ERP implementation is a complex and challenging process, and it's not uncommon for businesses to encounter unexpected obstacles along the way. However, with careful planning and a comprehensive understanding of the common challenges that arise during an ERP implementation, businesses can navigate the process successfully. In this blog, we will explore some of the most common challenges businesses face during ERP implementation and provide practical tips for overcoming them. By anticipating these challenges and developing a solid plan to mitigate them, businesses can ensure a smoother and more successful implementation.
A successful ERP implementation requires contributions from a number of people, so it often faces challenges such as resistance to change and technical obstacles. Common ERP implementation challenges include:
Project Management
As noted in a previous blog 'The 5 Stages of an Implementation Plan', ERP implementations entail multiple phases. Each phase brings critical tasks, and all elements need to stay on track, so meticulous project management is critical. Additionally, successful ERP implementations require participation from all the groups that will be involved in developing and using the system. That can be incredibly challenging because each department is juggling its ERP project responsibilities with multiple other priorities.
Strong project and people management, which includes setting realistic expectations, deadlines and milestones, along with timely two-way communication, is crucial to success.
Project Planning
Organisations often underestimate the time and budget necessary for a successful implementation. Two of the most common causes of budget overruns are scope creep—when a business adds capabilities or features to the system that weren’t part of the original plan—and underestimating staffing needs.
A realistic project plan that acknowledges possible speed bumps and minor cost overruns and addresses them in advance will simplify decision-making processes and keep the project on track.
Data Integration
One of the key advantages of ERP is that it provides a single, accurate source of data for
the whole organisation. A key step in ERP implementation is data migration, which typically involves transferring and consolidating data from multiple systems into a central database. But first, you have to find all of your data. This may be much more challenging than you expect. The information may be spread far and wide, buried in accounting systems, department-specific applications, spreadsheets and perhaps on paper.
Well-planned data migration can help keep the entire ERP implementation project on time and on budget. It’s also an opportunity to winnow out obsolete and redundant data lurking in the organisation’s older systems. In contrast, underprioritising data migration can cause issues such as inaccurate or duplicate data and go-live delays.
Data Quality
Once the organisation has located all data sources, it can start planning how to migrate them to the ERP system. But that may involve a serious data hygiene exercise. Because multiple departments interact with the same customers, products and orders, organisations often have duplicate versions of the same information in their systems. Information may also be stored in different formats or contain other inconsistencies.
Employees must not only learn how to use new technology but may also have to adapt to new work processes that change their day to day.
Resistance to change can be a formidable roadblock, but getting buy-in from leadership
and stakeholders across departments early in the process should reduce resistance.
Communicate the features and advantages of the new ERP to all stakeholders throughout the implementation, especially end users. And make sure all users receive comprehensive training and support to ease their paths to the adoption of the system.
Cost Overruns
ERP projects are infamous for sailing past budgets after the implementation kicks off. Many organisations underestimate the amount of work required to move to a new business system, and that results in spending more money than expected.
When internal resources run low, businesses frequently turn to a software vendor’s services team or third-party consultants. This is especially common if the solution requires significant customisation to meet your company’s needs. Experienced ERP consultants usually run about $210-240 per hour, plus travel expenses. Another budget breaker is data migration, which can represent 10%-25% of the total project cost. Training costs are one other expense to consider—ERP vendors often offer free basic training to customers, but you may need to pay for additional training hours or classes during or after the implementation.
To avoid blowing up the budget, companies should consider these and other overlooked expenses, and budget more than they think for them. Coming in under budget is always preferable to the alternative.
In conclusion, while there are many common challenges that businesses may face during an ERP implementation, proper planning and preparation can mitigate many of these issues. However, it is also important to stay organised and focused throughout the entire process to ensure that the project stays on track and meets its objectives. In our next blog, we will discuss the importance of sticking to an implementation checklist to help keep your project organised and moving forward smoothly.
