Wednesday, 09 May 2018

ERPs play a crucial role in keeping all back-office operations running smoothly and are often the backbone of an operation. They are often taken for granted and many underestimate the time, effort and resources that are needed to implement and maintain an ERP successfully. According to analyst findings, roughly 75% of ERP projects fail.

Unfortunately, no company is immune to the devastating impacts of an ERP failure:

  • Nike lost $100 million in sales after a failed supply chain project in 2000. They were also hit with a series of lawsuits and saw a 20% dip in their stock

  • In 1999, Hershey's could not deliver on $100 million worth of chocolate right before Halloween due to a failed ERP implementation

  • Back in 2004, nearly 27,000 students from the University of Massachusetts were unable to register for classes or collect financial aid checks due to bugs in their ERP implementation

However, catastrophic mistakes like this can easily be avoided.

1. Know What You Really Need

Whilst ERPs are instrumental in the backend management of a company, they are not a solution to every business challenge. They are not equipped to take on every ask (e.g. collecting a payment or sending an invoice). For business functions that ERP are not equipped for, it may be more efficient to opt for a third-party solution that can be integrating with an existing ERP.

Before jumping into an implementation, make sure that is can handle the specific tasks you need. Bearing an ERP's limitations in mind, you will have a better chance o ensuring you are managing your back office systems and data in the most efficient way possible.

2. Set Realistic Budget Expectations

As ERP projects are such a powerful tool, they inevitably come with increased costs. ERP's require massive amounts of time and labour, as well as the additional costs associated with licensing, maintenance, development and hardware fees. Underestimating these costs can be detrimental.

When 74% of ERP projects cost more than predicted, accurate planning and evaluation are key. By benchmarking against the ERP deployments of similar organisations, you can ensure that you keep your implementation process as smooth and cost-efficient as possible. It is equally as important not to overlook the smaller costs that may crop up such as training staff, fixing bugs and converting data. 

3. Expect Extended Timelines and Plan Accordingly

Unfortunately, successful ERP implementation does not happen overnight. According to a report by Panorama Consulting Solutions, nearly 59% of ERP projects end up taking longer to implement than originally expected. Relying on a new system to perform functions by a certain date is one of the biggest mistakes IT executives can make. Rushing to meet deadlines should never be a part of an implementation plan. It is important to remain flexible when it comes to the project timeline.

It is also critical not to underestimate the time needed to maintain an ERP system going forward. ERPs are not a one-time investment. As a business grows, so does the complexity of its ERP. You and your business must be prepared to put in the time and resources needed to provide continual support and maintenance for an ERP.

4. Be Patient and Be Prepared to Problem Solve

Part of any successful ERP implementation is addressing bugs, and this is a step where you can afford to make assumptions. Using a phased approach to deploying an ERP can prevent any major disruptions. Rather than immediately switching to a new or upgraded system, test it before your existing system/process is dismantled. 

A study by Panorama found that 88% of companies will end up customizing their ERP, this will require additional time to implement and test. Whilst customisation may work properly in the short term, there's a chance you may face difficulties in supporting customisations in the long term. Customisation within your ERP system may require additional resources or third party support o deploy upgrades or ensure compliance with evolving industry best practices.

 

 

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