The top 5 ERP mistakes and how to avoid them

Overhauling enterprise resource planning (ERP) is a considerable investment of time and money for an organisation and here's how they can get more bang for their buck.

Overhauling enterprise resource planning (ERP) is a considerable investment of time, money and effort for an organisation. While successful implementation of a forward-looking ERP solution can drive your business in new directions, yield valuable insights and make transactions and business planning simpler, there are some pitfalls to be avoided as well.

A poorly-implemented ERP solution can be too costly for what it delivers. It can hamstring you in terms of future developments, and costs can easily blow out without the guidance of an experienced solution architect.

These are some of the most common mistakes companies make when implementing ERP solutions:

Poor planning 

Planning is vital when you're implementing an ERP solution. As well as planning the implementation project itself, you should carefully align the development of your ERP system with your future business plans and strategies. Make sure you've got the functionality you're going to need to pursue your whole-of-business goals most effectively.

Important decisions about whether to opt for a comprehensive ERP solution or a hybrid solution made from best-of-breed software for different ERP functions, are expensive to reverse and will have a huge impact on system functionality.

Consider customisation carefully 

No business has the same requirements, so customisations are an important consideration. Customisations need to be seamlessly integrated with the standard package, however.  It’s worthwhile considering an implementation by a software provider with extensive experience in your industry and an understanding of essential industry-specific functionality for your business.  This will ensure there are no functionality gaps through lack of industry knowledge, and will also allow seamless communication with suppliers and customers who use the same system uncustomised.

Use standard configurations where you can, rather than completing customisations. If what you need isn't available as a standard function, there's a good chance you should be looking for a different software platform altogether.

Aim to purchase an ERP solution that is highly configurable and can be tailored to your organisation, while containing standard functionality that is widely used throughout your industry.

Not understanding features

As many as 46 per cent  of businesses don't have a comprehensive understanding of the features and functions available to them in their current ERP solution.

Additionally, in our experience when speaking to new clients migrating from an incumbent ERP, their utilisation of the overall capabilities can be as low as 20 per cent of the functionality that they have invested in. In some cases, organisations go live with the new system but revert back to hold habits and workarounds, foregoing any of the new functionality that drove the system change project in the first place.

 This means these companies are missing the chance to automate business functions, analyse valuable business data and complete functions faster. They're also more likely to update without needing to, and to have those updates fail.

Keep a list of all the functions available to you, and provide this to staff being trained in new or updated systems. While there may not be a use within your business for a specific function at the time the ERP solution is implemented, future developments may mean it will become vital to your growth.

Not considering user adoption and training 

To get the best productivity boost out of an ERP implementation, you need your staff to be able to take advantage of its functionality. They'll discover ways to make their own jobs less complex and more efficient if comprehensive training is provided.

Seek to gain user adoption early, to achieve more buy in during the evaluation process and the user acceptance testing phase of the implementation. Don't expect staff to just “come online” at a certain date, or to pick up the system on-the-fly.

Dedicated training has a couple of benefits. As well as ensuring across-the-board basic competency, training staff on the in-depth functionality of your ERP solution will have productivity advantages. Each member of staff knows their own role better than any other person in the company, and with training they'll see ways to automate processes, speed up administrative tasks and find new efficiencies.

Working with inaccurate data

It can be tempting to think of data as a kind of amorphous substance that gets “poured” into your ERP mould late in the game. But this approach can be severely detrimental to your ERP solution as a whole.

You should be thinking about your data from the outset – after all, an ERP is only as good as the data going into, and coming out of it.

If you're in a situation where your suppliers or customers have a more detailed knowledge of your purchasing behaviour and supply chain details than you do, an ERP implementation should ideally reverse this situation. Once you've got more accurate, detailed data you're in a stronger negotiating position when it comes to future purchases.

There's far more to implementing an ERP solution than simply having it go live and waiting for the business benefits to start flowing. In fact, meeting your go-live date, or sticking strictly to your budget won't be the most important factors in the success or failure or your ERP implementation. It's critical to partner with ERP specialists to implement the solution that'll bring the most benefits to your specific business, which has its own pre-existing idiosyncrasies, methods and culture.

 Ian Whiting is CEO of Markinson Business Software Solutions.

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