November 3


ERP Project Failure in Manufacturing Companies

By Patrick Millerd

November 3, 2023

what is an ERP system, what is ERP software

ERP project failure is often scapegoated as a computer system failure … it’s not.

In the context of an assignment, I’m often asked the question “Do you know SageX3, or Epicor, or Netsuite, or SAP B1, or Microsoft Dynamics or whatever system?” What for?  When implementing an ERP system into a manufacturing environment this is irrelevant.

The simple analogy is driving a car. Is it important what car you’re driving when your goal is to get from A to B? The main issue should be, can you drive? Do you understand the concept of driving a car? There will be some differences like the indicator being on the left or the right, the kind of handbrake, is the GPS in the car or on your phone?

None of which impacts achieving the aim of driving from A to B.

The question shouldn’t be “do you know Sage X3 or NetSuite or SAP” but “do you understand the business?”

What is an ERP system?

An ERP system is a business system that uses a bundle of software programs. A collection of programs that address the needs of the business. The successful implementation needs the mentality of a person who understands the system in the context of the overall  business. Not someone tacking the business into a software package.

Many projects are either driven by the wrong people in the wrong department or the right people with the wrong mindset.

To be successful an ERP project needs strong project leadership, driven by the business needs.  Not side tracked by outdated opinions.  Opinions which lead to long discussions, and even worse, customisation design sessions that lead nowhere.

Most businesses in the same industry or industry group need the same systems. But these needs become driven by polluted wants of the myriad parochial and personal interests and fears that permeate businesses. Personal power games, preconceived ideas, “we’re different”, “we’ve always done it this way”, siloed thinking, becomes the sludge that the implementation has to trudge through. Slowing progress and leading to implementation failure.

What is ERP Software?

Is this illusion created by the software suppliers themselves? Only concerned about selling more of their systems? Creating the illusion of uniqueness where there isn’t any? Or are certain systems that different from each other that they address different needs?

They are not. The basic needs are all the same. Although in some industries the needs have been extended by legislation for example in manufacturing pharmaceuticals.

Many years ago this became very clear when there were the arguments between a generic, in. those days MRP or MRPII, systems and industry specific “we’re different” systems. The argument was spurious. Created by the parochial interests of technical people who had limited understanding  of the business as a whole. They were wrong!

How much of this type of thinking still exists today with a marginally different slant?

The implementation of an ERP system in a manufacturing business is a tool of the business system and not the other way around.  A strong business leader must lead the project. Someone who can cut through limited thinking and personal agendas and ensure that the implementation of the real need system is completed as quickly as possible. There may be options in doing things but often the differences are minimal and can be changed later.

The different systems are merely different makes of vehicles. There are some special requirements in certain circumstances but the real needs of all manufacturing businesses are the same. Manufacture optimally and deliver customer orders on time every time.

ERP implementation failure is not a failure of the software but a failure of the project management. It’s a business system failure not a computer system failure.

Patrick Millerd

About the author

I support small and medium-sized business (SMB) owners to drive profitability and cash flow, managing the financial health of their business through understanding and using their numbers.
Helping them build a complete management system that puts them in control.

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