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An enterprise resource planning (ERP) system can enhance productivity and efficiency across any organization by automating procedures, giving all teams access to one source of data, and streamlining business processes throughout.
Unfortunately, its implementation can often prove complex or challenging due to all its effects on people and processes across an organization - here, we discuss some of the main barriers associated with ERP implementation as well as strategies for avoiding or overcoming them. Here, we present some of the main obstacles associated with ERP implementation, along with strategies for avoiding or overcoming them.
What Is ERP?
An enterprise resource planning (ERP) system supports various business operations, from accounting and human resources to sales and marketing, and engineering.
By serving as the organization's central database, an ERP system connects all groups within an organization using its benefits, including increased productivity and process efficiency along with real-time information that enables teams to make quicker, smarter decisions.
ERP Implementation: What Is It?
An ERP implementation project typically comprises several stages that include revamping business processes to take full advantage of its capabilities, configuring software to meet these new demands, migrating data to its new home, and training users on its use.
Large organizations may take months, with project teams overseen by stakeholders from every functional group within an organization leading it all.
Why Is It Difficult To Implement An ERP?
Since ERP implementation can impact all business processes in an organization, its implementation may prove complex and challenging.
Furthermore, to take full advantage of their new system, people often need to adjust how they operate by adopting more automated or efficient procedures in place of manual ones that have long existed within an organization.
Implementation of ERP can present many difficulties to users and functional groups alike, so effective project management with senior support from leadership is required to drive this change process.
A dedicated project team should include representatives of each ERP user platform user when developing this system to guarantee it meets user requirements while running smoothly across the organization.
Seven Main ERP Implementation Difficulties
People and technology both play key roles in an ERP implementation process, which may present both technological as well as people-related difficulties that need overcoming (for instance, resistance to change).
Here are seven main challenges associated with its implementation that must be considered before beginning its journey toward full functionality:
Project Management
ERP implementation processes encompass discovery and planning, design, development, data migration, testing, and deployment support updates after launch - each phase must remain on schedule.
Key tasks must be introduced at each stage and require careful project management to be successful. All groups involved with the system's creation or use must collaborate. Otherwise, the ERP implementation could become problematic as each department must juggle multiple priorities with its ERP project duties simultaneously.
Success depends upon effective project and people management, including setting reasonable goals, deadlines, and milestones, as well as two-way communication between team members.
To tackle such an obstacle as effectively as possible, senior leadership support from executives or top leaders may be crucial.
Project Planning
Organizations often underestimate both the time and budget required for successful implementation, according to Statista.
Scope creep (when an organization adds features or capabilities not part of its original plan) and underestimating staffing needs are two frequent sources of budget overruns.
Preventing issues during a project can be accomplished through crafting an explicit and practical plan from its inception.
Making decisions will become simpler while staying on schedule will become less likely with such an effective project plan that accounts for potential roadblocks or cost overruns and addresses them early on.
Data Integration
One of ERP's primary benefits lies in giving all members of a company access to one reliable source of information.
Data migration entails moving information from disparate legacy systems into its ERP database. However, finding all your information first might prove challenging due to scattered storage areas across your company, such as spreadsheets, department-specific apps, accounting systems, or even physical files.
Data migration can assist the ERP implementation project as a whole in staying on time and within budget by clearing away redundant and outdated information in existing systems.
If data migration is given inadequate priority, however, issues like missing or incorrect information or delays with go-live may result.
Data Quality
Once all sources of data have been identified, an organization can begin considering data migration into an ERP system.
However, doing so might necessitate conducting an in-depth data hygiene procedure as different departments often deal with similar clients, orders, and products due to duplicate records existing across their systems. Some data could even contain incorrect or outdated descriptions- such as clients or vendors who no longer exist- that need updating as soon as possible.
Before moving data to an ERP system, ensuring its quality can become a significant project in itself. This involves validating it, eliminating duplicates, and adding missing values as necessary.
Prior to going live with the new data in an ERP system, however, its quality must also be rigorously tested for quality purposes. Ensure all members of your team understand its significance by assigning specific tasks - for instance, accounting will manage financial information.
At the same time, customer service handles customer contact data cleaning duties.
Change Management
Implementation of ERPs involves more than simply installing new operating systems. Often, they entail revamping company procedures in order to take full advantage of productivity and efficiency gains made possible by new solutions, often necessitating employees to adapt their daily work routines or mindset.
As with all changes that require change management initiatives, this often poses unique difficulties.
Early buy-in from leadership and stakeholders across departments is crucial for successful ERP implementation since resistance to change can often become an impediment to success.
When rolling out an ERP, ensure all parties involved understand its features, particularly end users who will use it directly, and provide comprehensive training and assistance services to accelerate the adoption of the system.
Cost Overruns
ERP projects often overspend when their implementation phase commences due to miscalculated workload estimates by businesses switching over from an old business system, leading them to overspend by an unnecessary margin.
Cost overruns tend to manifest themselves in multiple forms throughout their implementation and often overspend the budget as planned.
Businesses often rely more heavily than anticipated on software vendors or outside consultants when resources become limited.
This is particularly the case if the solution must be tailored specifically for your company. Expert enterprise resource planning consultants typically charge between $150 to $175 an hour plus travel costs, whether working directly for their vendor or independently.
According to ERP Focus, data migration accounts for 10-15% of project expenses overall and can significantly strain budgets.
Another expense should be training. While most ERP vendors provide free basic training sessions or classes prior to, during, or post-implementation, additional types could incur costs as well.
Businesses should budget more than expected for these and any unforeseen costs to prevent overspending on budget. It is always preferable to come in under budget than over it.
Continuous Improvement
Deploying an ERP is an ongoing process that doesn't end once it's live. To keep pace with changing technological needs and business demands, its solution must continue evolving as new requirements emerge.
After the deployment has taken place, project teams should remain overseeing work by monitoring projects while overseeing workstreams to resolve problems or add requirements as they arise.
ERP systems often remain part of businesses for at least ten years after installation, making regular evaluations of them essential to make sure they still serve your company's needs.
Modern cloud-based systems often update themselves automatically with the latest features and innovations. In contrast, older on-premises ones might take more work to update themselves regularly. An obsolete ERP can start having detrimental effects on companies, so assessing whether continuing to use it or finding another is most cost-effective is imperative for success.
Conclusion
Establishing an Enterprise Resource Planning (ERP) system can be transformative, leading to greater efficiency, improved decision-making processes, and enhanced productivity.
ERP success comes with numerous complex challenges, from data management to change resistance, but its rewards are substantial. ERP projects are complex undertakings that require careful planning, proactive management, and unwavering commitment from all levels within an organization.
Businesses seeking longevity and relevance must prioritize continuous improvement as part of the ERP implementation journey, acknowledging its ever-evolving nature as they move ahead on this significant initiative.
ERPs offer businesses an invaluable tool to drive continuous growth and operational excellence if coupled with strategic vision, strong execution capabilities, and effective change management techniques.
