Why ERP Implementation fails

These checklists, form the managerial point of view, that may help anyone to find
out why an ERP system Implementation fails

Check List 1: Diagnostic Phase:

1. Have you Assessed and Discussed the Top Management Desire,
Willingness, and Resolve to implement the project? 1
2. Have you Studied the current Organization Business Model and its
environment and stakeholders?
3. Have you studied the special characteristics of the business such as MTO,
MTS, ETO or type of products such as V, A, T, I?
4. Have you Identified its Strategic Vision, Directions and Goals?
5. Have you Reached and Documented a clear statement of the Organization
Needs i.e. needs to be fulfilled by the project?
6. Have you assessed the Organization Current Performance and KPIs, their
trends and future Targets? And defined the gap to cross by the help of this
project?
7. Have you exactly Defined, Documented and Discussed the project Scope Of
Work SOW?
8. Have you interviewed the organization staff and gathered and Documented
all the Background Information such as the current and future Organization
Structure, the Job Descriptions, the organization Bylaws?
9. Have you used a structured tool such as IPO or SIPOC to collect and
document all the business process information of all the organization
functions?
10. Have you Plotted and Discussed the current “Cross Functional Business
Process Information Flowcharts” AS-IS as an End-To-End Business Process
Cycles such as Plan-To-Produce, Order-To-Cash, and Procure-To-Pay?

1
https://pubs.opengroup.org/architecture/togaf9-doc/arch/chap26.html
11. Have you Identified Documented and Discussed Dangling Tasks, Redundant
Tasks, Non-Value Added Tasks and Bottleneck and discussed them with
the organization staff to define gaps and current problems?
12. Have you Assessed Documented and Discussed the Organization Maturity
to implement an ERP system and define its needs to successfully achieve
the Project?1
13. Have you Identified, Documented and Discussed the past, current & future
Improvement and IT Projects?
14. Have you conducted Awareness sessions for the consent of the
organization staff after getting approval and support from the top
management?
Checklist 2: Business Process Re-engineering BPR Phase:
1. Have you Defined a Digital Transformation Strategy based on the company
Business Strategy?
2. Have you re-defined and documented the New Business Model?
3. Based on Strategic Vision, Directions and Goal, have you reached to the
Organization’s Strategic Metrics and their KPIs and Benchmarking
4. Have you dug down each KPI to be cascaded to its lowest level of
Performance Indicator PI and hence identified Core Business Processes
5. Have you Identified a Consensus and Documented the Priorities and Core
Business Processes?
6. Have you Defined Other Actions to address Risks and Opportunities,
Weakness and Strengths?
7. Have you Identified and Customized Best Practices for all core activities and
actions needed?
8. Have you Redesigned Customer Driven Streamlined End-To-End Business
Processes Cycles which are based on best practices and that are Cost
Effective, Responsive and Traceable?
9. Have you trained al staff to utilize the new best practices and embedded
them into their SOP Standard Operation Procedures?
10. Have you set the BPR Project Management, Action Plan, Timetable,
Milestones and the Project Governance; and defined Roles, assigned tasks
and Responsibilities?
Checklist 3: Prequalification of ERP System Vendors:
1. Decision to Implement an ERP System:

 have you identified that the ERP System will help you achieve your
organizational goals and improve the bottom line?
2. Building ERP Selection Team:
 Have you build a competent including members from all Department or
Business Unit plus subject matter experts (SMEs)? And appointed a
Project Manager?
(If your organization lacks ERP selection experience, then hiring an ERP
consultant is beneficial)
 Have you defined their Mission, Time Span, Tasks, Authorities and to
whom they should report? 2
3. Prequalification Phase:
 Have you established a long list of ERP Systems and their
implementers?
 Have you only addressed Tier 1 Vendors or you can also prequalify some
Tier 2 and Tier 3 too?
 Have you issued Expression of Interest (EOI)/Letter of Intent (LOI)/
Requests For Information (RFI) 3
o It aims to provide prospective bidders the background information
on the Organization and its project short- and long-term goals and
most important Requirements, and to prequalify bidders based on
commercial and functional scope compliance.
o The intent of this EOI is to determine high-level suitability upfront.
Interested ERP providers that meet the prequalification criteria of
this EOI will be provided with the detailed tender documentation
for the Request for Proposal (RFP).
 Have the EOI included the Project Key Principles such as:

