- Implementing an ERP system, or even an OMS, is a major undertaking for a retail business with a mixed bag of typical outcomes.
- Half (49%) of firms have experienced a major implementation challenge or failure when adopting the DIY approach within the last 12 months — highlighting why it is often a failure waiting to happen.
- According to Panorama, organizations do not always take the time to outline and quantify all the benefits they hope to achieve from their ERP or other solution, and that is a mistake.
by Justin Press
When successful larger businesses run into operational stumbling blocks, they are often tempted by Enterprise Resource Planning software, better known as ERPs. Meanwhile, brands on a smaller budget often turn to ‘single point’ solutions to overhaul their operations cheaply and easily. These solutions include Order Management Systems (OMS) and Warehouse Management Systems (WMS).
ERP Implementation: Good or Bad?
Implementing an ERP system, or even an OMS, is a major undertaking for a retail business with a mixed bag of typical outcomes: great results for a few companies, so-so outcomes for others, and disasters worthy of business school study for the unfortunate few. Despite ERPs being a little dated and inflexible, many merchants still see them as essential — and every year a new crop of growing commerce companies get large enough to sign up for an ERP implementation experience.
From a traditional finance point-of-view though, ERP projects are proving costly. Brightpearl, a leading retail operating system, researched 500 companies and found that on average, ERP projects cost around a third more than predicted, but only eight percent were significantly over-budget at more than 70 percent of the original scope. Nearly 60 percent of respondents completed their implementation in the projected timeline, which is positive, but 36 percent of projects took longer than estimated to get live — with an average 200-day delay.
Whether adopting an ERP or other similar solutions like an OMS, a common set of mistakes are often made. Brightpearl research highlights some typical pitfalls, including underinvesting in expert consulting assistance, not doing enough pre-purchase research to understand whether the system is fit for retail, or failing to foresee the headaches that a lack of flexibility, functionality, and integrations cause. Other issues are organizational, like employees’ resistance to change or failing to secure buy in from leadership.
The Problems of Do-It-Yourself Tech Implementation
There is one area that keeps cropping up as a major red flag for major technology projects: when businesses opt to go it alone. Despite the complexities of ERP (and OMS) adoption projects, some organizations keep consultant involvement at minimum, which is puzzling. According to Panorama Consulting Group’s annual ERP report, less than half of all respondents engaged consultants to guide their project, which is “surprisingly low,” said Panorama.
In Brightpearl’s data, a “lack of expert consultants” was named as one of the key reasons for project failure by 16 percent of merchants. According to Panorama, “many organizations don’t understand the importance of digital strategy nor what it means, so they’re less likely to seek guidance for it.”
That is probably a factor, but arguably cost is the driving concern here. ERPs and single point solutions typically offer a ‘self-guided’ approach to implementation, providing brands with instructions on how to set up the system and migrate data — and leaving them to do the legwork.
The DIY Approach is a Key Reason for Tech Failure
While the Do-It-Yourself (DIY) approach is temptingly cheap, complex, major technology projects come with many variables, any of which can go wrong. Taking the DIY approach may help with savings, but it introduces a high level of risk, according to Brightpearl’s data. Half (49%) of firms have experienced a major implementation challenge or failure when adopting the DIY approach within the last 12 months — highlighting why it is often a failure waiting to happen.
According to the study, the DIY (or self-guided) approach to implementation was the key reason for technology project failure for almost a quarter of firms polled (23%), which speaks to the importance of expert consultation for those wanting to avoid being the next business school disaster study. It is easy to see why this approach fails: with zero expert support and only very limited guidance, DIY-ers often see their major technology projects result in unstable technology stacks, disconnected systems, and clunky operations. Many companies then need to overhaul these projects within a few years because of ongoing issues.
Going it alone rarely pays off — something Michigan-based lab equipment brand USA Lab learned the hard way. “It was all about the price at the time,” Matt Wisniewski, the firm’s COO, said about why he opted for the DIY approach to his own technology project. “I was asked to more-or-less manage the implementation, with just some documentation for support.”
Inevitably, that introduced problems: “There were issues with data and transactional information and connecting all the APIs. It was not the easiest thing, especially by myself,” Matt said.
Meanwhile, Trevor Martin, Vice President Operations, of Snow, a Phoenix, Arizona-based cosmetics brand warns: “The worst thing you can do as a growing retailer is get into an implementation that fails. Self-guided implementation that comes with cheaper options is far too risky. I would not recommend going that route.”
Doing The Research Pays Dividends
According to Panorama, organizations do not always take the time to outline and quantify all the benefits they hope to achieve from their ERP or other solution, and that is a mistake. Introducing a new technology system into an organization can be a game-changer, helping to boost productivity/efficiency, reduce costs, support growth, and boost the customer experience. However, for it to meet those lofty goals, businesses need to do their due diligence — ideally before committing to a large investment.
Brightpearl advises businesses to really understand what they are looking for from their investment: ideally having a checklist that quantifies the key requirements, benefits, and functionality merchants need from their new system. This helps firms understand if a vendor is a good fit, and helps to avoid some of the major causes of adoption failure highlighted by their research.
Because implementation is so crucial to the overall success of the system, it really is essential to consider how any new technology system will be implemented and what support will be provided because not all implementation approaches are created equal. Finally, do not discount the power of consultants. A major technology investment is a risk — to the business and, by extension, your career. Surround yourself with retail experts that have a track record of success when it comes to implementation, and be sure they can get you online on time, within budget, and with a system that is properly optimized to meet your unique needs.
Major technology projects require high level expertise and support to be a success. If you want a DIY project, paint the garden gate.
Justin Press is the SVP of Customer Success at Brightpearl.