
Though no one can deny the great importance of digital transformation, it can also be a rocky path with plenty of challenges, large and small, along the way. Implementing new and complex solutions like ERP, CRM, and digital commerce always carries a degree of risk, but it is also vital for staying relevant in a rapidly evolving market.

According to ERP Focus, around 60% of new system implementations fail, and more than half exceed their original budgets. These impacts are often felt across fiscal years as funds need to be reallocated, and limited budgets hinder future innovation. There are also indirect costs to consider, such as those associated with decreased client satisfaction and staff productivity.

The root cause of failed implementations usually comes down to migration-related issues. A lot of established businesses are still dealing with old, unreliable, and disparate systems. This makes it notoriously tricky to migrate customer data and routine business operations over to newer and more agile systems without facing costly downtime and other challenges.

Here are the top three mistakes that finance teams make and how to avoid them:

## 1. Failing to assign dedicated resources

In today’s hyperconnected, digital-first world, IT teams have considerable responsibilities and are also expected to manage budgets. For large projects, assign a dedicated financial resource to maximize the allocated budget’s value for the effort.

There should also be a dedicated team to monitor the project scope, budget, and timeline to ensure it stays on track. If there is a lack of proper oversight, it is easy to overspend and not realize it until it’s too late.

When costing out a project, finance leaders must collaborate closely with IT leaders to better understand the project’s scope and its intended business impact. IT teams will usually be responsible for determining the cost of a given project, but they must justify these expenses.

## 2. Focusing too much on edge cases

The reason many implementations end up going over budget is so-called scope creep. This occurs when companies focus too much on edge cases and other one-off situations. It is also why many technology solutions end up with extra features that no one in the organization will ever use. This hinders productivity, therefore harming your bottom line.

One of the first and most essential steps is defining the system’s requirements, whether a new digital commerce platform or any other mission-critical solution. The requirements phase should segment business needs based on priority. A good starting point is to follow the tried and tested 80/20 rule, in which you capture 20% of the requirements that make up 80% of business activities. Addressing these requirements will add value to your business, while others just cost money and provide little or no return.

## 3. Not planning for unexpected expenses

The importance of strategy in any IT project cannot be underestimated. That said, even the most carefully planned projects can yield some unwanted surprises. This is why finance teams should always be prepared to fund a contingency plan that adds 20% to the original budget.

Planning for unexpected expenses provides a degree of financial flexibility should issues arise. These could include unforeseen security or compliance issues that only come to light during the implementation process. Other common challenges concern compatibility problems, unscheduled system downtime, or disruptions to dependencies like third-party suppliers or technology partners.

While strategic planning will minimize the chances of such problems occurring, it is impossible to account for every possible eventuality, hence the need for a degree of financial flexibility.

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Top three implementation mistakes and how to avoid them

While the value of digital commerce is without question, a bad implementation will compromise your competitive place in the market for years to come.

Why bad implementations can disrupt budgets across fiscal years


TL;DR: Building good software is difficult. Faster, better, cheaper for custom software is a myth. If you want good software, find an existing customizable solution for your business needs.

## The Sales Myth

Imagine if car companies only sold custom-designed cars. While the result might get you from point A to point B, if you're constrained by a budget and timeline yet still expect a high-quality product, you will be sorely disappointed. It's no different with custom software solutions. The solution might perform all of the business requirements, but it's not going to be pretty. IT leaders are becoming more and more tech-savvy. They understand that great software is an iterative process. Version 2.0 will inevitably be better than version 1.0. A salesperson might promise to deliver a custom solution that is faster, better, and cheaper than the competitors, but the harsh reality is that it is a myth. These three reasons will lead to a problematic or failed implementation. All hope is not lost, though! Unless your enterprise is in a very niche industry, there is likely a product that meets 90% of your requirements.

## It's All About Scalability

It turns out that the unique requirement for the car you wanted was the interior and exterior colors to be red. You realize that for your budget and timeline, you can get a Toyota Camry. You'll pay an upcharge for the color customization, but it is a highly reliable car. The initial cost is known, and maintenance is reasonably predictable. Everyone is happy. I don't mean to continue repeating the analogy, but I am often shocked by IT leaders' resistance to go with a proven solution. When purchasing a scalable software product, you're only paying for the company's marginal cost to make a profit. With a scalable solution, you can indeed get faster, better, cheaper.

Nowadays, with software-as-a-service, you can usually try before you buy or not get locked into long-term contracts. SaaS substantially lowers the risk that your technology will be outdated in a few years or worse, introduce technical debt to your organization that ends up costing multiples more to maintain over the lifetime of your custom solution.

## It's A Winding Road

No one understands your business as you do. Unique requirements can potentially still cause some barriers when customizing SaaS. Setting clear communication guidelines and providing sufficient time from knowledge experts is a must. It's also essential the vendors provide excellent service. If any critical business issue is found, you need a fast response time to avoid any negative impact.

Also, do not select silos. Modern software needs to be able to communicate with other solutions securely, ideally through a REST API. A solution can be a perfect fit for your requirements, but if it locks in your data, that's a hard pass.

In other words, make sure you have a good mechanic and don't buy a car that only runs on CNG. You're still going to have to work through issues, but as long as you plan and are aware of what to look for, it will be a pleasant journey.


What to Expect and Look for When Buying Software

TL;DR: Building good software is difficult. Faster, better, cheaper for custom software is a myth. If you want good software, find an existing customizable solution for your business needs.

Why bad implementations can disrupt budgets across fiscal years

Why bad implementations can disrupt budgets across fiscal years

Top 3 reasons custom software projects fail