The #1 Lesson You Should Take from Famous ERP disasters

When it comes to ERP disasters, when you hear just about any anecdote or read just about any article on the topic, you’ll find one common denominator:

A solid, well-known ERP software solution was deployed and then subsequently blamed for a disastrous result.

Unfortunately, this has earned solid and well-known ERP solutions a bad rap.

Here’s the truth of the matter: The ERP disasters you read about in the news are usually caused by not having the right people involved in the selection and implementation processes.

A successful ERP implementation relies on three core elements: people, processes and technology. All three of these things must be meticulously thought through and carefully planned for. Miss one, and you’re setting yourself up to be added to the next ERP disasters article in the major news media.

That said, of those three elements, the people element is less forgiving than the other two.

With the right people, you can proactively address issues in the early stages of the selection and implementation process and avoid disaster.

Why People Are the Most Important ERP Success Element

ERP disasters almost always stem from a lack preparation and planning — and it’s people who are responsible for this. If you don’t have the right people doing the right activities to prepare and plan for ERP implementation, you’re creating an environment ripe for catastrophe.

More often than not, this people issue stems from lack of capacity and capabilities among your people. You and your employees know your business inside and out — but you might not know ERP well enough, simply because it’s not what you do every day. Staying on top of ERP solution products and their various life cycles is no small effort.

And relying on your existing IT providers for ERP expertise isn’t always a good option, either. ERP is a unique skillset, even in the IT services realm. MillerCoors learned this the hard way.

Plus, organizing people in a way that gets everyone pulling in the same direction from the beginning is no small feat — and this is also mission-critical for a successful ERP implementation. Lidl’s famous ERP failure, for example, stemmed from a disagreement on record-keeping practices that should have been addressed long before implementation began. With the right people guiding the project and steering everyone into agreement, they could have dealt with this issue early on and avoided this cascade of ERP implementation problems.

Umpqua Dairy’s ERP Disaster — and How the Right People Helped Them Bounce Back

In the mid-2000s, Umpqua Dairy chose to implement a niche ERP solution that they believed would serve their very complex processing needs. Not being experts in ERP, they didn’t realize that niche ERP solutions were in a development down-cycle at the time. Many of these products hadn’t been migrated to the latest technology, the installation base was too small to justify the investment necessary to keep them up to date, and many of these technology companies were dying on the vine. At that time, a niche solution couldn’t serve Umpqua the way they needed. (Contrast that with today’s niche ERP market, which is absolutely sizzling with the latest SaaS products. It’s all cyclical!)

Umpqua simply didn’t know what they didn’t know.

What they did know is that no generic ERP solution would cut it. So they made the logical choice based on their existing capabilities and moved forward with a dairy-focused niche solution.

Two years and $300,000 later, they scrapped the project.

It would be easy to blame the technology at that point and say they chose the wrong solution. But in reality, the problem started long before they chose the niche ERP product.

They didn’t have the right people in place to lay the groundwork for a successful implementation.

Umpqua lacked the core team resources to prepare, plan and successfully execute the project. In addition to an external team that could provide ERP expertise and drive preparation and planning, they also needed two internal core team roles, an IT manager and controller, to execute and offer continuous support and improvement going forward. These internal roles would be the most critical to driving business requirements and executing the implementation, including testing and training.

Their ERP project had failed — but this growing company still needed an ERP. Their manual processes were resulting in customer-facing mistakes, and they were wasting massive amounts of time and paper. Plus, they didn’t have the network in place to communicate well internally, much less across their distribution depots or with their 75 daily route delivery drivers.

When they brought us in to help as ERP consultants, we started with an assessment of their people, processes and technology. We discovered a few critical issues:

1. Umpqua didn’t have the right network infrastructure to make their chosen ERP solution work well for them.
2. They had legacy applications that were no longer supported.
3. They had high transaction volume that relied heavily on manual processes — and this was resulting in customer-facing mistakes.
4. The employees — many of whom had been there forever, as Umpqua was a major employer in a small town — didn’t have experience with modern enterprise solutions.

We quickly realized that Umpqua needed to hire an IT Manager and Controller BEFORE they started implementation. These were long-term resources who would best serve the organization if they were put in place early in the process. (And yes, we helped them find, hire and onboard people for these critical roles.)
Getting these people in place was our highest priority because we knew this would impact everything that followed. This time, when they chose JustFood ERP software (which sits on the Microsoft Dynamics NAV platform) as their go-forward technology solution, the implementation was a smashing success.

Read the Umpqua Dairy case study.

Avoid ERP Disaster by Putting People First

A successful ERP implementation project isn’t just about choosing the right technology solution — it’s about making sure the right people are involved from the outset. From project-based roles like project managers or business and technology analysts, to long-term hires like IT managers, to internal stakeholder roles like users and subject matter experts, your ERP team should cover all the roles and responsibilities that will affect (and be affected by) your ERP implementation.

With the right people in place, you can proactively deal with inherent challenges and avoid ending up in an ERP horror stories article like this one.

So how do you figure out what people you need in what roles? Start with talking to an ERP expert.