Common Pitfalls of ERP Implementations: A Project Risk Management Perspective

Implementation Trends

Industry research reports have shown that 70 percent or more of ERP implementations fail. A poorly executed project can create many risks including budget overruns and delayed timelines which can negatively impact financial performance. Our team collaborates with the business and system integrator (SI) to identify high-risk areas and raise considerations such as:

Does the project have the right level of sponsorship to succeed?
Has the business defined the vision for future state business processes?
Have the impacts of changes to the business been assessed?

Many organizations identify a lack of internal resources or technical expertise, creating a need for independent advisory support or to backfill responsibilities as an extension of the project team. Protiviti’s Project Risk Management advisory services, along with a robust managed support model, provide technical and business resources to support the implementation of large-scale digital transformations (e.g., S/4HANA, Workday, Ariba, Oracle ERP Cloud, Microsoft Dynamics etc.) and coverage of day-to-day business operations.

The graphic below demonstrates the critical implementation workstreams that we typically use as a starting point with our clients to assess how well the workstream is covered and where there may be gaps.

What is Project Risk Management and How Can It Help?

The Project Risk Management (PRM) function should have intimate knowledge of the key processes and common risks associated with the project, as this role validates supporting documentation to ensure it sufficiently meets the needs of the organization as well as internal and external auditors.

That’s what makes this an ideal position to act as the liaison between the audit function, the system integrator (SI) and the business. This liaison can ensure that key business concerns are communicated to the system integrator and interruptions to the timeline are limited during critical project phases. This is where the PRM function can either act as an independent assessor of the critical workstreams or as an extension of the project team to fill missing roles.

The graphic below illustrates the workstreams typically covered by the client and system integrator, as well as areas often identified as gaps that are typically taken on by Protiviti.

The case studies that follow detail scenarios where I’ve had an opportunity to take on the Project Risk Management function to assist clients in avoiding common implementation pitfalls.

Case Study 1

My team was tasked with serving in an advisory role during design workshops, performing independent assessments of configurable controls and data conversion throughout our client’s SAP S/4HANA cloud implementation. However, as workshops progressed, we learned the sessions were not being facilitated in an organized or clear manner, resulting in confusion with the client stakeholders, ambiguous action items and few decisions being made. We worked closely with the business to re-align with the system integrator (SI) and restructure the plan to be more comprehensive moving forward. After multiple attempts to correct the issues, we assisted in the client in selecting a new SI.

The root cause was identified as core misalignment between the business and SI. This may have been avoided by thoroughly vetting options for the SI vendors, including workstream lead interviews, sample walkthrough design workshop, business requirements response presentations and rating the most critical criteria in the form of a scorecard. While this may seem like excess work for selecting a partner, this is perhaps the most important part of a successful implementation – not only having an experienced partner, but one that understands your business’s requirements and can assimilate into your culture.

Case Study 2

Another Protiviti project team was initially brought on to help the client select an ERP system to support the global organization’s business functions and requirements (Microsoft Dynamics 365 was selected). Once the client selected a system integrator (SI), they asked us to review the contract and suggest additional areas to supplement the implementation project team. The client was aware they did not have the resources or expertise internally and included our experts in the extended project team with the client stakeholders and system integrator (SI). This resulted in our team supporting the project management office, data conversion and controls functions.

Throughout the implementation, other needs the SI did not cover were identified such as User Acceptance Testing (UAT) facilitation and cutover planning. As the client team was small and maxed out on their existing responsibilities, we were tasked with taking on the additional workstreams and growing our team. This was a successful implementation that met the client’s original timeline, due to the partnership between the three groups (this also happened to be the first implementation completed fully remotely in a virtual environment).

Common Pitfalls

While each project is unique, my experience has demonstrated that there are common things that go wrong during implementations:

It is key for clients to be educated on the risks when taking on a large implementation or transformation so they can understand which workstreams may require additional scrutiny and what questions to ask the system integrator when engaging them as a partner. Identifying the right system integrator for your organization will set the foundation for success, as this will be the baseline in determining who is responsible for delivering the critical components of your project. With proper preparation, these pitfalls can be avoided, or at least result in reduced risk, to help complete the transformation on time and within budget.