The Top 5 Reasons Why SAP Implementations Fail – And How To Avoid Those?
It’s no secret that the essence of a company’s success lies in how well it manages its business operations, vendors, employees, and customers. Of course, many companies have sought to tap into that essence. And many of them have turned to powerful technology tools to do that.
These companies have realized that using a unifying system like an ERP can help them chart the road to success. ERPs have, obviously, evolved ever since they gained popularity. One of the most powerful ERPs out there is SAP S/4HANA. SAP S/4HANAis a next-gen ERP that provides real-time insights and drives value for companies irrespective of the business or industry size. It acts as a nerve center to connect operations across business units into a unified structure. It provides managers with real-time information to help them make better decisions.
But things don’t always pan out the way they should.
Although SAP offers plenty of benefits, a study from 2018 revealed that only 50% of the companies had found success in implementation. So, what could have possibly gone wrong in the implementation? Why did they not get the value they sought?
Let’s explore the top 5 reasons SAP implementations fail.
Top 5 Reasons Why SAP Implementations Fail And How To Fix Them?
- Lack of a clear strategy
The top reason for SAP implementations failing is that companies do not have a clear strategy in place. It may be surprising, but it is true nonetheless, that many SAP implementations don’t start with a clear and specific end objective in mind. While they have a high-level goal of implementation, they fail to ask themselves several critical questions. A leasing giant abandoned a massive SAP-based creation of a leasing system that was seen as the crux of a worldwide IT transformation after 2 years and millions of Pounds. The issue was that, even after the SAP implementation, the system was clearly unfit for the digital strategies demanded by the new world because it would have hindered, rather than aided the agility of the company.
What specific improvements are they hoping to drive with the SAP implementation is probably the most important question out of several on the table. The answer to that will provide valuable strategic direction to other questions regarding implementation strategy, alignment with business goals, resource allocation, and time schedules for the project, etc.
Solution: The easiest way to avoid this failure is by creating a clear strategy with other stakeholders and tying it to the achievement of some specific business goals. The role of the SAP implementation partner could be key here too. A partner who understands the technology is, of course, essential but a partner who can look at the business context and help you define the most effective way to wield the power of that technology is invaluable.
- Lack of Agility and haphazard change management
Migrating your business processes to SAP is a huge step. Although the implementation is designed to be easy and seamless, it can go wrong if all the users in the organization are not trained to embrace the changes. A leading sports apparel company showed just what could go wrong. Famously, poor management of post-implementation changes led to delay in shipments and productivity loss. But managing change goes beyond just training the employees to adapt to the new ways in a post-SAP world. It’s also about how the implementation allows for built-in dynamism.
The challenge here is that businesses today operate in a fluid world. Customers are fickle, the competition is alert, and the market extremely dynamic. This means that the business must be extremely nimble to stay ahead. As the example of the leasing giant showed, that agility must be built into the SAP implementation too. A hide-bound, inflexible, and hierarchical implementation effort may achieve what it set out to do but could trap the company into following a path that may already be outdated.
Solution: It’s now non-negotiable that the implementation must have agility woven into its fabric to deliver an SAP implementation that is in keeping with the “current” business needs. Post-implementation, it’s critical to ensure that all the decision-makers be completely cognizant of the changes that would take place in processes and workflows. These leaders will become the change agents across their functional areas.
- Not aligning with the existing systems
SAP implementations don’t work in a vacuum. They must find a place in the context of the enterprise tech stack. Different parts of the business would already be using specific systems for their specific needs. Many of these would form part of functional workflows. Considering how tightly connected the entire system is, there is a risk of the implementation going off the rails if there are integration and alignment issues with existing systems. One oft-quoted example is of an SAP implementation at a German retail super-chain. The implementation ran for over 7 years before being scrapped. The challenge was that the new system and workflows could not accommodate the specific ways in which the grocery chain’s current systems and processes looked at key variables like cost, inventory, and price.
Solution: Before shifting to an ERP system, companies should understand their existing systems and define the integration needs. An SAP implementation partner with a range of expertise across other key business solutions, like CRM for instance, would be able to help you get a glimpse of what the connected tech stack would look like. Such a partner would be equipped to look beyond just the individual technology elements at the business outcomes you need.
- Lack of knowledge
51% of IT managers admitted that they do not have enough knowledge or skills to manage the migration or implementation of SAP. As you can imagine, this can cause challenges in implementing the ERP successfully.
Solution: The only way to fix this is by working with experts who do have the knowledge and experience of implementing such systems. A premier SAP partner will be able to help you implement the solution, handhold you as the systems take root across the enterprise, and train you to be able to use the systems to their maximum power.
- Ignoring the technology complexity
There’s no getting around the fact that this is a cutting-edge solution with some complex technology implications. For eg., implementing SAP S/4HANA means a new architecture and the accompanying challenges as companies transition from a legacy ERP that has a different architecture. The same applies to data formats that need to be changed as data is migrated. Another issue is data redundancy. Data migration takes time and effort. Nailing down and removing redundant data becomes a key priority in the interest of efficiency. Designing and provisioning the right infrastructure is important as is an array of important technology choices that have the potential to derail the implementation.
In one instance, a 2016 merger between two cosmetics giants exposed a situation where migrating processes from not one, but two incumbent systems caused the implementation to come unstuck. The merged entity sought to replace the existing ERP systems in each company with a new, unified SAP HANA solution. Unfortunately, the migration and rollout was poorly planned and executed, leading to possibly millions of dollars in sales losses as a key manufacturing facility ran aground.
Solution: Prior to moving to a new ERP, companies must answer all the important technology questions related to the ERP. Consider whether it will be on-prem or on cloud? Will the cloud-based ERP be single-tenant or multi-tenant, etc. these answers will help companies to be prepared for a smooth transition.
As you can imagine, much of this comes down to the implementation partner. The right implementation partner should be able to understand the business objectives of the enterprise and then design the right solution set and implementation strategy. Agility and responsiveness become critical to success. A deep understanding of the technology is mandatory and so is experience in having delivered such complex solutions. One way is to look for a partner who has an SAP CoE with demonstrated capabilities and who has invested the time, money, and energy into building implementation assets like project management tools and processes specific to SAP.
It’s been said that how enterprises collect, manage, and leverage information could be the critical difference between success and failure. For the modern enterprise, a powerful ERP like SAP S/4HANA could become the key to winning -if implemented well!