE