An ERP system is a set of software programs that support many modern business functions. It can be used to manage everything from accounting, human resources, sales, and marketing to management.
The ERP system provides an integrated database that connects multiple departments with one source of information. It provides key benefits such as increased productivity and process efficiency. Additionally, real-time information allows teams to make faster decisions.
What is an ERP Implementation?
An ERP implementation partner involves several phases. These include redesigning business growth to make the most of the new system's capabilities, configuring the software, migrating data, training users, and configuring it. It usually takes several months, but large companies can have it take over a year. The project team includes all stakeholders of the company.
What Makes ERP Implementation a Challenging Task?
Because ERP implementation processes can impact business models throughout the organization, they can be complicated. People often need to adapt their work habits to reap the benefits of an ERP system. This includes replacing old manual processes with automated ones.
Implementing ERP is not easy. Users and functional groups need to adapt to the new system. This change can only be achieved with strong project management and support from senior leaders. The organization must have a dedicated project team that includes all users of the ERP platform to develop the new system. This ensures that all departments can use the software.
Few Key ERP Implementation Challenges
ERP implementations involve people and technology. It may also face human-related problems, such as resistance and technical hurdles. These are some of the most common ERP implementation challenges in wide range:
- Project management: ERP implementations involve multiple phases. These include discovery and planning, design and development, data migration, testing, and deployment. Support and post-launch updates are also required. Each phase has its critical tasks. All elements must be managed well. Successful ERP implementations will require the participation of all groups involved in developing and using the system. This can be extremely challenging as each department has to balance its ERP project responsibilities with other priorities.
- Project Planning: Organizations often underestimate the time and resources needed to implement a project successfully. Another reason is scope creep when a company adds capabilities or advanced features that aren't in the original plan. Statista also states that underestimating staffing requirements is another common cause of budget overruns.
It is possible to avoid these problems by creating a realistic and clear plan right from the beginning. Making decisions and staying on track is easier if you have a realistic plan.
- Data Integration: One of the main advantages of ERP is the ability to provide a single source of accurate data for all employees. Data migration is a key step in ERP implementation. This involves moving data from different systems into the ERP database. First, you need to locate all your data. This can be more difficult than you think. This information could be scattered across the company, hidden in accounting systems, department-specific software, spreadsheets, and even on paper.
- Data Quality: Once the organization has identified all data sources, it can begin to think about migrating them to the ERP system. This may require serious data hygiene. Multiple departments may interact with the same customers, orders, and products. Organizations often have duplicate versions in their systems. Information may be stored in different formats; there could be inconsistencies in name spellings or addresses; some information might be incorrect; it could also include outdated information like customers or suppliers who have gone out of business.
- Change management: Implementing an ERP system requires more than simply switching to a new program. This usually involves reorganizing business processes to reap the benefits of the new software system's efficiency and productivity enhancements. This requires a change of mindset and changes in daily work processes, which can present typical challenges in change management.
- Overruns in costs: ERP project budgets are often exceeded after implementation. Organizations underestimate the work involved in moving to a new business system. This can lead to over-investment in many areas.
- Businesses: often turn to third-party consultants or software vendors with limited internal resources. This is especially true when the solution needs to be customized to your company's requirements. Expert ERP consultants are usually available from vendors or as part of third-party consulting. Travel expenses and other costs may apply. According to ERP Focus, data migration can be a major expense, accounting for 10-15% of total project costs. Another expense to be aware of is training costs. ERP vendors often provide basic training for customer relationships at no cost, but you might need to pay for additional classes or hours during or after implementation.
- Continuous Improvement: An ERP installation is not a one-time effort that ends with the system going live. To meet new business requirements and technology, the solution must evolve. After deployment, the project team must continue to manage it, fix any issues, and support new requirements as they arise.
Any ERP implementation project has 6 phases: Discovery and Planning, Design, Development, Testing, Deployment, and Ongoing Support.
This is an iterative process. There will be overlaps and movement back and forth between phases. Our team specializes in software solutions. They have over 100 years of combined experience in ERP and financial software implementations. We have shared the process with our customers. Below are the steps.
Planning an ERP Implementation Strategy
- Discovery and Planning
The first phase is during the sales process. It continues after sales. There will be initial meetings as the team attempts to identify and solve current problems and develop potential solutions. This phase includes the creation of the project plan. It will be a guide for the remainder of the project.
This is not about rearranging furniture or painting the office. What will the enterprise-wide system look like and how will it work in the company? The ERP Design phase will see the project team and the implementation team work out the different configurations of the new system, define roles, and document standard procedures.
The development phase prepares the system for its launch. This involves activities such as creating user training and importing data. As with any custom software development project, ERP implementations are like any other. "First, solve the problem." Next, create the code.
Does the system's functionality meet the requirements of the project? The Testing and Development phases often overlap as the project, and implementation teams move between them. They will constantly be tweaking the configuration. Project team members will feel comfortable performing their tasks in the new system by the end of this phase. This is the last step before you can dive into the live system.
The project team and the implementation team will assess the situation. They then make the final decision. The final data will need to be loaded and validated before it can go live. Other employees will be trained by the project team to use the new system and will eventually stop using the older one.
- Continued Support
The purpose of the project team will change once the ERP system is live. As the user's work habits change, the system configuration may need to be adjusted.
Read More: You Should Know These Important Benefits of ERP Solutions
Few Key Steps To A Successful Implementation Of An ERP
Every company faces unique business challenges and business strategy. To overcome them, they need an ERP solution. They also need to partner with an expert vendor to understand industry requirements and create an optimized solution that meets their company's objectives. Follow these steps to make sure seamless implementation.
