Why ERP implementation is a challenging task? A major undertaking like an ERP rollout demands that all units of the organization are on the same page for a smooth transition. However, that’s easier said than done. When a company falls flat on its face during this transition you can bet it’s the result of any or all of these reasons:
Enterprise resource planning or ERP software programs have changed the way businesses operate. It brought order to what once was an often disorderly environment by streamlining, standardizing and integrating processes across organizations’ different departments, which include procurement, finance and distribution, among many others. It was deemed a cost-efficient replacement for outdated systems. Aside from these, there are a lot of other benefits that define ERP software as a very useful tool. And we’ve included here some of the leading examples of ERP solutions that you can consider.
Although most ERP systems differ vastly in terms of functionality, scope and scale, most of these tools share similarities that include a single database, company-wide integration and real time operations. They fall under different tiers depending on the size of the business or organization that will use them. These categories include Tier 1, which supports large, global businesses, Tier 2 for large businesses with limited international presence, Tier III for midsize companies and Tier IV for small businesses.
Why ERP implementation is a challenging task? Failure to properly implement an ERP system can cost an organization billions, majority of which emanate from lawsuits associated with such complications. The sad reality is that ERP rollout failures have become a common occurrence. In fact, it is a known fact that 75% of ERP implementations fail. Panorama Consulting Solutions’ 2018 ERP Software Report has some very interesting facts about current trends in ERP implementation. This article will focus on the most common mistakes that organizations make during ERP software rollouts, which make it a challenging task. Real life examples will be provided and tips on how to avoid such errors offered.
So why ERP implementation is a challenging task? With all the benefits and features that ERP software offers, there remain some problems associated with the implementation of such system. The following are common errors in implementing an ERP system:
It is easy for any business to automate existing processes by implementing an ERP solution. However, such processes must be subjected to thorough analyses when gathering information about system ERP requirements.
The legal battle between garbage disposal firm Waste Management and SAP over a botched ERP implementation deal is a classic example of the importance of knowing one’s system requirements. Waste Management accused SAP of engaging in fraudulent sales schemes, which it claimed accounted for the failure. However, SAP said its client violated a contract provision by failing to define its business requirements, resulting in the project’s failure.
What to Do: Keep in mind that an ERP is designed to automate and improve processes. Prospective users should identify which areas need improvement prior to implementing such a platform.
Contrary to what many organizations do, employees who are to use the ERP software should be consulted when shopping for such a solution. Most IT managers spend their time getting their projects approved by high brass that they often overlook this very important step.
A textbook case of this is when Hershey lost $112 million from a failed ERP launch. The project was supposed to result in a fully integrated ERP system. However, around $100 million worth of products were not delivered as a result of the issue.
What to do: To prevent such from happening to your organization, take time to make sure that all employees are trained in using the system and that the platform has been fully tested before going live.
There are factors to consider when choosing between on-premise and cloud-deployed ERP platforms. On-premise tools require IT teams to maintain the system, hardware and huge one-time payments. This form of deployment suits those who want to have their systems running on their own premises. Cloud-based ERP, on the other hand, requires Internet connection are offered on cheaper pricing plans and designed to cater to personnel on the field.
Cloud-deployed ERP has been gaining traction in today’s market and is seen as ideal for those encountering implementation problems. But cloud tools are not without challenges. They are not known for being customizable, forcing businesses to align their processes to such systems. In addition, they may not be able to provide everything that an organization needs, necessitating the use of third-party applications.
A survey conducted by CIO magazine in 2008 revealed that most IT executives still preferred on-premise systems, citing security concerns associated with cloud-based platforms. However, things have changed since then with SaaS ERP vendors experiencing an increase in the use of their products.
What to do: Choose well by identifying your business’ needs before investing in a system.
Many decision-makers often commit the mistake of undermining the costs of ERP implementation, which are not limited to the hardware or software needed. A successful implementation also needs competent IT staff. Limiting implementation budgets could result in rollout failure.
In 2009, the city of San Diego, California terminated its contract with Axon, claiming its project management practices are systematically deficient. Another reason for the fallout was the fact that the project was already running above budget by $11 million. Clearly, the city may have overlooked the huge costs associated with the project.
What to do: Executives should consider their ERP budgets along with the individuals involved in the process.
Given the complexity of ERP platforms, quickly identifying requirements for implementation, conducting user training and activating such systems just can’t be done in a single sweep. This implementation model has been found to be ineffective with more successful organizations opting to take a slower but more efficient approach, which involves gradual implementation.
The case of Target Canada exemplifies the problem of outright implementation. Thinking that new infrastructure would prevent problems associated with data conversion as no old data are to be imported, the company went on to implement a new system. However, a subsequent collapse of the company’s supply chain was traced to erroneous fresh data entered manually by inexperienced personnel. Data accuracy in the system was found to be only 30%.
What to do: Take your ERP implementation one step at a time. Make sure that key requirements are met, along with required employee training.
Any ERP implementation should never be without the element of change management. All stakeholders in such an undertaking must be able to meet the challenges of managing change. Areas where change management could effect organizational change include employees, technology and processes, which can lead to the positive transformation of any business.
What to do: Undue focus on technology that is meant to improve processes is not enough, human resource and strategic planning likewise need to be considered.
Sure, the importance of platform features can never be discounted but one also has to consider a platform’s track record, flexibility and capability to integrate with other systems, among others. These are apart from answering the question, will it be able to provide your ERP requirements?
