Top 5 ERP Implementation Mistakes and How to Avoid Them
ERP has been 'Man Friday' for organizations to execute their growth strategies. There are numbers of benefits realized while implementing ERP. ERP usage slashes the administrative costs, operating costs, improves service levels and brings down the error rates by a great chunk. But many people make mistakes while adopting them.0 Comments
- What are those possible mistakes committed during an implementation of an ERP system? Answer is MANY
- Is implementing an ERP system as easy as it seems to be? The answer is a firm NO!
1. Inadequate PlanningWeakly defined scope of the ERP is one of the biggest mistakes organizations commit while adopting the technology. Organizations often assume ERP to be a magic wand, which shall nullify all the issues. Ill-defined scope & lack of attention leads to unwanted costs. This can be vindicated by the stats: "63% of implementations went over budget while the average implementation took nearly four months longer to implement than expected" ~ 2014 ERP report Solution: Management must conduct a detailed internal audit, and set the objectives and goals for ERP solution in tandem with the concerned department. The organizations must chart out the time frame for the implementation and the budget and strictly adhere to them.
2. Improper OR Broad CustomizationCustomization is a double edged sword, more so in the implementation of ERP software. As per Mint Jutras report, 67% reported that they need a solution with more industry-specific functionality than their current ERP system gives them. This shows that the lack of customization is one of the issues which held back optimum delivery of the ERP. There is also another problem, which is of over customization of software, which negates scalability or expansion of the process in ERP features, with the minor change in the business operational way. "An organization can adjust its process around the generic ERP system that it selects OR it can go for the customization to suit the substantial processes. There could be one or other processes that don't fit but it totally depends on the team how it interprets and alleviate its effect. The crux is to use the system to fulfill the organization's needs, increase the pace of the processes and not incur cost and waste time." Solution: Management has to be utmost careful of imbibing the customization so as to optimally utilize the software and also allow the scope for scalability in future.
3. Inadequate evaluation or Miscalculated ExpectationsA third of ERP buyers did not even demo a product before buying it finds Capterra. By not evaluating the software with demo and aligning it with business process, the probability of failure increases as can be seen in Panorama study - 40% of ERP implementations cause major operational disruptions after go-live. “Mismanaged expectations is a key driver of ERP failure. In one of the polls by Panorama, 25% of respondents cited realistic ERP implementation expectations as the most important requirement for avoiding failure." Solution: It is very imperative to not only evaluate the software with the business process; but also evaluate the vendors and their client list, to confirm the reliability factor on their maintenance and after sales service. And, also the time required for the complete implementation of the project should be as real as possible because any miscalculation related to it can add cost and loss of man hours.
4. Weak Organization Change Management PolicyERP changes the way business process were earlier carried out. Now, with this system, there ought to be good changes; good only when there has been a strong organization change policy incorporated and enforced. Without which, the employees may not accept the changes and the vehement reactions would reflect in their behavior that would eventually bring the downfall of the ERP system. "Organizational change management issues were the no.1 reason for implementation success or failure. 20% of organizations said that their top problem was either related to organizational issues or training." Solution: while deciding to implement the ERP solution, it is very necessary to take all the employees of the concerned department and also other staff on board, have consensus. Proper in-depth training is very much necessary for optimal utilization of the ERP Software. Gartner recommends around 15% of the overall implementation budget in the Organization Change Management while currently it's as meager as 5% which is not of much help.
5. Lack of Maintenance StrategyInstalling ERP is not one-time phenomenon. Due to lack of maintenance strategy, the scope of scalability by way of updating the version of software gets limited, and the operations are confined to stated functionality from the start, which becomes difficult to handle over a period of time with increased scope within the same process. "The technology keeps changing and so the need to keep up-to-date with the changes. The organization needs to have a preventive maintenance strategy in order to stay as contemporary as possible and keep benefitting from the ERP. An approach to the maintenance should be long-term and inclusive." Solution: A proper maintenance strategy is as important as that of ERP implementation planning, where it is decided the schedule of maintenance and proper in-house training also provided in case of minor glitch and proper contract signed with the vendor over providing time to time upgraded versions to take care of increased workload. There would be one or other obstacle that may crop up during the ERP implementation program but aligning the ERP platform with the suggestive measures can help organizations to leverage ERP to the fullest.
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