Enterprise Resource Planning system implementation is done in many steps and stages. All the details have to be taken into consideration for a successful implementation. The various components of the ERP system have to be studied well in order to avoid failures. The reasons for ERP failure are many and depend on many factors. If there is a problem in the ERP software, business process, hardware or problem with the users of the system, there can be a chance of a failure. Hardware problems can be rectified and fixed relatively easier than the other errors. The implementation process involves a lot of planning and investment. Many people and resources are involved therefore there is a risk of failure also involved. The risk analysis, benefits analysis and performance objectives should not be overlooked. The reasons of ERP failure can occur at any stage of the implementation process.

Right from the beginning of the implementation process with the selection of the right ERP package, all details should be carefully considered. The various reasons for ERP failure are as below:

1. Best Business Practices: The ERP software can result in a failure if the best business practices are not followed. If a proper understanding of the requirements and goals of the business is not done properly, proper planning is not done or proper management is not done the implementation process can fail. These can be the reasons for ERP failure. Therefore it is essential to follow the best business practices.

2. Budget: Determining the budget is essential for the project. The budget to be allotted depends on the organization’s size and the package which is chosen. The budget is often limited and underestimated which can cause problems later. Depending on the vendor for this evaluation may not be correct. This is an important step and the cost of implementation process of the ERP is more significant than the software. Improper budget can be one of the reasons for ERP failure.

3. Project Management: The project management needs to be handed over to a project manager who can coordinate and communicate well. The right manager should be chosen in order to make the implementation successful. The manager needs to be involved in the software selection and the implementation process. Improper selection of the project manager is one of the reasons for ERP failure.

4. Unrealistic Goals: Unrealistic goals and approaches lead to delays. Realistic schedules, resources, budget should be identified. Unrealistic goals lead to errors and delays. The schedule should be update regularly to reflect the real time progress and activity. This needs to be reviewed by the management regularly too.

5. Lack of Training: Many times the organizations do not give sufficient importance to training and this is one of the reasons for ERP failure. Proper training is essential as the users need to know how to use the new system. They need time to understand and get used to the system. For a successful implementation, the staff needs to be trained properly and given training sessions.

These points often are the reasons for ERP failure and should be taken care of in a detailed manner.

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Read about Causes of ERP Failure. Also know the ERP Project Management.