9 biggest challenges to implementing an ERP system

Enterprise Resource Planning (ERP) systems help streamline processes, improve efficiencies and productivity, and provide a central database. However, whether you are replacing a legacy system or implementing something brand new, an ERP implementation is not straight forward. ERP projects are complex and have an impact on systems, as well as processes, people and data. They cut across the whole organisation!

The track record of companies delivering these type of projects is extremely poor with 70% of projects failing to deliver its benefits (McKinsey) and an astounding 75% of executives who believe that that projects will fail (Geneca) – and that’s before they have even started! So, what can you do to make sure your project is a success?

Here are some of the potential challenges and how to avoid them:

  • Finding the right software

There are many different ERP systems available on the market – but how do you find the right system for your business? And it’s not just the system. How do you find the right partner who you can work with, who understands your needs and who can support you to enable your future requirements? We recommend this stage is not skipped and a thorough and diligent approach is taken. This starts with understanding the needs of the business, as well as the challenges you are trying to solve.

Cut the sales talk and presentations. Take time to talk to actual customers and get their feedback on the system and partner they used. Understand what worked well and what they would do differently if they had the opportunity. Conduct site visits, see the solution in action and get real feedback from real people.

When it comes to evaluating responses from potential vendors – just remember the decision should not be based on cost alone. They will need to understand your goals, the scope and challenges you face. They need to have the right credentials, approach and capacity. And perhaps one of the most important matters is the cultural alignment and fit – you need to make sure you actually want to partner and that there is a level of trust, respect and collaboration.

  • Getting ‘buy in’ at the top

It is crucial that the implementation process is supported by the ‘top’. Getting the executive team fully involved in the decision-making process and having regular communication to ensure they are aware and brought in to the benefits is essential.

  • Project management

Like any large project or programme, it takes a huge amount of planning, preparation and seamless implementation. Getting the right people to see this through is essential. Missing a step or failing to communicate properly could result in costly delays or improper adoption.

A good project manager should have done their due diligence and be addressing problems and challenges head-on. The real cost of a project occurs when it is delayed – so get the right project management expertise and experience to ensure the project delivers the first time.

  • Streamline Processes

Any ERP solution can be configured and developed to meet your needs, but this is often the most costly and risky part. If it’s not ‘out-of-the-box’, extra costs will be incurred and often the bespoke development become points of failure. The path for any future upgrades will also be more complicated and costly. So wherever possible, streamline and simplify your processes. Yes, you are different – but actually – lots of businesses and its processes are similar.

We recommend you don’t replicate your current processes on a new ERP solution. Instead, focus on developing common and simple processes and only have exceptions where absolutely necessary.

  • Managing people change

Any change a company may face, including software implementation, has a direct impact on a company’s workforce and its morale, often triggering people’s primal instinct to oppose change. It is the people within a company who allow changes to either transition smoothly or not.

You will need to be clear on what will change for each stakeholder group and explain how it will be different and what the key benefits are for them. Pointing out the risks of doing nothing is also a helpful way to get buy-in.

Communicating at every stage of the change is essential to explain how the proposed change will work to everyone’s benefit and to ensure issues are addressed head-on.

  • Managing scope change

 As an ERP cuts across the organisation, it is likely that not all elements have been captured or new requirements emerge as the programme progresses. It is fine to be flexible and agile, but you will need to manage this scope change tightly and understand what impact each has on budget, time and quality. You can’t have it all and will need to prioritise. Don’t let scope creep!

  •  Data

If you are replacing an ERP system it will undoubtedly mean that ‘old’ data needs to be migrated. This is often out of date,  in an unusual format, or does not reflect new ways of working. Time should be allocated to reviewing legacy data and making decisions about its relevance.

A new ERP system will also need a tight definition of categories, lists, drop downs and values – a big task – and an important one as this will ultimately drive how you can slice and dice reports and management information.

  • Testing

Testing an ERP system is an essential phase designed to not only ascertain if it is working or not but also if it is meeting the needs/goals you scoped in the planning phase. Not allowing enough time for testing is a common problem and will almost certainly lead to problems and issues when the system goes live. When it comes to testing make sure you cover all aspects – the system itself, the integration points, the data and reports, and the end-to-end process.

  • Training

Adequate training is essential for end users – the system will only ever be as good as those using it and is reliant on the adoption of all teams.

Don’t forget to include specifics on how the system will change day-to-day processes and ways of working for each department or team, as well as considering what takeaways and handouts may help people to remember key tasks.

 

For more information about implementing an ERP system, please contact Esther McMorris estherm@ninefeet.com.

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