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Mind the Gaps Along Your ERP Journey

While ERP can offer tremendous business value, the potential obstacles and risks associated with executing a major ERP project can often outweigh the benefits. In fact, 65 percent of enterprise software implementations fail to meet project expectations around duration, cost and intended benefits.1 A recent report from Panorama Consulting Group cited that 61 percent of ERP projects take longer than expected, 74 percent exceed budget and 48 percent realize less than half of intended benefits.2

In most cases, ERP projects fail because companies do not budget adequate time, money, human capital or proper external consulting support. Further, they don’t properly plan for change, do not complete enough testing, nor do they offer suitable training. However, despite low success rates, an ERP implementation, when done correctly, can build the foundation for future growth, improved productivity and significant cost savings. This paper addresses five critical areas that are often overlooked or underserved, but that can make or break the success of an ERP initiative.

The ERP services market is estimated at over $10 billion. The growth can be attributed to a desire to increase revenue and find new value from current IT investments. Additionally, companies are focused on governance and transparency, which had fueled a renewed interest in ERP projects.

Organizational Assessment and Planning

Workforce planning is a critical first step toward meeting ERP goals. Within the early planning stages, you should assess your team to see what resources you have in house, what you need full time and what you’ll need on a contingent basis. Planning for the people and not just the technical aspects of the project can mitigate many of the risks inherent to ERP initiatives.

The following steps can be taken to assess your organization’s short- and long-term needs for an ERP implementation:

  • Review the roles and skill sets that your project will require. Include internal employees who currently support the legacy environment in the planning process, and ensure that you balance the time borrowed from existing staff and backfill appropriately to maintain productivity.
  • Conduct a people-focused gap analysis against existing resources. It is usually people, not technology, that derail IT projects. Of the top ERP problems cited in Panorama’s research, 52 percent are people or talent related, which includes lack of appropriate project resources or expertise.3
  • Carefully weigh decisions to retain support skills in-house or outsource them. Generally it is best to retain functional skills in-house and outsource technical skills that don’t require significant enterprise knowledge. To develop in-house expertise, consider technical training and project participation for key production support team members.

Data Quality and Data Profiling

Poor data quality is one of the biggest inhibitors to successful ERP implementations, and new ERP systems will only be as good as the data that goes into them. The Data Warehousing Institute estimates that data quality problems cost U.S. businesses more than $600 billion a year.4 Further, Larry English, author and information expert, says the cost of bad data may be 10 to 25 percent of total company revenue.5 Companies that fail to accurately assess the quality of their data are more likely to underestimate the cost of an ERP project. Even clean data may demand some overhaul to match process modifications required by the ERP implementation.

The following steps can be taken toward understanding your organization’s data quality:

  • Utilize experts to understand the current status of the data within your systems. Find a partner that offers defined processes and methodologies, so you can ensure that the analysis is done accurately.
  • Ensure that you profile and analyze every data value in every file to identify omissions, inconsistencies, inaccuracies and out-of-bounds domain values. This is the first step toward creating business rules and developing Meta data.
  • Once the data is clean, store it within the right staging areas with filters to protect its integrity. Preserving clean data is critical, as it ensures that only accurate data makes its way into the new ERP system.
Companies that fail to accurately assess the quality of their data are more likely to underestimate the cost of an ERP project.

QA & Testing

QA and testing is another major hidden cost when it comes to ERP. No one is better equipped to conduct testing than internal business users, so leverage your internal QA group but be aware of competing priorities. You may need to supplement that team to ensure that productivity on other projects does not suffer.

The following steps can be taken toward successful QA and testing:

  • Utilize a vendor-neutral third party to independently verify and validate vendor systems. Avoid conflicts of interest by leveraging separate entities to develop the system and conduct the QA and testing.
  • Ensure your partner is familiar with various QA and testing tools. Relationships with providers like HP Mercury Interactive, Borland, Compuware and IBM Rational enables your partner to utilize the best technology for your environment.
  • Build quality assurance blueprints that fit into your overall ERP project schedule. Make sure to plan for this step, so there is enough time to thoroughly test your system. This critical step will ensure that everything works as expected and will meet desired goals and outcomes.

Training and Change Management

Training is often overlooked and underfunded. Lack of investment in end-user training and change management programs are a major reason for ERP failures. Gartner states “that companies that budget less than 13 percent of their implementation costs for training are three times more likely than companies that spend 17 percent or more to see their ERP projects run overtime and over budget.” 6

The following steps can be taken toward proper training:

  • Identify and plan for training needs, including functional training on the front end, end user and support training on the back end, and technical training for employees who understand the legacy systems.
  • Conduct labs and readiness assessments so you are able to tailor curriculum development to the specific needs of the various audiences.
  • Utilize instructors who have vast, real-world experience in using ERP platforms. This will ensure that learners get a clear understanding of the curriculum and are able to apply it quickly to real life scenarios.

Legacy Applications Management

Good processes can help create a smooth transition to a new ERP environment. You must maintain your critical production systems until they are ultimately replaced by a new ERP system.

The following steps can be taken toward managing legacy applications through retirement:

  • Establish a solid transition plan to maximize efficiency, beginning with your best employees. Enable migration of your best in-house team members to the project by providing technical training on the new system, backfilling their roles and eventually phasing out the legacy system.
  • As you remove a system from service, ensure you retain appropriate access to documentation for legal compliance. Prior to application shut down, execute strategies for data archival and retrieval.
  • When outsourcing, utilize a vendor with PMI certified and experienced engagement leaders who can help identify and implement process improvements.
  • Maintain your mission critical production systems until they are ultimately retired and replaced by the new ERP system. Utilize a vendor that offers best-in-class reporting and incident management systems to track performance and validate cost savings.
Lack of investment in end-user training and change management programs are a major reason for ERP failures.


ERP projects are complex initiatives that touch multiple parts of organizations. To successfully meet project milestones and reap the benefits of a successful implementation, organizations must ensure that they have accounted for the potential gaps that can cause delays, add costs and potentially cause project failure. Proper workforce planning is a critical first step toward project success. Further, cleaning and preserving data ensures that accurate information enters the new system. Sound QA and testing methodologies allow ERP systems to work correctly at launch, and end user training enables your workforce to utilize the full capabilities of the system. Finally, sunsetting legacy applications in a methodical way allows you to utilize them until they are replaced by the new ERP system. Focusing on these actions and ensuring that you have the right workforce in place to meet these critical requirements are important steps toward a successful ERP implementation.

1 “Lessons from ERP implementation failures”, Focus Research, June 10, 2010

2 “2011 ERP Report”, Panorama Consulting Group, 2011

3 “2011 ERP Report”, Panorama Consulting Group, 2011

4 “Data Quality and the Bottom Line”, The Data Warehousing Institute (TDWI), 2002

5 “Bad Data, Bad Decisions”, CoreTech Revolution, February 23, 2011

6 “ERP Support: Organizational frameworks for ERP/Business Application Training”, Gartner, November 9, 2010