ERP (Enterprise Resource Planning) implementation is renowned for being complex. If you’ve heard horror stories about companies suffering significant losses as they struggle to introduce a new ERP system you might be wondering if it’s worth the effort.
However, you can successfully implement ERP software by preparing for some common challenges such as:
- Managing organisational change
- Integrating with existing applications
- Carrying out customisation
- Sticking to a budget and deadline
I’ll take a look at some key points for you to bear in mind when dealing with these challenges.
Managing organisational change
Getting ERP software up and running is bound to create some upheaval in any company and unless it’s managed well it can lead to stressed colleagues and low morale.
Top of your list of things to do when you embark on an ERP project is getting buy in from your company’s executives. Having them on your side will help you galvanize the rest of your company.
Communication is very much the key here. Communicate with them early on and then continue doing so regularly. Your executives must be well informed so they can deal with the decisions you’ll need them to make. You may need their approval for significant process or operational changes, or even alterations to job roles. Show them the benefits of what you are doing and how it supports company goals and improves efficiency and performance.
Even if your colleagues support the change, they may be unsure about how it will affect them, so be sure to engage with them. In particular, make sure the end users are given adequate training to use the new system with confidence.
Integrating with existing applications
Nike’s disastrous attempt to use a new ERP system in 2000 led to them being regarded as “the poster child for failed implementations”, according to Roland Wolfram, their vice president of global operations and technology at the time.
They faced some classic challenges many companies struggle with, like the integration of different applications. Differences in data storage formats made it hard for them to integrate with their supply chain planner, for instance. Such compatibility issues can make it particularly hard for large companies to realise the vision of a single database for all parts of the business.
When deciding whether or not to integrate a particular application like your CRM, POS, or accounting, be sure to consider the knock on effects. The consequences of not integrating a particular aspect of your business can leave staff without access to information that’s vital to their job.
Asking yourself how integration will affect your existing processes and most importantly your customers should help you decide what to do.
Once you’ve decided a particular application needs to be integrated be sure you are using the most up to date and accurate data. Conducting an audit of your data beforehand could save you a major headache later on.
Carrying out customisation
Customisation is one of the most tricky aspects of introducing a new ERP system because it can lead to costs spiralling out of control and timescales stretching far beyond what was planned. Plus, significant modifications to out of the box functionality makes it harder to maintain and upgrade software in the future.
A new report from the ERP consultancy firm Panorama found that only 12% of 342 companies who implemented ERP software in 2016 hadn’t done any customisation. Most of the respondents (70%) who carried out customisation had modified 11 to 25% of their software’s code. The majority of their respondents were in the manufacturing and distribution industries and had an average annual revenue of $445 million.
Because it is very likely that you will have to handle customisation requests from various parts of the business, you need to have a strategy in place for handling them. Sometimes you’ll need to say no to such requests and prioritise what truly needs to be customised to meet your business goals.
Remember to consider alternatives to customisation too. You may be able to address the problem through configuration rather than customisation for example. Or, perhaps you actually need to improve an existing process rather than changing the ERP software.
If you are constantly having to customise your chosen software it may be a sign that your requirements are not right in the first place, or you didn’t pick the right vendor for your type of business.
Managing your time and budget
According to the Panorama report, 59% of the businesses they surveyed experienced duration overruns and 74% experienced cost overruns.
Effective research and planning can help keep these to a minimum. Before starting the project, gather all the information you can from different parts of the business, so you are not hit by surprises that cause delays later on.
You need to be realistic about how long the project will take. Find out how long ERP implementation typically takes others in your industry with a similar size business. When putting together a project time scale, be sure to factor in the impact of making changes to your business processes. Remember you’ll also need time to test the new system and train staff.
Choosing the wrong vendor can also be a costly mistake. Make sure you thoroughly research the vendor you choose and opt for one with experience in your industry. To avoid extra costs creeping in later down the line, look at whether their product’s out of the box functionality has features that meet your key requirements.
Despite the complexities associated with ERP implementation, in the long run it can make your daily operations simpler and help you realise your company’s ambitions.