8 Challenges That Companies Face When Implementing ERP

8 Challenges That Companies Face When Implementing ERP

If You Use A Set Of Specialized Systems And Software To Manage The Workflow And Staff In Your Organization, You Are Well Aware That This Is A Difficult And Complex Task.

You have a plan for managing accounting activities, and you have a plan for managing customer relations (CRM), you have a plan for managing inventory, you also have specialists in your organization who are responsible for overseeing these processes and coordinating between different teams. In all these cases, you need a centralized and comprehensive mechanism to coordinate the different parts with each other.

As an organization grows, the complexity of operations and processes increases. On the other hand, performing accurate analyses with traditional methods is difficult and time-consuming, and the results obtained from manual surveys are unreliable and can be cited.

Typically, all large organizations deal with a set of Disparate Systems, knowledge hidden in the heart of data, changing technologies, and employees who move to or from different departments.

Large organizations seek solutions, or more precisely, a platform that automates critical processes and simplifies day-to-day business management to solve the problem of inconsistency between different departments and comprehensive oversight of business processes. This comprehensive platform is called Enterprise Resource Planning (ERP).

What is ERP?

An organization resource planning system is modular software that integrates core business processes. The software provides applications to organizations in critical business areas, such as finance and accounting, human resources, production management, customer relationship management (CRM), and supply chain management. ERP software contains various components called modules.

One of the key features of ERP software is that it is database-based. This database is a comprehensive set of information that every business needs to manage its core processes (from accounting and financial management to inventory management, production, orders, and human resources).

The shared database, through which different modules allow users to access information, sets ERP software apart from other application software. In most cases, the modules of this software share information with each other.

ERP software companies will save high costs and time because they do not need to re-enter information. The system increases accuracy and interaction between different parts of the organization by sharing data.

 On the other hand, by automating and integrating the organizational workflow, the ERP system makes tracking and analysis operations more accurate, making the organization’s decision-making process faster and wiser.

Based on the explanations we have provided, we must say that ERP is an internal, comprehensive, organizational, modular, and standard application software package that includes a set of integrated and pre-designed modules that can be configured and configured according to the dynamic needs of organizations. has it. This solution is flexible, process-oriented, and information-oriented and includes all the primary and practical activities and processes to create added value for the organization.

In fact, through the ERP system, an organization creates information integration between different human resources units, finance, administration, sales, etc. According to the above definitions, we must say that the most crucial feature of an ERP system is its process orientation, or in other words, attention to organizational processes among functional areas.

However, when choosing an enterprise resource planning ( ERP ) solution, the main challenge begins with analyzing the needs and preparing and successfully implementing the ERP that fits the requirements.

Where to start?

Here are eight challenges that businesses face when choosing and implementing an ERP. By reading this article, you can fix some common mistakes that can be time-consuming and costly for the company and divert you from the path of successful ERP selection.

Challenge 1: Not having a good starting point

The selection and implementation of ERP depend on the strategy of the organization. Because without a well-thought-out plan and approach, you may run into organizational problems or issues with people and neglect to align today’s processes with tomorrow’s needs. When thinking about choosing an ERP, it is essential to have an analysis of all your existing business processes so that you can better understand the scope of your ERP needs.

Do not just think about current and existing processes because these processes may only apply to your company today. Choosing an ERP is an excellent opportunity to take a closer look at these processes and determine what works well, what can work best, and what your needs may be in the future.

If you automate a process that is not currently working well with ERP implementation, you will not be able to take full advantage of what ERP offers. This evaluation can create opportunities to improve or change the existing workflow.

In the beginning, looking at all the organization’s critical software, systems, and applications is essential. What are the points of discussion or problems? How can they be solved by implementing ERP?

Remember that all issues that may affect the critical operations of your business should be considered before selecting and implementing ERP.

Will the ERP solution integrate seamlessly with existing business operations, does the ERP have the ability to integrate with the sales plan, does it have the ability to work with accounting systems, and will the ERP solution generally replace other keys?

Did you know that 80% of respondents to Technology Assessment Center (TEC) surveys say that ensuring that ERP fits their business needs is one of the most overlooked issues?

You may encounter an ERP that only meets some of your needs at the end of the implementation phase. Before choosing an ERP vendor, take the time to analyze your operational needs and goals, plan them carefully, and put them on your to-do list.

Challenge # 2: Choosing the right vendor

After analyzing the business process and needs and making a to-do list, it’s time to select potential vendors that fit your ERP goals. In the TEC survey we cited, 50% of respondents said that choosing the wrong vendor was the main reason for ERP implementation failure. Selecting an ERP‌ partner who will work closely with the team during the evaluation and implementation process is essential. A partner who actively evaluates your goals and suggests plans and strategies that positively impact operations.

