Is cloud based ERP an extremely risky project for SMBs?



Anderson Yates consultants have been asked to rescue three ERP projects in the past two months, all involving companies that employ less than 250 employees - deploying cloud based ERP. What went wrong for them and what lessons can be learned that will ensure your company doesn’t fall into the same traps?


Anderson Yates writes:

You are right to be cynical

When I see a headline like this written by an independent consulting firm that sells project management and change management, my initial reaction is: of course they will say that.  They want to scare us into buying their services. 

You will be right if the whole article does not draw any practical lessons that you can put into place to avoid making the mistakes when your company needs a new CRM, Accounting, ERP or Business Intelligence system.  This article is not the same as ERP suppliers giving you advice on how to choose their product as your next ERP.

Location and industry is not immune from ERP project failure.

Let me tell you about these three ERP projects.  First of all, they are in three different locations;  East Anglia, London and Wales and in three different sectors;  IT Services, Ecommerce and Financial Services. 

Case study 1 – Lessons from IT Services company ERP project rescue

Surely IT Services company must have a successful implementation, aren’t they experts?  You would have thought that such a company is accustomed to delivering successful IT projects.  They have dedicated project managers in house, what could possibly go wrong? 

What event caused the failure?  It wasn’t their project management that let them down, but it was their ERP project focus.  When discussing the project with the management team, they admitted that their focus was on replacing their Quickbooks accounting software.  Marketing and the services team perceived this as being a finance only system so didn’t really get too involved in the implementation.  Until the services team was asked to use the system to process sales orders, place purchase orders for hardware and software sold and raise appropriate sales invoices.

Why did the implementation not work for the Services team? With little input at the business process stage, the services team found the system difficult to use and was not complementary about it.  They were unable to know which Sales Order has been dealt with and by whom and whether purchase orders have been raised or not for the items sold.  They are able to see that Sales Orders has been invoiced but they were unable to tell if the goods ordered has been delivered to the warehouse, whether an engineer has been assigned to configure it, and whether it has been delivered.   Finance did not think it necessary for the stock system to be used – after all they only do a back to back order and most stock is allocated to client project.  The result of this assumption was that the services team had to use good old email to inform everyone what’s going on.  There must be a better way….

What we did?  We booked in a review with the Services team to uncover the problem above.  We informed and show them that if they were to use the stock control system, the progression from Sales order, to placing Purchase order, to receiving and invoicing workflow can be seen from a sales order screen and that is how most systems gives you control.  We also resolved other matters relating to who is dealing with the order and the stage that it is in now.  The solution comes from changes to their process and system.  It isn’t one or the other in order to find the optimum process, it is usually both.

What happened to Marketing?  Well we helped them implement marketing automation after explaining what their system provides them.  Campaign Management linking to project costs comparing budget with actual, E-Mail and letter templates, Campaign Categories, Run campaigns out of the system and track results, viewing each contact lead source and their history of responses to each campaign, which opportunity, sales order and profit is generated by each campaign to provide campaign effectiveness and ROI measure.  Finally, we reviewed reports and dashboards for KPI monitoring.  We configured the system based on the client’s marketing mix.  They are now busy preparing the first campaign from the system which is the launch of a new product.

Transformation delivered?  The Managing Director commented that we have achieved more in one day consulting with these departments than the previous consultant did in 6 months.  The users are now enthusiastic about the system that is aligned to help them to be more efficient and effective to meet business goals.  That’s transformation.

Team Training?  Why and isn’t it a waste of time and money?  We recommend team training conducted by senior consultants to help clients really understand what their software can do and how best to achieve it.  We conduct Team Training at the beginning of every full ERP implementation project or rescue.  The purpose of which are 1.  to envision the project team as to what the new system will look like.  2.  To communicate why the change and 3.  The process involved and the hardships to get there.  Not to worry though we will be with them on the journey and we have completed lots of successful implementation in their industry.

Here is a Sales pitch, feel free to ignore……

If you have Quickbooks Enterprise V14, your license and support will be expiring on 31 July, 2015.  You can still get free technical support including e-mail support free until 31st July 2017.  After which time I guess the support team will be going on their summer holiday.   Here is what QB says about payroll: “After 5 April 2015, no further tax or payroll updates will be released. This means it will not be possible to use the software to run payroll or prepare returns for HMRC.” If you are still using their payroll, it may not be compliant.  But don’t panic.  What you should do next depends on your business.  Call us on 01440 702299 or email:  if you need an impartial advice and assistance as to the best thing to do.  That’s why we are here for – our purpose is to assist SMBs to successfully adopt business management solution that helps to win more business, improve efficiency, increase profitability and provide flexibility to maximise opportunities.

 Key lessons learned:

  1. ERP Project failures are not limited to location, size, industry or sector.
  2. Your focus and change management during implementation determines if your ERP ends up to be perceived as Finance only system.
  3. Involve all process holders engaged throughout the project lifecycle, right through to go live and do not make assumptions on their behalf.
  4. Do not skip or short cut on User Acceptance Testing stage.
  5. Team training is important to set expectations and buy in.
  6. The choice of consultants matter for your ERP project success.

Next week we will share with you what we found at the e-commerce and financial services companies.  We are aware that most of your readership may be from the Technology and Pharmaceutical industries.  We will share stories from these industries in the near future.