- Project Planning
Set clear objectives to define the scope of your implementation. This will be accomplished by conducting an in-depth assessment of existing entire business unit practices and areas where improvements are needed. ERP systems can be complex, so it is important to establish timelines, assign roles to project team members, and identify training processes.
- Analyzing Software Capabilities
Spend a week analyzing the software for the project team. This step is crucial as it will help determine if any modifications are required in the software. Before employee training, customize the requirements. To meet expectations, the team must follow the correct direction. To fully train the team in the ERP software and identify gaps, you should cover all aspects.
- Data Management
Analyzing current data will help you determine which information should convert. It is not a good idea to convert 100% of the data as it will contain outdated information. First, identify the source of the data and then verify that it is compatible with the software. This step has one goal: to improve data accuracy and completeness.
- Training And Testing
The project team should practice using a test database to ensure that the software functions correctly. You can modify interface design or integration issues before the software launches. After all testing is completed, you can create a training plan for your team.
- Go-Live & Post-Implementation
Before going live, create a checklist. The project team and department heads must be trained to answer users' questions about the software. To maximize its benefits, the management team must remain committed to the software.
Why did ERP System Implementation Failed?
- Inadequate Ownership of the Project
ERP implementation is an important IT project management task. Most often, the project owner does not have the data or resources. Instead, they delegate organizational responsibility to different IT departments for ERP implementation. ERP implementation is often a failure if there's no clear chain of command or management, such as if the delegating department doesn't own the project. This confusion leads to multiple ERP implementation failures.
- Hurrying to Implement
One of the biggest causes of failure is rushing the implementation and evaluation of an ERP project. Establishing a list of ERP evaluation criteria you follow during evaluation is important. This will allow you to choose the right software and partner for your implementation, regardless of whether they are SAP, Oracle, or Microsoft.
The ERP Project Team should be focused on meeting the deadlines and conducting quality control studies, as described in the ERP Standard Operating Procedure. It is crucial only to release new products when known bugs are fixed. Also, it is vital to gather information from end users before rolling out new products. This will ensure that all parties are up-to-date.
- There is no Delivery Limit
One of the main reasons ERP implementations fail to succeed is that the scope of delivery was never established.
The scope of delivery is the programmatic description of the system's end-to-end functionality in an ERP implementation.
This can be avoided by defining your ERP requirements well before any ERP evaluations or implementation.
This definition can change depending on the implementation. Because different parties have different skill sets, knowledge, and resources, the delivery may be different. The scope of delivery is an essential part of any ERP implementation. It should be addressed by those who implement the ERP system. It should be treated as a collective statement of direction'. This definition should not be modified or qualified by your ERP Platform provider. It is impossible to implement profitably and customer satisfaction & customer service.
It allows the scope for delivery to be set up when a project is first deployed to an ERP system. It allows the person implementing it to limit who can use it until it is fully functional.
- The Preliminary Work is often underestimated
ERP implementation involves complex tasks such as designing, implementing, and maintaining an information system that can meet your company's requirements. To ensure business continuity, many components need to work together. These include hardware, software, and data processing. IT departments often underestimate the amount of work involved in ERP implementation. It is important to realize that not all ERP implementations are easy.
- ERP can be considered an IT Project
Many ERP projects can be considered IT projects because of their complexity rather than being information organization systems. These projects include information technology (IT), computer systems, and other resources required to achieve the desired result. ERP can be implemented both as a software or hardware system. However, it is seldom considered an IT project. Because it requires both technical inputs and organizational coordination, ERP module implementation can be considered an IT project.
This Incorrect Designation is Responsible for the most Common Failures:
- It is difficult to evaluate the potential impact of ERP issues on other applications' operability because of their complexity.
- ERP applications are so interconnected that implementation problems can lead to cascading failures in an ERP implementation.
- ERP applications often undergo more impulsive upgrades, which can lead to design changes or operational modifications that make it more difficult to integrate into other applications.
- ERP system integrations depend on the quality of emerging technologies. They are, therefore, particularly susceptible to disruptions due to network disruptions and human error.
- Although ERP project management activities are organized into functional roles -primary, secondary, and tertiary implementers--they're just about managing the items.
- Insufficient Testing and Validation.
A common mistake in ERP implementations is the failure to follow proper validation and testing procedures. ERP applications should undergo at least one round of validation. It was most often not done correctly.
Organizations don't test the solution before releasing it. This is why they can't gather crucial data about its effectiveness. It's difficult to know if your software delivered on its promises without proper test data. Even with the best test data, it can be difficult to tell if something needs to be changed.
- "One-off Project" Mindset
An ERP implementation is a long-term strategic project that will have long-lasting effects on the business outcomes. Many organizations view ERP implementation as a one-off task.
Realize that an ERP implementation is not a "one-off" but a series of individual projects. Each project has set-up procedures, implementation schedules, questions, build systems, and management that require the audit.
- Inadequacy in Planning and Resource Management
Process failures are almost inevitable in any system with a history of failures. ERP implementation is no exception. Insufficient planning and poor resource management are the most common causes of failure.
Implementing any software or hardware is difficult because it requires the procurement of the resources needed - both hardware and software, as well as the right network architecture, custom-developed tools, and skilled staff.
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You must follow the same steps to define your requirements, select components, and create a design plan before delivering an ERP solution for your internal users. No matter the situation, ERP system failures can cause major organizational disruption. Inadequate planning and resource management combined with a lack of awareness of risks are the main causes of ERP implementation failure. This can occur at many levels, including in critical business activities processes. It can also overwhelm technical teams' ability to manage risk and change effectively. Ask experts like Arion ERP for advice on the right ERP system to fit your company's needs.