ERP gone bad: Lessons from real-world failures

Spectacular flameouts have much to teach managers about the right way to run projects

ERP projects are among the most critical efforts IT ever undertakes, as they touch almost every part of essential business operations and are complex technically. Not surprisingly, some fail -- spectacularly. Although ERP has been an enterprise focus for a decade, many companies are still embarking on such efforts, and even more are dealing with ERP redos because of mergers and business changes. Here's what you can learn from the failures of others and put to use on your own ERP projects.

I focus on failed SAP deployments because the details are more commonly available, thanks to SAP's huge presence in large publicly owned enterprises and government, where documents surrounding litigation and major cancelled projects must be made public. But the lessons apply to Oracle and other ERP deployments as well.

What is an ERP project failure? Not mere cost overruns, but an event whose effects are so large that they force a company to restate its earnings or a government entity to cancel a project that is substantially funded.

John F. Kennedy once said, "Victory has a thousand fathers, but failure is an orphan." In the world of ERP projects, the reverse is almost always true: Failure has a thousand causes. These causes almost invariably arise, says Michael Krigsman, CEO of the consultancy Asuret and a well-known analyst of ERP failure, because of a lack of alignment between the three key parties in a project: the customer, the software vendor, and the system integrator.

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