Internet is full with the same messaging “why ERP implementations fail”. Most bloggers simply explain the doom scenarios. Some are telling how you can prevent it by telling you that if you hire company XYZ things will be good because of the: Experience, Best People, Market knowledge, methodology etc.
I would like to approach it differently and tell you what the cause is for each “reason why ERP implementations fail”. I would even like to challenge you saying that we can do a full Microsoft Dynamics AX implementation for you for just €10K.
First, a success story
When I started my Dynamics AX career, one of my first implementation I did was for an old employer of mine; an international trade company with about 25 FTE in The Netherlands and China. I was the Dynamics AX consultant, and a personal friend and colleague of mine was the Dynamics AX developer. We implemented Dynamics AX3.0 for about €50K in just a few months time. The project team was very lean; the director told all I needed to know about the business procedures, I was the consultant who understood the business (I worked there for a few years). We started the project by declaring that trust in each other is the basis of this project, and therefore there is no need for project management, progress reports, etc. We also decided to implement the project using the Extreme Developing methodology.
Were we successful? Hell yeah! We developed a shipping module to track and trace the imports from China and the deliveries to the customers in Europe. We changed the way invoices were settled (3 way matching in AX3.0), we created a new inventory valuation (Shipping batch pricing and all related costs), we introduced a rudimentary workflow (there was no workflow or alerts in AX3.0) and the documents were printed using the HD pictures the customers made from all their items. Just for €50K.
Actually the deal was even better in hindsight since we sold the shipping module we created twice to other customers. The customer used Dynamics AX 3.0 for 8 years. He never upgraded to AX4.0, AX2009 or AX2012. Simply because Dynamics AX3.0 and the modifications we made was exactly what he needed, so why upgrade? If you add the license costs of AX and SQL, hardware to our services minus the returns of selling the shipping module he spent about €10K a year on a tailor made ERP system.
The challenges and rules of ERP implementations
Can we implement AX for under €10K? Of course we can. So what needs to be done to stay under this €10K? I’ll explain this using the “top reasons why ERP implementation fail”
- Incomplete requirements: You need to know and be able to tell me what you want! Changing a way of working is easy said, but it takes me time to configure. So understand what your employees are doing or need to be doing and stick to it.
- Lack of User environment: We’re talking about Microsoft Dynamics AX. Not Microsoft Dynamics AX2012R3 which needs on premise installation, hardware setup etc but I’m talking about the new cloud based Dynamics AX.
- Lack of Resources:You need to help and you have to be available! Much time is spent on education, data migration, security settings and gathering procedures (see point 1), project management (point 4) and change management (point 5).
– Regarding data migration I simply need you to put your employees to work. And remember: “bullshit in, bullshit out”.
– Regarding education, either you do it yourself or you have to pay me more than €10K
– Regarding security settings; I’ll tell you how to set it up, you’ll have to take it from there.
- Unrealistic expectations:We’re talking about vanilla AX, which means; No modifications no interfaces or integration and you have to use standard AX documents.
- Lack of executive support/report: You need to have the authority to make every single decision.
Much time is spent on internal discussions, getting authorisation or asking others people opinion. Most of the time simply because things are unknown (see previous point) or because you don’t dare to make the decision for your colleague or your boss. If we want to stay below the €10K I need you to make decisions! I need you to be a bad ass boss!
- Lack of IT Management:Keep the team as small as possible, preferable keep it minimized to just you.
If point 5 isn’t clear enough; The less people that are in the project team, the smoother and faster it goes. People in the project team have knowingly or unknowingly secondary agenda’s:
– They most likely want to let you know they are real smart / they can lead / they matter / ….
– The team wants to obstruct the progress since they think their job is on jeopardy,
– They want to use this to prove themselves and also climb the corporate ladder,
– They want to use the ERP to change procedures,
All nice and well, but I really don’t have time for politics if we have to remain below the €10K.
It is possible
You are joking right, you ask? Not really! As an example I’ve implemented a fixed asset module in just 2 days (reference can be provided upon request) The CFO himself told me he wanted to use simple straight line depreciation and he already had his team prepare all the data for me. Everything else he trusted me to setup; I’m a CFO myself, have over 18 years of experience with implementing AX and I’ve implemented AX fixed assets multiple times. On another project the implementation took me over 6 months. This was because I had to spend time on gathering data, explaining to the team what we are doing, help with the data migration, conduct project management meetings etc. Read also this blog and learn how to save millions on ERP implementations.
Shall we do business?
Can I give any guarantees? Not really. It starts with a meeting and just like dating, it feels good or it doesn’t. Also, just like dating, I have to detect how high maintenance your company is, which determines the effort I have to put in.
Further, Dynamics AX (cloud version) is not to be sold to companies below 50 enterprise users and with that all the conditions mentioned above are most likely not feasible. But do understand; if you spend millions on an ERP implementations, went X times over budget, deadlines were not met or the quality is really bad, then most likely you violated one of the 6 rules mentioned above.
Do you feel that I missed something? Please do share your thoughts with us and tell us your experience in the comments bellow. Also feel free to contact us for more information and subscribe to our newsletter to receive news about Dynamics AX straight to your inbox.