Biggest Challenges of an ERP Implementation

Challenges in ERP Implementation

ERP stands for Enterprise Resource Planning. It is a software that incorporates the latest technology to integrate different processes of a company.

The different processes that an organization has are Finance, Human Resources, Marketing, Procurement, Planning, Production, and more, depending on exact business.

ERP implementation is not that easy! The decision to switch to an ERP system may take several months or even years, and requires lot of accurate customized training – see for example the SAP Implementation steps for that matters, which are applicable to other solutions.

ERP serves as the central nervous system for your organization that provides real-time reports to higher management.

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People sitting down near table with assorted laptop computers

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However, if not implemented correctly, ERP may lead an organization to face financial and non-financial loss. Some of the common challenges faced by different organizations during ERP implementation are:

1.Choosing the Right software:

ERP companies have many solutions to offer to their customers. This is the major and most common challenge faced by almost every organization. It is the first step in transforming your business into a new system.

Lack of knowledge about current technologies lead to a waste of time and money. There are hundreds of solutions available in the market. Organizations need to understand which is the best one that fits their needs in terms of size and scope of systems.

The best solution to overcome this problem is to look at other firms of the same size in your industry, what software they are using, how long they have been using that software, but also to look at other ERP implementation failure to take an informed decision.

2.Full Knowledge about the processes of the company:

There have been instances where ERP software companies are not briefed properly about the processes of the company. ERP implementation is a costly process and consumes huge financial resources.

Software companies also allocate their resources to develop the best ERP system, but sometimes, even when everything is ready, the company finds out they missed one of the core business tasks to include in the ERP system.

At that time companies find themselves in hot water because there is no other choice than to revise the whole project once again, or even revert to previous system. It takes time for developers and also puts extra burden for the client company to pay extra for any additional task.It is therefore important for companies to arrange meetings with their managers before the project starts. This way developers get full knowledge of the process about what’s happening in the company and how they must address the issues in the best possible way.

3.No Prior Knowledge of ERP:

Many managers in a company don’t even have prior knowledge about what is an ERP. This lack of knowledge leads to create differences between them and developers. Sometimes they misunderstand the ERP implementation and even the best solution for their company’s operations.

They opt to go for ERP even when they can achieve the same result from just a simple software. During this situation it is in the best interest of project managers, and for the companies, to downscale the project.

They can advise them what is best for them and if ERP is either suitable or not. Most of the time this happens when companies don’t have IT specialists in their companies or their IT manager is incompetent to guide them properly.

This, in turn, leads to ERP implementation failure in technical training as well because of the very technical nature of ERP.

How to ensure your ERP implementation will succeed?

While there is no sure way to ensure success of an ERP implementation, is follow the right implementation process, such as the SAP Implementation steps for instance.

Also, before starting the project, make sure that the team is correctly staffed, and that customized training has been provided to the whole team, even if possible with more than what’s necessary, to create synergies between departments and upskill all project participants.

Biggest Challenges of an ERP Implementation : Man holding incandescent bulb
Man holding incandescent bulb

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Biggest challenges of an ERP implementation: Stephanie Snaith, Managing Director, Gradient Consulting

A lot is made of risk management in any project, particularly one to implement an ERP system. An ERP implementation will impact pretty much the whole business, with associated issues in terms of roles, processes, data, etc. As a result, I think there are two, but inter-related, “biggest” challenges – that of change management and leadership.

From experience, any company that neglects or pays lip-service to either of these has a project doomed to failure. Assuming an ERP is designed to deliver business improvement (if not, then I would question what the point was, but that is a different story), then business, as usual, is not an option. Ok, what does this mean? The project needs to be driven from the top but involving a broad a cross-section of the overall workforce as possible. Right from the start, consider how things will change – for instance, the manual processes might be eliminated – this is someone’s role in the business, and they will quickly work out that their job might disappear.

It’s not about having all of the answers upfront, but it is about a level of openness and honesty in communications, delivered by engaged senior management who can articulate what the future might look like.

Stephanie Snaith, Managing Director, Gradient ConsultingStephanie Snaith, Managing Director, Gradient Consulting

Originally a trained CIMA accountant working in industry, Stephanie formed Gradient in 1997 after running various projects which identified the need for ERP project expertise. During that time, she has enjoyed working with a broad cross-section of companies selecting and implementing systems that have resulted in real business benefit.
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Person holding pencil near laptop computer

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