In our last post we discussed ERP implementation and briefly went over some common mistakes people make before, during and after the implementation of an ERP system. This post is going to cover those implementation mistakes in more detail.
Implementing an ERP system is a major undertaking. It’s expensive, time-consuming and complicated for an IT department to take on. Unfortunately, potential delays and expenses are all too common. One of the most common questions we hear from organizations considering implementing an ERP for the first time is “how much is this going to hurt?” The simple answer is: It’ll hurt. However, the more you and your organization prepare for it, the less of a burden it’ll be.
The implementation of ERP is disruptive — rightfully so. Considering ERP solutions are capable of improving nearly every aspect of your business, impacting every single one of your departments and helping your business be more profitable. Good things don’t come easy, and if they did, they wouldn’t be very effective. It’s essential that businesses are honest with themselves and accept the fact that it’ll be a challenge. Prepare yourself for disruption and understand if that’s something you’re willing to accept.
That being said, here are the top 10 most common ERP implementation mistakes organizations make before, during and after implementation, and how to avoid them, in no specific order.
ERP System Mistakes: The List
Mistake #1: Improper Planning
Planning is arguably the most important part of a successful ERP implementation. Deploying an ERP system is going to affect every department in your organization, so you’ll need a solid plan to tackle an ERP project. Most organizations don’t do enough up-front planning, and this typically leads to confusion down the line which can delay and derail the ERP project all together. There’s a simple solution to this: plan, plan again, then after you’re done planning, plan again.
It’s vital to think through the implementation of the new ERP system and establish your priorities. Having a plan in place will give you a good roadmap to follow, and will help you get back on track when you hit bumps along the way. In addition, businesses should assemble an ERP implementation team from departments across the company. Not only will this help the implementation of the ERP project move smoothly, but you’ll have someone to turn to in each department to help put the new system into place.
It’s also suggested that an internal audit is conducted of all current processes before selecting the ERP system to know where you stand.
Mistake #2: Not Weighing The Pros & Cons of On-Premise vs. Cloud-Based ERP
Before deciding between an on-premise and a cloud-based ERP solution, businesses should evaluate several factors. For example, a cloud-based deployment requires proper internet connectivity, subscription-type payments and comes with numerous benefits such as catering to remote employees. On the other hand, on-premise ERP systems require a dedicated IT staff, up-to-date servers and in-house hardware with large up-front fees, which is suitable for those who want to host the software on their own servers.
Software-as-a-service is quickly becoming the most predominate platform for new ERP implementations. SaaS may seem like the perfect solution for organizations who’ve experienced difficult implementations or have struggled to support their earlier ERP investments. While SaaS does offer solid benefits, clients need to understand that there’s potential for new organizational challenges.
For example, SaaS cannot be customized to suit your business needs and users are forced to adapt existing business processes to the software. These process discrepancies can often impact integration with legacy systems, which can expand organizational change management concerns. Additionally, organizations with unique functional or industry-specific requirements will need a structure and approach to address necessary functionality which isn’t provided by the new ERP system. This usually means you’ll need to find work-arounds, third-party software or alternative means.
Mistake #3: Trying To Implement All In One Go
When implementing an ERP system, the single most important thing an organization can do to reduce delays is to focus on one task at a time. We know it may seem counter-intuitive, but you’ll go a lot slower if you don’t have priorities set, and are trying to do everything all in one go. We suggest starting with the features and departments that are most important to your business. Echoing above, planning ahead of time helps you identify which features are the most valuable for your business, and helps you understand that certain functionalities are dependent on others already being in place.
Mistake #4: Not Having An Active Load Testing Environment
The best way to see if your system is up to speed, and performing how you’d expect it to, is to run testing. Unfortunately, you won’t be able to see accurate results based on a few test users. To really see if your ERP system is working as effectively as it should, you need to simulate your entire user load in order to see real-world effects of changes. Taking time to do proper load testing will not only speed up the implementation, but it will also better set your business up for success.
Kevin Herrig, president and CEO of GSI, an ERP software specialist with a primary focus on Oracle’s JD Edwards products: “You won’t be able to see the true results of your changes based on a couple of test users,” points out Herrig. “You must be able to simulate your user load in order to see the real-world effects of changes and avoid costly unplanned downtime.”
Mistake #5: Not Evaluating Your Needs
As obvious as it may sound, choosing the correct ERP solution from the start is very important. Sit down with the implementation team and evaluate what your business is doing well and what areas it needs improvement in. Think about where your business runs into issues: maybe it’s inventory management, or maybe it’s CRM (Customer Relationship Management). Whatever the answer to that question is, finding an ERP solution with features that suits your businesses needs will address these shortcomings. Additionally, keep your industry in mind when evaluating ERP solution vendors as there’s tons of good small software companies that support industry-specific needs.