Of course, there are some questions you can ask the seller:

  •  How many similar projects have you completed?
  •  What are some common problems you have encountered, and how can we address them effectively before we begin?
  •  What kind of industries do you serve?
  •  Can you explain a little more about your area of ​​experience?
  •  What are your pricing criteria, and what does it include?
  •  What are the main features of ERP, and how do they meet business needs?

Challenge No. 3: Organizational silos and communication issues

Organizational silos are a group of employees who want to work in independent units within the organization and are not interested in sharing their information with employees and other parts of the organization.

When selecting and directing ERP implementation is left to the solution partner or vendor, it is common to get the opinion of this group of employees, who are often managers of different departments and are responsible for high-level organizational tasks.

In addition, another essential point to note is that it attracts the favorable opinion of middle-level managers and employees who are responsible for day-to-day tasks and are directly involved in ERP processes.

True, this can be bypassed-but not unless you’re a techie who knows what he’s doing. Please ensure all employees are aware of the ERP goals, take the time to interact with them, and know their roles directly contribute to the organization’s success. Once you have identified these key players, create a communication program.

If the organization is so large that one person alone can not manage all the communication related to ERP programs and their development, form a small communication team to manage different administrative departments in other parts of the organization.

Please work with your core team to keep their information up-to-date throughout the deployment process and ensure they know the importance of sharing information such as improvements, milestones, challenges, and breaks with relevant teams. Provide staff with ways to provide feedback during the process. Be open to suggestions, criticisms, and improvements, especially those associated with the system.

Challenge # 4: Inadequate budgeting

When budgeting for ERP implementation, some factors can limit the scope of work and increase the project’s final cost. If your ERP system is unusual and exceptional but meets all your needs, it will require less budget than a system that requires a lot of customization to meet your needs. Remember the list of requirements we mentioned in Challenge 1?

The better and more accurate your list is, and the more comparable your vendors are to that list (Challenge # 2), the more successful you are at reducing unexpected costs. Also, keep in mind that most new systems require some level of maintenance. When budgeting for a new system, be aware of these additional costs.

Challenge 5: Form the right team

We addressed organizational silos and communication issues in Challenge # 3. Selecting the right members for the ERP evaluation and implementation team can help address these challenges. While some organizations make using ERP a top IT priority, the reality is that your new ERP system will affect many of your employees and business operations. Forming the right team is essential to success.

Make sure the ERP team comprises people working in critical parts of the organization. It is best to have these employees at all levels, including executives, middle managers, project managers, and people responsible for the day-to-day work of ERP.

Challenge # 6: Lost Data

Suppose you are thinking of implementing a new solution for business management. In that case, you should consider whether it is possible that valuable data will loose or the data will become inaccessible after implementation. Under such circumstances, ERP implementation will be a significant business failure.

Missing data is a significant breakthrough for ERP applications. Ensure the vendor can manage the data transfer and integration without losing data quality or stopping necessary operations due to lack of data.

Challenge # 7: Lack of enough time

Selecting, implementing, deploying, and training ERP is a time-consuming process. Often, key members need to be re-employed away from their typical day-to-day tasks to use ERP without difficulty. Contact your ERP vendor to create a project timeline with key and essential plans and responsibilities. Compare this chart with your organizational needs and daily operational goals.

Match the two, then set up a timeline for implementing ERP to suit the organization’s needs. Remember that the more time you spend planning and implementing, the more likely the team will be able to overcome problems before using ERP. The less the negative impact of implementation on business operations will be.

Challenge # 8: Change Management Issues

Suppose you have set all the business goals, chosen the best ERP for your needs, and found the right vendor, the budget is enough, and you have enough time to implement the new solution, the data has been successfully transferred to the new key, and all the systems Are operational.

What happens if people who use the new system are defensive about the new solution or if they prefer to do things the usual way? What if the opposition can influence the employees’ views on the new solution and hurt them?

The fact is that not all employees like change, and few people accept change.

About 45% of respondents to the TEC survey said that poor change management is an essential factor in the failure of ERP implementation. Unfortunately, change management is an area that is often overlooked in business.

When planning for ERP, create plans that manage change, not just for processes and technologies but also for employees. ERP is more than just a behind-the-scenes solution; it affects the entire business operations of the organization.

One way to help change management is to ensure you understand the communication and challenges of teams and employees and provide adequate and efficient training on the new ERP system.

Design a training program that teaches employees how to work with the new system and addresses their questions and concerns: support feedback and reward employees whose suggestions improve performance.

Increase performance with ERP

After overcoming these challenges, with the new ERP solution, you will be on the right track, which will increase your business performance. Your team can automate much of what used to be done manually, gain instant access to data, and gain insights that can help make better operational decisions.