Thesedays CEO has more choices than ever when choosing an ERP solution. From on-premises systems to cloud-based software-as-a-service to industry-based solutions, there is a wide range of options. And decision makers may feel overwhelmed when trying to determine which features and functions are the most suitable and necessary.
In fact, ERP projects often fail when actually implementing. Here are some biggest mistakes when choosing or implementing ERP software – as well as suggestions for businesses to avoid making potentially costly errors.
ERP is considered as the future technology of business management as the business expands and grows quickly. Instead of complicated financial software or manual processes and Excel spreadsheets, “all-in-one” ERP systems seem the better solution. However, managers often feel overwhelmed because of vibrant live demos from a lot of vendors. And, successful cases of many other companies make you quickly come to the conclusion that a new management system is all you need right now.
As mentioned in previous blog, an ERP system has many functional modules (accounting, human resources, supply chain management, logistics, …) which are integrated and synchronized data. Without clearly defining the needs and desired business, enterprises deploying ERP easily fall into the “overload” of ERP functions. A general description of the technical requirements of an ERP system will make it difficult for suppliers to give you a specific implementation plan. There are unnecessary modules deployed in system, whereas there are modules that do not meet all the necessary business operations of the company.
The only way you can find the right ERP System for your organization is to truly understand your company and what you need. Make a discussion with your team and take some time to evaluate what you are doing well and where the gap you need help. Think about which parts you have the most problems and need to improve right now. And then, you can find advanced advice from experts like GA Advisor to give you a complete picture of your current operating system and remedies.
Implemeting an ERP will relate every department in your organization from engineering, to purchasing, to operations, so you will need to have a solid plan in place to tackle such a huge project. Many ERP projects are delayed due to lack of detail plan, thereby leading confusion down to road.
A well-prepared ERP plan has to combine strategic planning from C-level to the executive level. Although leader is the one who decides to implement the system, employees are the end user. Make survey and training of employees, not only the IT department, but also all operational parts of the organization is an extremely important step. The comprehensive participation of all relevant departments will ensure to fill all gaps of the current system. Therefore, businesses can plan and describe the product more completely, find the most suitable ERP solution possible.
Besides, you should also set up backup plans for the potential bad cases.
This mistake is often made when businesses buy ERP software on demand. The deployment process for ERP software is written on demand often as follows: Software vendors receive required descriptions – Write software – Return to deploying enterprises – Receive feedback and modify as required – Deliver the final version.
The process usually takes at least 6 months and the longer the duration, the more costs rise up. And if you do not know, the cost to deploy the ERP software written requirement is from a few thousand dollars on the minimum or more, except for maintenance costs.
63% of implementations went over budget while the average implementation took nearly four months longer to implement than expected” ~ 2014 ERP report
The features of the ERP system are very complex, the more departments businesses have, the more complex the system requires. Therefore, from the design, deployment to completion and putting into practice the ERP system could take a rather long time. However, many managers do not understand this and shorten the time to implement the project as soon as possible. This is counterproductive to enhance the performance of ERP software leading wasteful cost without success. A typical example of this mistake is the case of Hershey Food Corporation (Anil Bhagwani, University of Kansas, 2009).
The Hershey Company engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, food and beverage enhancers, and gum and mint refreshment products. Its chocolate and confectionery products include chocolate bars and drinking cocoa mixes, high-cacao dark chocolate products, handcrafted chocolate gifts, and natural and organic chocolate products. The company sells its products through sales representatives and food brokers, primarily to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, department stores, and natural food stores. It principally operates in the United States, Canada, Mexico, Brazil, Japan, Korea, the Philippines, India, and China; and markets confectionery products worldwide. The company was founded in 1893 and is based in Hershey, Pennsylvania.
The consequences of SAP ERP system implementation at Hershey Foods were so bad that during Halloween, big customers like Wal-Mart and Kmart were loading up candy from Hershey’s competitors. Mid-September 1999 order processing problems resulted in a 19% drop in Hershey’s third quarter earnings. Computerworld described Hershey’s ERP implementation as catastrophic failure. One of the main reasons for this debacle was that users of the new SAP ERP system at Hershey Foods didn’t get enough time to learn the new system and didn’t understand how the integrated processes of an ERP system impacted their daily roles and responsibilities. The original plan was to implement the system in four years which was compressed to two and half years by the Hershey’s management. To make things worse SAP ERP implementation went live in July 1999 just before the business peak season for Hershey starts. Hershey employees needed to correctly follow the business logic built in the SAP software. They needed to understand how various models worked and interacted with each other. Hershey was not only implementing SAP ERP system but also a CRM system from Siebel Systems and a logistic system from Manugistics. All this went live at the same time just before the peak business season started. Since the user training was inadequate, Hershey’s employees suffered from information overload.
The company could have very well avoided this trouble if only they thought of going live with ERP system during those occasions when the business process in the whole market experiences a slow period and at the same time providing ample time for user training.
With a strong investment in advertising, suppliers easily “steal” the attention of businesses at the first time. The surely commitment, porfolio full of strengths and superiority makes you dazzled and difficult to choose. So which is the company that provides the right ERP solution for your business.
The first thing you need to do is draft an ERP plan for your business, or at least a complete description of the business and techniques you expect to have in the system. Then list out the vendors available in the market and list the industry which are their strength. Next step, highlight your industry-understanding vendors and learn about some of their successful implementation projects. Finally compare and score each suppliers to make final choices.
We can’t emphasize enough that implementing an ERP system, like all big changes, will be disruptive, and that they’ll be a few growing pains along the way. Not preparing your staff for the change, and not giving your staff enough training on the new system are some of the most common reasons that ERP projects fail — and they can also result in employees resenting the new system because they don’t understand the point of the system, or how to use it. To improve your chances of ERP success, make sure employees have a chance to become comfortable with the new system before it goes live. Communicating with your staff, and providing adequate training, will remarkably improve your implementation process.
[Properly] structuring the internal implementation team and giving it the [necessary] time and resources it needs to carry out the implementation and associated business transformation is one of the most critical steps of an ERP project. “A successful team requires the right people, with executive buy-in and decision-making power to get the job done. This often means re-assigning the day-to-day responsibilities [of team members],” but doing so can be the difference between a successful rollout and failure.
A successful team requires the right people, with executive buy-in and decision-making power to get the job done
Strict in principle of changing processes and misleading their processes to create competitive advantage has led to the strong custom needs in most ERP implementation projects. Customization can create extremely complex systems and expand the scope of your project. This does not mean that businesses should not participate in customizing the system. However, a management software system can hardly cover 100% of a company’s actual needs.
Implementing an ERP system takes time, but the work hardly stops once the system is successfully in place. Businesses should implement a maintenance strategy to ensure workers are aligned on what needs to be done to maintain and improve the ERP system on a regular basis so it doesn’t become outdated or obsolete.
Outdated ERP systems can put companies at risk for security issues and holes in their business processes, GA Advisor’s IT Expert said. Having a set plan and assigning who in the company is responsible for the project and maintenance at a given time will ensure the ERP system is always running smoothly and is up-to-date with the latest applications.”
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