2
https://www.panorama-consulting.com/erp-software-selection-guide/
3
https://www.iom.int/sites/g/files/tmzbdl486/files/erp_platform_selection_eoi_background_information.pdf
 o To have an integrated design: Business Model Integration,
Business Process Integration, Intra-system integration, Inter-
system integration
o To Streamline the Planning and Decision Making, Follow-up and
Control processes
o To improve the customer experience
o To improve employee and operational efficiency
o To remove manual work from processes
o To enable real-time data, allowing for better decision making
from leadership
o To make it easier to conform to potential or existing regulatory
compliance
o To seek configuration-driven/low-code solutions that bridge the
gap between functional and technical experts and enable a more
tightly coupled approach for the business to manage their
operations.
 Have the EOI defined the Functional Project Scope such as (RTR) Record
to Report, (OTC) Order to Cash, (PTP) Procure to Pay, (HTR) Hire to
Retire, (PTP) Plan to Produce, (ATR) Acquire to Retire, (PTI) Plan to
Inventory, (ITR) Issue to Resolution,
 Have you Requested the Vendors to submit their Company Profile,
Technical Know How and their Past and Current Projects including their
experience in your type of Industry and how they will fulfil your
Requirements?
 Have you defined the prequalification Criteria and Classified your
Requirements into (Mandatory, Value Added, Nice- To-Have)?
Checklist 4: Terms of Reference TOR for ERP System Implementation:
Have you included in your TOR the following?
 Functional areas
o Have your TOR included all the required Functional Areas (Modules)
with their Sub-Modules, detailed Description?

“You can get help form subject matter expert and ask vendors to
submit their Modules with full details”

“I found some manufacturing companies, although they have tier one

ERP System they begin their Planning process by MRP, and ends
planning by just issuing weekly Planned Orders.”

 Configuration
1. Have you defined your Special Requirements?
o Have you defined your company specific requirements to be
configured in the ERP System?
(you have many options and setting to decide such as to select MRP
or DDMRP, classical Costing System and Budgeting or Activity Base
Costing ABC and Activity based Budgeting…)
2. Have you included your needs for consistent look and feel across
modules?
o The system should provide a comprehensive enterprise view across
modules, making real–time information available to management
anywhere, anytime to make proper decisions
3. Have you defined your needs for Real Time Operations?
4. Have you defined your needs for ERP system to be connected to the
Plant Floor Information?
o “ERP systems connect to real–time data and transaction data in a
variety of ways (Direct integration, Database integration, Enterprise
 appliance transaction modules (EATM), Custom–integration
solutions)”
5. Did you select the right configuration One-Tier or Two-Tiers ERP
System? 4
o Two-tier ERP software and hardware lets companies run the
equivalent of two ERP systems at once: one at the corporate level and
one at the division or subsidiary level.
Each independent center (or) subsidiary may have its own business
operations cycles, workflows, and business processes.
o I saw some cases the mother company runs One-tier ERP System with
centralized processing at HQ; it was catastrophic situation, operation
processing was very slow, no possible customization to the subsidiary
special requirements. The subsidiaries were welling to remove the
System as it represents a great obstacle to run the business efficiently.
6. The ERP system must be scalable to allow additional modules, and
must interface with other business information systems.
 Customization
1. Have you defined the needed flexibility in modifying settings by the
company in order to be Agile company that adapts better to change?
2. Have you included you needs for Best practices to enhancing the
business—internally and externally
o Adopting "standard" processes without customization can lead to a
loss of competitive advantage.
3. Have you included you needs to Customized Reporting System, KPIs,
Dashboard and the Company Overall Balanced Score Card BSC?
Some companies don’t even know that there are lists of standard KPIs,
Dashboard and Balance Scorecard
 Project Management
1. Have you included your needs for the Project Quality Assurance?

4
https://en.wikipedia.org/wiki/Enterprise_resource_planning
 o The ERP will be tested against fitness to purpose, Customer Value,
Business Performance and Technology Integration
2. Have you defined the Project Governance?
o This include the decision Making structure, The people within the
Structure, The information Flow 5
3. Have you included Metrics to Measure Success of Your ERP Project?6

5
https://www.slideshare.net/RossGarland/slideshare-establish-project-governance-03
6
https://blog.trginternational.com/5-metrics-to-measure-success-of-your-erp-project