Independent studies by Gartner & McKinsey have estimated that over 75% of ERP implementations fail to meet their objectives, many with costs running more than 200% over budget. This is a striking statistic and one that gives businesses concern over their own ideas for new software implementations. Discrete manufacturing projects face especially high failure rates due to their inherent complexity.
While many small and medium-sized businesses (SMBs) are turning to software solutions like Enterprise Resource Planning (ERP) systems, Customer Relationship Management (CRM) tools, and Manufacturing Execution Systems (MES) to boost efficiency, reduce costs, and stay competitive – the implementations can often fall short of expectations. These failures lead to wasted investments, operational disruptions, and lost opportunities. But why do they happen, especially for SMB manufacturers?
In this blog post, we’ll dive into the top reasons behind these failures, drawing from industry insights and expert analyses. Understanding these pitfalls can help SMB leaders navigate their next software rollout more successfully. We’ll also include tips on how to avoid them.
1. Lack of Clear Objectives and Planning
One of the most common culprits is inadequate upfront planning. Businesses often jump into implementations without defining specific goals, such as improving inventory management or streamlining supply chains. This leads to scope creep, missed deadlines, and a system that doesn’t address core needs. Without a thorough needs analysis, projects become reactive rather than strategic.
Tip to Avoid: Conduct a detailed assessment of your current processes and set measurable success metrics before selecting software. Establish a governance structure with clear roles and realistic timelines. Setting clear goals and objectives will help the solutions experts at the software vendor you chose build the right product to address your business needs.
2. Insufficient Management Commitment and Buy-In
When leadership isn’t fully on board, the project lacks the authority and resources it needs. Executives might view it as an “IT thing” rather than a business transformation, leading to half-hearted support and poor cross-departmental collaboration. In SMBs, where founders often wear multiple hats, this can result in monopolized decision-making and failure to build consensus.
Tip to Avoid: Ensure top management communicates the project’s importance and appoints a dedicated internal leader with operational knowledge and authority. Make it a priority across the organization.
3. Poor Software or Vendor Selection
Choosing the wrong system—one that’s too complex, not industry-specific, or mismatched to your operations—sets the stage for failure. Sometime, off-the-shelf systems are not the right solution at all. An increasing number of SMB manufacturers are opting for custom developed software rather than generic software from a vendor. With custom builds, SMB manufacturers can partner with software development agencies, like Lasso, that specialize in building custom software systems for SMB manufacturers.
Tip to Avoid: Research vendors with experience in your sector. Talk to reference customers and focus on systems that align with your business needs, avoiding unnecessary features.
4. Inadequate Training and User Adoption
Even the best software fails if users aren’t trained properly. SMBs often underestimate the learning curve, assuming employees will adapt quickly. This results in resistance, errors, and underutilization of the system. Many off-the-shelf systems offer a plethora of features and workflows – some are needed, but many of which are not and only serve to make the implementation and ongoing operation more complex. This is where custom software may be considered as a more simple, streamlined approach.
Tip to Avoid: Develop a comprehensive training plan tailored to different roles, including hands-on sessions and ongoing support. Consider various learning styles and allocate dedicated time for practice.
5. Data Migration and Integration Challenges
Manufacturing relies on accurate data for everything from BOMs (bills of materials) to inventory. Poor data hygiene—common in SMBs using tools like QuickBooks—leads to migration issues, incompatible datasets, and integration failures with factory floor systems. Especially which generic systems, the options for integrating scattered data are limited and custom data integrations and migration pipelines may be needed.
Tip to Avoid: Invest in data re-engineering early. Formalize structures like SKUs and hierarchies, and test integrations thoroughly before go-live.
6. Resistance to Change and Poor Change Management
Employees may resist new systems due to fear of disruption or lack of involvement. In SMBs, where processes are often ad-hoc, this can amplify pushback. Especially when the new system is complex and difficult to use. Focusing on simplicity & ease of use for the actual end users will help change management adoption.
Tip to Avoid: Implement a change management strategy that includes communication, incentives, and monitoring. Involve users from the start to build buy-in.
7. Underestimating Costs, Time, and Efforts
SMBs frequently fixate on budgets, cutting corners that lead to overruns. Implementations can take longer and cost more due to unforeseen issues like process changes or productivity dips. This is where setting clear objectives from the start will be critical to guide the project to keep it on track.
Tip to Avoid: Budget for the full scope, including training and support. Avoid shortcuts and prepare for temporary dips in efficiency.
8. Lack of Cross-Functional Collaboration
Treating the project as siloed (e.g., just IT) ignores input from key departments like production and finance, leading to overlooked needs. Ensuring that all required workflows have adequate representation will be critical for adoption and the overall success of the project.Â
Tip to Avoid: Form a diverse project team and foster collaboration to ensure all perspectives are considered.
9. Misunderstanding of System Architecture and Processes
First-time implementers often underestimate the need for process standardization and architectural planning, assuming integrations are plug-and-play. Custom software projects have more flexibility with implementations while off-the-shelf systems can run into challenges with incompatible data objects.
Tip to Avoid: Document and re-engineer processes with expert help. Don’t resist standardization where it makes sense.
10. Weak External Support and Coachability
Relying on inexperienced consultants or ignoring their advice dooms projects. SMBs may withhold details or skip recommended steps. It is also important to chose partners that specialize in building systems for SMB manufacturers as they will be more in-tune with the most common challenges and potential roadblocks to look out for.
Tip to Avoid: Choose industry-savvy partners and be open to their guidance. Build strong relationships for better outcomes.
Conclusion
Software implementations don’t have to be a gamble for SMB manufacturers. By addressing these common pitfalls through better planning, involvement, and realism, you can turn potential failures into successes. Remember, it’s not just about the technology—it’s about aligning it with your people and processes. If you’re embarking on a project, consider consulting experts early to stack the odds in your favor.
Lasso – Your Technology Partner
Lasso is a software development agency created to bring this new software paradigm to reality and it starts with our simple process that turns your ideas into custom systems for your business:
Initial Consultation
Scope & Estimate
Milestone Deliverables
Ownership Transfer
Service & Support
Sound interesting? Let’s get in touch so we can discuss your project!
