Problems Associated with ERP Implementation

Implementing an ERP system into a company is considered a major decision by the IT advisors. With this being said, one can see how important it is to fully understand all positive and negative aspects of ERP systems. Companies often invest a lot of time and money into their ERP systems and unexpected problems within these systems can often be costly not just in financial terms, but also in employee performance. ERP systems typically need continuous technological reformations and financial investments to ensure that company can orchestrate effectively across all divisions and geographies.

Source: http://www.intelligententerprise.com/channels/enterprise_applications/showArticle.jhtml?articleID=20301367

Below is a list of common mistakes and errors made by companies, which contribute to the extensive failure rate of ERP systems.

Not knowing enough about ERP software

Companies need to be sure they fully understand ERP software before any purchasing or implementation can exist. A company must decide what type of ERP software is essential for their business. They must decide between fully

integrated ERP Software, or “best-of-breed” Software. Fully integrated software is typically used by smaller companies with smaller budgets. This system allows the company to streamline information and improve productivity at a lower cost, using far less resources. The “best-of-breed” software system is generally used by bigger businesses with more disposable incomes. It is more costly and time efficient, it consists of implementing an entire number of systems in the organization by choosing the best fit for a particular function.

Not recognizing the individuality of the organization

Lacking software specialization is a common cause of failure in ERP system implementation. Organizations typically try to use software that works as a solution for another firm. However, in order to have successful implementation it is important that every firm specializes their final software to meet the individual needs of their own business requirements.

Making a mistake when choosing a vendor

A common mistake in choosing a vendor for your ERP software needs is picking one that does not understand your business and industry. Organizations are often convinced that any big-name merchant can provide the best service for their business, but what they don’t understand is that they are often too large to offer specific industry data and supply to the uniqueness and special requirements of individual firms. Not choosing the appropriate vendor can lead companies with having to teach the ERP software to work with their business. Choosing the right vendor will help the integration process in terms of cost and efficiency.

Ignoring your ERP software needs

ERP systems are a costly and time consuming investment. They require much dedication and commitment from all staff, especially IT advisors. In order for successful implementation the entire process must be monitored and streamlined. It is important that all staff are trained to eliminate unnecessary confusion and problems that can be associated with ERP systems. Check ups are the most important aspect of the integration process such that a simple integration process is maintained.

Investing for the short term

ERP software should only be considered as a long term investment. If a company cannot afford to look into the long term with ERP software, it is typically in their best interest to avoid the adoption process. ERP software is used to improve and enhance the functionality of the business process, and, if successfully implemented, can pay itself off in the long run. However, it should not be considered as a short investment opportunity.

In order for successful implementation of an ERP system it is important that there are no surprises upon startup. In order to alleviate potential problems it is very important that any organization understands the following list of constraints:

Implementation is an extensive and vigorous process (much greater than forecasted).
The current mix of what is being done manually by staff as opposed to what will be done by the new system is a dramatic change. Tasks will be automated. Automation reduces company flexibility.
Computer literacy must be increased across the organization.
The word Enterprise in ERP means that whatever happens in one area has a ripple effect in other areas. Understanding the implications of actions of one area, on other areas of the company, is not something that happens overnight.
Data integrity becomes critical. The computer cannot make human judgments. The information needs to be put into the system or there will be a domino effect.
ERP systems replace old systems. All new aspects must be learned as quickly as possible. This is often difficult for non-computer literate staff.
Things must be done across the organization in a similar format. All branches must conform through the new system. The system determines how to complete tasks.

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ERP Failure

ERP failure can often be linked to an area of uncertainity that created a serious problem. As said before an ERP system can add to any organizations productivity and efficiency, however, a lot of work and preparation is necessary to alleviate failure. If a firm is not prepared to work through the extensive process it will end up being an unsatisfactory experience. Some areas that cannot be neglected that are correlated with ERP implementation failure are as follows:

Training

If all staff across the company is not properly trained on how to use the ERP system it will lead to mass confusion and lower employee morale.

Reengineering

Companies are often not prepared to reformat company structure to fit the new software. It is typically underestimated how much work and change will be subject to the new software.

Planning

Companies usually do not create an extensive plan for potential problems that will arise. Being unprepared for the ERP software generates more problems and confusion for the entire staff.

Project Management

Very few organizations have the experience in house to run such a intricate project as implementing a large-scale integrated solution. It usually requires outside contractors to come in and manage such a major exercise. There can be a fine line between handing over responsibility and sharing responsibility. Many firms create more havoc by not allowing a third party to handle important tasks.

Technology Constraints

The amount of time and effort it takes to create interfaces, customize software, and convert data is often underestimated. Also collecting new data, and prepping it for implementation is also a strenuous process that is often underestimated.

Support from Management

Support from upper management is a must have necessity. Upper management will ensure the appropriate mix of business and IT is being appropriately utilized. Also play a major role in problem solving.

Underestimating Third Party Costs

Most organizations have found it difficult to forecast accurately to finance a project such as ERP implementation. Not considering service fees and charges, integrative testing, and consulting fees.

Lack of Evaluation

Most companies do not completely understand the software before they purchase it. This leads to unsuccessful implementation, use of the software, and evaluation.

Source: http://www.projectperfect.com.au/info_erp_imp.php

Created By Curtis Rideout + J.R

Contact: x2005fze@stfx.ca