ERP is the backbone of the organization. Its primary use is to centralize the whole data and provide easy access to other departments to work on such data.
ERP offers total transparency into business processes, facilitating cost-effective resource management and enhancing judgment.
A good ERP system offers many advantages which can vary depending on how the system is deployed. The following are six major benefits apply to all modern ERP solutions:
1. Higher productivity: Streamline and automate your core business processes to help everyone in your organization do more with fewer resources.
2. Deeper insights: Eliminate information silos, gain a single source of truth, and get fast answers to mission-critical business questions.
3. Accelerated reporting: Streamline company and financial reporting, and make it simple to discuss outcomes. Utilize insights for real-time performance improvement.
4. Lower risk: Maximize business visibility and control, ensure compliance with regulatory requirements, and predict and prevent risk.
5. Simpler IT: You may streamline IT and provide everyone with a simpler way to operate by utilizing integrated ERP systems that share a database.
6. Improved agility: With efficient operations and ready access to real-time data, you can quickly identify and react to new opportunities.
However, implementing a new ERP system is always complicated, management needs to know what to avoid in the process so that it will be successfully implemented.
Implementing a new ERP is always the most time-consuming activity an organization undertakes.
Therefore, maintaining timeliness and cost-effectiveness requires careful planning and efficient administration.
Implementation of an ERP system will affect your entire business, so it’s natural that many challenges arise. However, these challenges shouldn’t stop you from enjoying the positive ROI of a new ERP.
As an ex-ERP consultant and an experienced IT Auditor, in this article, I will explain 12 common ERP implementation challenges that help you as a guide before selecting, testing, and deploying an ERP solution for your organization to avoid ERP implementation failure.
Let’s dive in!
12 Common Challenges of ERP Implementation
Select Competent Vendor
Data Quality
Business Process Mapping
Employee Retention
Not understanding key features
Training
Others Systems Integration
Flexibility in Configurations
Top Management Approval
Resistance from Employees
Cost
Hardware Requirements
1. Select Competent Vendor
It always occurs that a clever marketing team persuades clients for the product functionality.
Still, it's not until after the system has been put into place that you discover how limited the functionality is and how it will impact your current best practices.
The organization must do proper background checks of the vendor before selecting it for ERP implementation.
I recommend meeting at least 5 different providers before making a final decision. Previous work history, reviews, and complaints after service should be properly checked before selecting it.
Vendors are the nearest point of contact whenever there is any halt in ERP implementation.
If a vendor is not good with its services, it can create issues during ERP implementation.
2. Data Quality
Since ERP is going to replace the legacy systems; thus, it creates challenges in data migration.
Data collected by legacy systems might not be compatible with ERP systems. This can be overcome by proper planning before any new implementation is done.
This will provide a clear picture of various modifications a new system might require.
3. Business Process Mapping
One of the challenges in ERP implementation is to decide which process needs to be mapped. This type of challenge commonly occurs in an organization with multiple divisions.
Selecting the right ERP process can ease up the daily operation, whereas an unwanted mapping will only delay the process and might affect the results.
4. Employee Retention
Even after the proper training of the employees, some might still choose to leave the organization because of adapting to a new culture.
This might slow down the implementation process in the company.
5. Not understanding key features
Businesses invest millions into their ERP system, users aren’t aware of what they are using or the features that are available to them.
This means that businesses frequently miss chances to automate their business processes, speed up functionality, leverage industry-specific features, and meet more targets.
6. Training
Before and after implementing a new ERP system, the staff needs to be properly educated about its functioning.
Employee resistance to adopting the new ERP systems is a possibility.
However, this can be resolved with the right drive and training.
7. Other Systems Integration
One of the common challenges of ERP implementation is trying to work out which of your already existing processes and systems would benefit from an ERP integration and which of these would end up impeding the workflow of your business.
This is especially difficult for organizations with different competing divisions.
Without an ERP system, businesses lose important time putting disparate data from various spreadsheets and sources together.
By integrating your current systems and work processes with an ERP solution, you can ensure that there will always be one source of all data within your organization.
8. Flexibility in Configurations
Many times, it happens that an ERP system is not flexible which needs experienced in-house teams who know and challenge the vendor.
This means it can’t be configured according to the current process of business.
At this time, an organization has to step backward and adapt according to the ERP requirements.
However, choosing the right ERP for your organization will eliminate such flexibility issues.
9. Top Management Approval
The majority of the time the delay in the implementation of ERP systems is because of the slow processing from higher authorities.
The complete involvement of top management is necessary for ERP implementation. The more quickly we can implement the ERP software, the better results can be expected quickly.
10. Resistance from Employees
Even after the ERP benefits have been explained to the employees, some might still resist change.
This often creates issues for the organization and leads to multiple errors.
This is worse if your team doesn’t fully understand the importance of implementing the new ERP system.
Always take your time to properly train your staff before implementing your new software and pay attention to how the new ERP will simplify rather than complicate their regular tasks.
11. Cost
ERP systems might bring your organization’s management issues to a minimum, but they often need maintenance.
Many times ERP systems need to be upgraded according to the changing business needs.
An ERP system might seem cheap to start with, but if you don’t factor in the maintenance costs attached to it before implementation, you can end up with overwhelmingly large sums to pay.
You should also keep in mind whether the software will be supported in the longer term and ensure that your chosen vendor or software partner can provide adequate support for several years to come to make implementation worthwhile.
12. Hardware Requirements
ERP systems can’t work on the hardware that was brought in for legacy systems.
ERP systems might ask for advanced, and more technically sufficient hardware to run efficiently.
Slower systems might increase the cost and time issues for the organization and may also result in unproductiveness.
So, it is advised to properly invest in the hardware compatible with the ERP systems a user wishes to implement.
Conclusion Now you will know what are the key challenges of implementing ERP.
ERP systems automate the majority of business tasks, thereby increasing the business’s efficiency and goodwill.
However, results can be adverse for organizations that don’t do proper research before implementation of ERP systems.
Users should adequately understand their business needs before affirming the ERP implementation.
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