According to a report by Allied Market Research titled "Global ERP Software Market - Size, Industry Analysis, Trends, Opportunities, Growth and Forecast, 2013-2020," the global ERP software market is all set to reach $41.69 billion by 2020. Another report by Panorama Consulting Solutions stated that ERP failure rates had increased from 16% in 2014 to 21% in 2015.
An ERP installation is a one-time, multi-million dollar process that involves three to four years of hard work and dedication. When the system fails despite all efforts the subsequent losses can exceed the millions of dollars poured into it. Some familiar organizations that have witnessed a massive failure in their ERP projects include Hershey’s (19% drop in profits), City of Oakland (erroneous paychecks), Miller Industries (inefficient ERP), and WW Grainger Inc. ($11 million drop in earnings). What did these companies do wrong? In an article on ERP implementation failure by Steve King - author, COO and CSO, 'training' makes it twice on his list of top ten reasons for ERP system failure.
Reading through the analysis of ERP failures, the most commonly documented ERP training-related complaints included:
Training is an important part of an ERP installation and cannot be underplayed. Although not rocket science, implementing ERP training in an organization requires forethought and planning. I have listed 5 steps that are often missed during the implementation of ERP training in an organization:
#1 Plan a budget:
While extensive budgets are set aside for various phases and processes in ERP implementation, it is surprising how little is set aside for critical training. Sadly, the Training Department has to bear the brunt of cost-cutting exercises when the budget runs out. According to a Gartner group research, organizations that spent less than 13% of their total ERP cost on training were three times more likely to run into hurdles such as exceeded deadlines and exceeded training budgets, than those organizations that spent 17% or more of their total ERP cost on training.
Like all ERP budgets, ERP training budgets too are infamously known to overshoot the initial costs set aside. To avoid this, the training budget must be comprehensively planned during the pre-implementation phase and should take internal and external training into consideration. Skimping on your training budget could spell disaster for your project.
While ERP training strategies might differ from one organization to the next, budgets must, at the very least, take into consideration:
#2 Align Training with Change Management:
Most of us find it easy to adapt to minor organizational changes. But the scope of change related to an ERP installation is so large, and affects so many people within an organization, that it is hard to ignore or comprehend its immensity; it is also met with severe resistance by employees. Failure to overcome this resistance will lead to failure. Align your training with change management and you will find:
#3 Start Early:
Typically, vendors train the ERP project team during the initial stages of implementation in preparation of the testing that must be conducted by them. Assessments and certification programs must be conducted on the features, functions, etc., of the ERP, to ensure that the team members have enough knowledge to carry out training of the system once it is deployed to the test server, and subsequently to the production server. Once this is done, enterprise-wide training sessions must be held.
Vendors prefer the train-the-trainer approach where the project team is trained, and these trained members pass down their training to the enterprise. However, the following must be considered with this approach:
A more effective but costly approach would be to get the vendor train the entire organization. Don't be surprised if your vendor is not willing to take this route.
Along with training the ERP team, it's important to "educate" the team, as well as sensitize employees on the importance of the new system which will indirectly also arm them with a deep understanding of the concepts behind their individual jobs.
Whichever way you decide to conduct training, it must begin even before you decide on a vendor and must be completed before the EPR is configured.
#4 One-off Training Won't Do It:
ERP training and assessments are a continuous process that should not end with the implementation of the ERP.
#5 Choose a Training Delivery Format that Works:
Some of the common ERP training delivery formats that work well are:
A successful alternative is to find a reliable training organization that has a track record of successfully training employees involved in ERP installation. Such an organization would understand the importance and essence of each step of ERP training and would also possess the necessary know-how to suggest the best training methodology for your employees depending on your organizational training needs, the size of your organization, and the industry involved.
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