The following guest article has been written by Justin Press, SVP Customer Success at Brightpearl
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).
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 8% were significantly over-budget at more than 70% of the original scope.
Nearly 60% of respondents completed their implementation in the projected timeline, which is positive, but 36% 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. Our 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’s one area that keeps cropping up as a major red flag for major tech projects – and that’s 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 our own data, a “lack of expert consultants” was named as one of the key reasons for project failure by 16% 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.
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 to major tech projects may help with savings, but it introduces a high level of risk, according to our data. Half (49%) of firms have experienced a major implementation challenge or failure when adopting the DIY approach – and that’s 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 tech 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’s easy to see why this approach fails, with zero expert support and only very limited guidance, DIY-ers often see their major tech projects result in unstable tech 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,” said Matt Wisniewski, the firm’s COO, talking about why he opted for the DIY approach to his own tech project. “I was asked to more-or-less manage the implementation, with just some documentation for support,” adds Matt.
Inevitably, that introduced problems: “There were issues with data and transactional information and connecting all the APIs. It wasn’t the easiest thing, especially by myself.”
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 wouldn’t recommend going that route.”
Doing The Research Pays Dividends
According to Panorama, organizations don’t always take the time to outline and quantify all the benefits they hope to achieve from their ERP or other solution, and that’s 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!
At Brightpearl, we advise 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 our research.
But because implementation is so crucial to the overall success of the system, it really is essential to consider how any new tech system will be implemented and what support will be provided – because not all implementation approaches are created equal.
Finally, don’t 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’s properly optimised to meet your unique needs.
Major tech projects require high level expertise and support to be a success. If you want a DIY project, paint the garden gate.
Want to know even more about why implementation projects go wrong so often? Grab your free copy of our new report: ‘Implementation Crisis: Are Most Major Tech Adoption Projects Doomed to Fail?’ now.
There’s also a smarter, safer way to undergo the implementation process. We’ve put together a 7 step framework to successful e-commerce software implementation which will ensure your software implementation is smooth and stress-free. Download a free copy of the new guide today.