8 Challenges of ERP Implementation (and How to Ultimately Win)

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Thursday, November 24, 2022

ERP systems are excellent at improving productivity and boosting profit, but implementing them can be difficult. Here’s how your business can tackle common challenges.

Article 6 Minutes
4 Challenges of ERP Implementation (And How to Ultimately Win)

Enterprise resource planning (ERP) has exploded in recent years, to the point where it has become an inescapable facet of life for many businesses. It’s widely acknowledged as a more efficient way to work, which in turn leads to improved productivity and boosted profit. However, these are all long-term benefits; in the short term, ERP systems can be tricky to get off the ground.

Why ERP implementation is a challenge for organizations

There’s no such thing as a standard ERP implementation, because every organization is different. Each one has its own needs, expectations, processes, quirks and industry considerations to complicate things. That means a one-size-fits-all approach can’t be applied and the specific challenges of the business must be overcome for the benefits to be realized.

Despite the disparate nature of organizations, the overall challenges are universal - it’s just that they must be overcome in individual ways. Irrespective of business size or the region it’s operating in, many companies will find themselves with the same ERP implementation challenges to overcome.

Common ERP implementation challenges

Here are some of the typical challenges companies will face, and how you can bypass them. 

1. Service disruption

Implementing any kind of system is bound to cause some issues, and around two-thirds of businesses experience some kind of operational disruption while deploying an ERP solution. This can be a serious problem given the length of most implementation periods, which has increased to an average of 17.4 months.

The best way to tackle this issue is to shorten the implementation period, as disruptions are inevitable and have to be dealt with as they arise. The main cause of ERP deployment overruns is organizational issues, so before you start implementation you need to make sure every level of your business is aware of what’s coming and put processes in place to make it go as smoothly as possible.

2. The project going over-budget

Budgetary issues are likely to come with every major project, but they seem to be more of a problem for ERP implementation. Deployments can easily end up costing three or four times as much as was planned, and in 65% of cases the cause of this is the same: aspects of the system need to be changed midway through implementation, which leads to scope creep.

Of course, this can be prevented with solid pre-implementation planning. ERP experts Velosio recommend starting the process with a pre-sales discovery, and advise limiting additions as much as possible once deployment has begun. If you can stick as closely as possible to the ERP system you originally requested, the project should stay close to its original budget.

3. Testing before day one

The first day of an ERP project is bound to be nerve-wracking. As much as you might know that it will take much longer to fully implement, day one is still crucial. However, just because it’s the first day of use doesn’t mean it should be the first time you test the system out.

A survey of manufacturers and distributors found that when ERP projects fail, the number one reason - cited by 31% of participants - is inadequate quality of testing. Checks to make sure everything is operational and working as expected should be completed before you even think about unveiling the solution.

4. Changing your organization’s culture

One of the main issues that can typically come from deploying an ERP project is that your company culture causes friction. The top difficulty that ERP project teams face is organizational change and the ‘people’ part of the transformation, not anything to do with the actual product being implemented.

This can be dealt with in a number of ways, but the best solution is to tailor the ERP solution as much as possible to your teams’ specific concerns. That way, you can clearly show each individual how the new system benefits them specifically, rather than relying on how it will help improve the business as a whole; something that can feel nebulous and hard to care about at times.

5. Data quality issues

How to clean up datasets is an important consideration when it comes to implementing ERP. After all, there’s a good chance multiple departments will deal with the same customers, products and transactions, which can lead to duplicate data if a proper hygiene exercise isn’t carried out.

Add to this the disparate formats that may have been used across departments and other inconsistencies like incorrect spellings or changed addresses and it could become congested. Only once the data has been properly cleaned, consolidated and tested should it be migrated across to the new ERP.

6. Data migration

Even once data has been cleaned, migrating it presents itself as a large-scale challenge for most businesses. Data security is a specific area that mustn’t be overlooked, as moving sensitive information from one place to another is when it’s at its most vulnerable. Failure to tackle this issue properly can have serious repercussions, so involving the IT department from an early stage is vital.

Another decision to make is when data is migrated, as this can have an impact on operations. Many large organizations now choose to move data in sections as opposed to completing a major shift in one go, which has the potential for a huge fallout if there are any issues. Migrating data in increments also makes it more manageable, breaking it down so there’s more opportunity to identify and rectify problems as they occur.

7. Not vetting ERP vendors

It’s easy to be seduced by the first ERP vendors you come across, but it’s really important to vet them carefully before selecting one to commit to. After the daunting task of reducing the options down to a more manageable list of possibilities, you must look at the remainder of the ERP applications in careful detail to work out what distinguishes them from their competitors.

One of the approaches to use is to ask for a case study that takes everything from portfolios to industry verticals into account. While vetting ERP vendors, keep a close eye on your most pressing business needs and how you expect the new system to deliver on your expectations. This will ensure you remain focused and can cut through the noise of ERP reps insisting their solution is the best.

8. The ERP implementation process is lengthy

Deciding to implement an ERP is a commitment to a lengthy process that’s made up of multiple steps that must be taken in turn. From initiating the move to analyzing your requirements and configuring the system can easily take three or four months. Then it must be validated, deployed and optimized over the course of months five, six, seven, eight and nine.

Even then, it’s impossible to say the project is complete, as to enjoy the most benefits from ERP implementation, continuous improvement must be factored in. Businesses are constantly evolving and with that additional needs must be addressed. Technologies develop to meet this new landscape and must be integrated into the ERP to prevent your organization from falling behind on operational efficiencies.

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