Implementing an ERP system such as SAP S/4HANA can be considered new territory for most businesses, even those with prior experience with large and complex IT projects.
While SAP S/4HANA has its own flaws, which we will discuss later, all ERP implementation failures tend to follow a similar pattern.
The reality is that most SAP projects do not fail due to a flawed selection process or ERP system functionality. ERP implementations fail because they are not viewed as a people-centric system rather than a large IT project.
So, let's explore the most common reasons for failure explained by Christopher Salis.
Being Product-Led
The foundation is the first step in any construction project, and it is prudent to ensure that the foundations are sound. The tendency with SAP S/4HANA is to approach this from the ground up as well: ensure that the IT infrastructure is sound and fit for purpose, that data can be migrated, and that new systems work within given performance parameters.
As a result, the implementation is viewed as an "SAP S/4HANA migration project" rather than a business transformation project. "Migration" implies a technical approach, whereas business transformation necessitates early input from all departments.
Unfortunately, end users are unlikely to be involved in the early stages of a business transformation program. As a result, specific critical strategic steps may be defined at this early stage - before the company has wholly defined what the program is for.
Features Over Function
While it is healthy to think of your SAP S/4HANA project as one that will transform your business, don't expect systems to solve all your problems and elevate you to the position of digital leader. Setting unrealistic and overly optimistic expectations is another path to failure.
The failure at Lidl is an example of having unrealistic expectations. Any project must have a reasonable time frame and align its working methods with system capabilities. After seven years and €500 million, it became clear that bridging the gap between how Lidl wanted to operate and how the SAP systems have been designed to work would not be possible.
Lacking Experience and Expertise
Your internal resources and vendor systems integrator may be capable of handling your entire project, but how do you know?
Your systems integrator and your ERP project/program manager should have prior ERP experience in your industry. They may be capable of designing and managing the system development process, but can they handle the additional people and process the required transformational elements?
Change management, risk assessment, and user adoption are all critical to success. Have you accumulated enough experience and expertise to deal with them? Without these capabilities, the project will fail once more.
Bottom Line
Although ERP systems are frequently regarded as a necessary evil, they are here to stay, particularly as businesses strive to go digital. You can avoid the major pitfalls of the conventional, often complicated, implementation approach. So, plan ahead of time, gather requirements, form strong teams, and strengthen expertise in process and people-centric issues.