Efficiency is critical in today’s fast-paced business world. This is why many businesses across the globe opt for automated technologies to run various operations. One of them is Enterprise Resource Planning (ERP) systems, which automate certain aspects of management in an organization, whether supply chain management or human resource operations. ERPs are invaluable tools for organizations, but certain usage mistakes can sometimes reduce effectiveness. Here are some such common ERP mistakes to steer clear of:
Neglecting budgeting
ERP systems can be costly for businesses. They need to set aside a sizable chunk of their annual budget to set up, install, operate, and maintain ERP systems for their operations. Unfortunately, companies make the cardinal mistake of not considering budgeting expenses regarding the pre-installation phase of an ERP system.
Therefore, businesses must include all the additional costs of an ERP system, including employee tracking, patch management, and data security safeguarding. Improper budgeting is just as catastrophic as improper planning when it comes to ERP, and both could cause the collapse of critical organizational processes.
Not considering employees’ inputs
The lower-level employees in an organization will use ERP systems as much, if not more, as the managers or executives. Yet, companies may ignore these employees while testing ERP systems and implementing them. Lower-level employees can provide many insights to their seniors about the quality of work in a system and the changes needed to improve it. Companies must stimulate the complete user load to determine how efficient their ERP system will be. Not considering their opinions during the implementation process can cause significant operational issues for ERP when set up and ready to use.
Approaching ERP implementation like a standard IT project
When implementing an Enterprise Resource Planning (ERP) system, treating it as just another technology introduction to business operations might seem logical. However, this mindset can cause severe challenges and setbacks, as ERPs have a broader impact on an entire organization. These systems touch every aspect of a company, including finance, inventory management, HR, sales, marketing, worker records, and more. Therefore, executives responsible for signing off on ERP implementation must acknowledge the nuances and complications involved in the planning phase and consider the inefficiencies and missed opportunities for process improvement.
Companies must adopt a holistic approach to leverage such powerful and versatile technology. Executives should involve every stakeholder in setting up and using ERP systems for business operations, including clients, debtors, creditors, suppliers, employees, and others. This means that the executives, managers, and workers from all company departments must be involved during all stages of ERP implementation. The IT team should not be the only ones involved in the process for great ERP success in the future.
Having an unrealistic implementation schedule
For a system that will permeate every core aspect of an organization so profoundly, some businesses cannot afford the time and patience needed to implement ERP systems company-wide. Rushing the process often results in certain essential steps being overlooked, and the ERP project is a failure in the long run. Having an unrealistic implementation schedule puts pressure on the technology team that is doing it carefully and systematically, on the employee who will use it, and ultimately, on the organization itself to get things right in the first go, hyper-fast.
Not having a comprehensive data strategy
Organizations must assess how legacy data is stored for successful ERP implementation and devise creative and effective ways to aggregate, unlock, and align it with the new ERP system. This data strategy must also include plans for integrating the data from ERP systems into CRM and other systems to digitize and optimize the entire business.
Many organizations must consider the data into which ERP systems will feed, crunched, and analyzed. Therefore, businesses need to scrub and rationalize their data so real-world information, such as customer purchase orders and open balances, can be used even while the ERP system is tested, tuned, and optimized.
Not having a project sponsor
A particularly winning approach to ERP implementation is selecting an employee to sponsor a company’s ERP system. This employee acts as a champion for the project’s internal survival and functionality. As ERP implementation involves every worker in a business, this individual must have excellent communication skills, problem-solving ability, and operational expertise about every business activity that goes on within a business. Having a sponsor makes the ERP implementation process much more streamlined and, according to many examples in the past, successful for companies.
Not checking references
When investing money in an ERP system, businesses need to be cautious and rely on more than just the vendor company’s sales pitch. It is crucial to check multiple past references and examples where other successful businesses have had positive experiences with the same ERP system. Failing to do so can make implementing ERP systems a risky endeavor with no clear expectations of what to expect. On the other hand, checking enough references gives businesses the confidence to embrace an ERP system wholeheartedly. One will judge vendors better by talking to their customers than just their salespersons alone. Therefore, conducting thorough research and seeking reliable references is essential before investing in an ERP system.