Mistake #6: Not Taking Time And Resources Into Account
Organizations grossly underestimate the time and resources required to implement a new ERP system. You’re probably asking yourself how you can calculate implementation time. A rough estimate to answer that question would be to divide the cost of the ERP software by 100. For example, if the ERP software costs $50,000, then that would equal to approximately 500 man-hours, or roughly three months to implement the ERP solution using a certified consultant. Additionally, you may need to double those figures if you plan on implementing the new ERP system yourself with minimal professional assistance.
Mistake #7: Not Retiring Legacy Systems
The new ERP system that you implemented is more than likely a replacement, even upgrade, from your legacy system. It’s important to make sure staff stops using legacy systems to utilize the ERP to its fullest capacity. Keeping legacy systems intact will not only cost you money, as you’ll continue to pay for licensing, maintenance, and upgrades, but it will also undermine the effectiveness of the newly implemented ERP system.
“If organizations do not actively work to decommission applications during the implementation, the end result is an ERP with all of the original legacy applications hanging off of it,” argues John Picciotto, principal, Application Modernization & Optimization at Accenture . “The end result is another piece of software that you are paying maintenance and support on, paying for hardware and upgrades, and paying for interfaces back into the core ERP,” when the point of getting an ERP system was to streamline workflow and reduce costs and waste.
Mistake #8: Not Having A Maintenance Strategy
Like all tools, ERP systems need proper maintenance to function at optimal levels. Scheduling preventative maintenance can ensure the ERP system is fully taken advantage of, and will limit the chances of problems, which could end up costing organizations a lot of time and lost productivity down the line.
“Customers not conducting preventative maintenance are not taking full advantage of their ERP investment and their maintenance dollars,” states Marco Valencia, vice president, Upgrade Office, North America & Latin America, SAP America. “By not applying maintenance, their systems will quickly become obsolete (from a technical perspective) as will their business processes.” Moreover, he says, it is important to “keep the kernel up-to-date, with the right legal changes applied to prevent potential problems,” and with improvements in installation technology, customers now experience only limited disruption when implementing support packs.
Mistake #9: Improper Training & Change Management
As emphasized before, implementing an ERP solution, like all big changes, will be disruptive, and there will be bumps in the road. Having an unprepared staff and not given them sufficient training on the new ERP system is one of the most common reasons ERP projects ultimately fail. Additionally, it can make employees hate the new system because they don’t fully understand the point of the system, or how to use it. It’s important to make sure staff has a chance to become comfortable with the new system before it launches. Communicating with staff members, and providing adequate training, will drastically improve the implementation process.
“Change management is an absolute requirement when implementing a new ERP solution,” states Jeff Carr, founder and CEO of Ultra Consultants, an independent research and enterprise solutions consulting firm serving the manufacturing and distribution industries. “The ability to effectively manage change may very well be the most important skill that executives, managers and employees need to master. Business transformations through ERP will not take place without effectively managing change across three key organizational areas: people, process and technology.”
“All too often, organizations look only at the IT technology to unify, streamline and simplify business operations,” says Akhilesh Tiwari, global head of enterprise application services at Tata Consultancy Services. “While processes and systems require deep analysis, the people factor needs as much careful consideration and strategic planning as the rest. This is even more critical during a cloud ERP migration.”
“SaaS solutions bring the promise of configurable business processes and more intuitive user interfaces than prior ERP software offerings,” says Frey. “This often leads organizations to assume that organizational change management and training are less important for SaaS projects.” However, “SaaS solutions place greater burdens on clients to adapt current business processes to the software.
“To avoid rework and ensure that end users thoroughly understand the changes that will occur upon go-live, organizations should identify necessary process changes early in the implementation project,” Frey recommends. “Additionally, end-user training must consider not only the transactional aspects of a user’s role but also the changing interaction with other users and with systems not part of the new solution. By delivering appropriate, timely training, users are likely to accept the new system at a faster pace and with greater success.”
Mistake #10: Underestimating Accurate Data
Garbage in equals garbage out. It is essential to ensure the new ERP system is set up with accurate and clean data, which will minimize the possibility of errors, and ensure that proper procedures and parameters are in place. ERP systems are remarkable tools that can scale your business like you’ve never seen, but at the end of the day ERP systems can only function properly with data being fed to them. Setting the system up correctly from the get-go will create far less issues down the line. It’s suggested to review all your data sources. By doing this, it may reveal informational gaps in existing data.
“It is imperative that proper programming and procedural parameters are put in place right from the start to minimize the likelihood of errors,” says Martin Levesque, director of Professional Services, iDatix , a document management and workflow solutions provider.
Hopefully this will guide your business in the right direction when ERP implementation inevitably becomes part of the game-plan. Implementing ERP solutions are not easy, but there are people out there who are willing to help. Are you ready to start your ERP implementation journey without any mistakes? Feel free to contact us at 818-484-5004, email us at firstname.lastname@example.org or simply fill out the form below. Additionally, you can visit our home page for a list of services offered and ERP system solutions!