Cleveland State University had a brush with a system like this. The institution sued PeopleSoft, citing faulty installation of its ERP apps. The case involved breach of contract and negligent representation, to name some. This just goes to show that no amount of add-on tools and features can ever replace a proper ERP solution.
What to do: Take time to fully evaluate a prospective platform’s ERP capabilities first before deciding on one.
One of the most important phases of ERP implementation is the allocation of time and resources to the implementation team. The right individuals who have decision-making powers are required for such an undertaking. However, this means that members of the team would have to contend with the reassignment of tasks, which often comes with the implementation process. This may very well determine the success or failure of any ERP implementation. Decision-makers must be sensitive to the needs of their ERP teams.
This is exactly what happened to Select Comfort’s $20-million ERP rollout. The company was forced to put the project on hold under pressure from impatient shareholders. A shareholder’s SEC filing described the issue as something that stemmed from poor judgment by management.
What to do: Ample time and resources must be given to your ERP implementation team for a project to be successful.
Lack of communication, especially among corporate departments can adversely impact any ERP implementation. This can be avoided through the creation of a communication plan for all project phases. A small team made up of personnel from across all departments, which are most likely to be affected by the solution should likewise be put up.
What to do: Implementation teams must ensure that this core team is constantly updated on the progress of the project.
So, you’re ready to implement an ERP system? There are tons of ERP solutions out in the market, catering to specific organizations and industries. These valuable tools provide not only streamlined processes but also open doors to opportunities for growth. Here are some of them.
Cloud-based NetSuite ERP is a highly-scalable platform developed for mid-size and large enterprises. Under the system, both front- and back-office processes such as financial, revenue, order and inventory management are automated. It basically gives all relevant users a view of critical performance indicators and reports
What makes NetSuite ERP unique, however, is its mixture of financial management and built-in business intelligence tools, allowing users to make sound business decisions. Its order management suite improves order-to-cash processes, linking pricing to sales and fulfillment operations. Lastly, production management capabilities provide absolute control over production workflows, boosting product placement in the market.
The vendor has an appealing free trial that lets you use premium features at no cost. Simply sign up for NetSuite ERP free demo here.
Syspro is a robust ERP tool specifically targeted at manufacturers. It aids businesses in integrating, controlling and synchronizing their production processes. The platform is made up of a number of modules, which also aid in aspects of businesses other than the manufacturing process. Syspro can stop revenue leaks caused by too many manual and repetitive processes by effectively managing costs. The vendor offers an attractive free trial plan. Simply sign up for Syspro free trial here.
The platform can also meet businesses’ warehouse automation requirements as it is able to manage distribution. Its financial management feature can help increase income while users can gain key insights, which can reduce risk and boost growth at the same time. On the manufacturing side, the system uses smart platforms to create “smart factories,” which can automate processes, communicate online and present opportunities with analytics.
Scoro is a cloud-based business management platform that caters to SMBs, particularly those in the consulting, IT and advertising sectors, among others. Notable features include work scheduling and tracking, CRM, quoting and billing and collaboration, to name a few. It sports a user-friendly interface, allowing novice users to immediately explore the product. Country-specific integrations for the European market are also available as the vendor offers localized solutions. The best way to evaluate the features is for you to try them. You can easily sign up for Scoro free trial here.
With Scoro, users are given total control over their entire organization from a single dashboard. Leaders are always in the know as far as business performance is concerned as task changes are readily viewable at any time. Task scheduling is automatically done by day, week or month and compiled in a list. Security is no problem as Syspro authorizes users at a variety of levels so that you can be sure that only relevant users are working on a particular project.
A combination of Sage and Intacct, Sage Intacct gives finance and accounting cloud capabilities. Its powerful applications are preferred by the AICPA. Designed to boost financial productivity and improve business performance, the system is being offered by leading accounting firms and value-added resellers to their clients. The solution’s key features are cash management, financial consolidation, vendor management, accounting, subscription billing, revenue recognition and project accounting, all of which are delivered through the cloud.
Multi-channel management platform Brightpearl helps retailers in managing processes like orders, real-time accounting, inventory, customer data and reporting all from a single console. It is likewise capable of real-time reporting on information such as customer purchasing behavior, channels, cash flow and inventory, to name a few. It has robust integrations with eCommerce sites like Shopify, Bigcommerce and Magento, along with online marketplaces Amazon and eBay. To make matters even better, it has established ties with carriers such as Shipstation and Shiptheory, ensuring accurate and on-time shipments. Brightpearl is likewise very useful in improving profits and promoting growth as it provides businesses with insights, channels and tools.
Integrated ERP and business management system ADVANTAGE 365 incorporates all the functionalities and tools you need within a single platform to cover all the bases of your business operations, including accounting, analytics, sales, marketing, inventory management, and others. The system removes the burden of handling a separate set of business systems in order for you to execute your work processes smoothly. Aside from unifying all your business tools for frictionless business operations, ADVANTAGE 365 also minimizes maintenance expenses as you are no longer bogged down by operational failure on disparate systems. Furthermore, the software is able to seamlessly communicate between external systems so you can easily take advantage of your existing business applications.
Now that we know why ERP implementation is a challenging task. The question of whether an organization can survive a failed ERP rollout remains. The answer is a straight yes, and this does not only apply to Fortune 500 companies. It is true that failure of ERP implementation can wreak havoc not only to a business’ processes but to its finances as well. But there are means by which to prevent such from happening as outlined above. Avoiding such mistakes guarantees a successful ERP rollout especially for those who practice patience and due diligence.
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