Erp Failures

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Case Study ERP Implementation Failures

ERP systems are an integrated software solution that is typically offered through a vendor as packaged software that supports the organization’s supply chain and other business functions, such as, receiving, inventory management, customer order management, production, planning, shipping, accounting, and human resource management. The use of ERP is very widespread across a multitude of industries. As a matter of fact, a report by Computer Economics Inc. states that, “76% of manufacturers, 35% of insurance and health care companies, and 24% of Federal Government agencies already have an ERP system or are in the process of installing one.” Over 60% of Fortune 1000 companies have implemented ERP systems (Hawkins & Stein, 2004). It is not just large firms that are implementing ERP systems, small and medium size companies are making use of ERP systems as well (O’Leary, 2004). ERP systems have expanded across the globe and many of world’s leading companies consider Enterprise Resource Planning (ERP) systems an essential information systems infrastructure to survive and prosper in today’s economy.

There are many advantages to ERP systems. Companies that have successfully implemented ERP systems report improvement in management decision making, improvement in efficiency, improvement in information exchange, improvement in performance and productivity levels and improvement in customer service and customer satisfaction, just to name a few. So why, then, do industry statistics show that greater than 60% of ERP implementation historically fail? (Ligus, 2007).

There are several major reasons why companies fail in implementing ERP’s including, business objectives are not clear and concise, executive leadership is not engaged, communication is lacking, project methodologies are not followed, employee resistance, inadequate training…...

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