For any company, an Enterprise Resource Planning system (ERP) can be one of the largest and most crucial IT investments it will make. Not only does it incur massive costs in licensing, maintenance, development and hardware fees, but it requires vast amounts of time and labor. Most likely, an implementation of this scale is being tackled because company growth and process demands it — you need to ensure efficiency and security in your business and improve operations management.
An ERP will certainly help with this but only if implemented thoughtfully and strategically. The average time for an ERP project from start to finish is around 14 months, but when problems in the implementation arise, it can take up to five years. In fact, a recent study showed that more than 57 percent of ERP projects take longer than the projected timeline.
Because of these complicated factors when embarking on an ERP project, there are a few things CEOs need to keep in mind:
ERPs can’t solve every business challenge
While ERPs serve a crucial purpose in the back-end management of a company, they are not designed to handle specific tasks for all departments. For example, ERPs don’t have a simple interface and they can lack flexibility and nuance to handle tasks easily. What’s more, 37 percent of companies find it difficult for their staff to adapt to processes using a new ERP. Instead, organizations may find more efficiency with third-party solutions that integrate with their existing ERPs.
“CEOs must be clear and express the value and necessity of the new ERP and provide employees with support to make the transition.”
Employees will resist the change
Simply put, if employees are comfortable with the process that’s already in place, making any adjustment can pose a challenge — even if that change means improvement. CEOs must be clear and express the value and necessity of the new ERP and provide employees with support to make the transition. There will be a learning curve that may require additional training and extra time to complete projects as employees adjust to the new system.
Customizing your ERP can create more headaches
A 2017 survey found that 88 percent of companies end up customizing their ERP to some extent. Even with all of that investment, additional time is needed to undertake these customizations. Moreover, while these customizations may work in the short term, in the long term they can create headaches. Customization within your ERP system can be difficult to upgrade and comply with ever-changing industry best practices. In addition, it adds complexity when businesses do choose to integrate third-party software to help streamline specific tasks, making an initially “seamless” integration anything but.
ERPs are not one-time investments
The average lifespan of an ERP is about seven to ten years, so companies will repeatedly need to make the time and investment to ensure its ERP is capable of handling business objectives on an ongoing basis. ERPs require continual IT support and maintenance to support each user of the system, posing an added strain on a company’s IT department. Additionally, as your ERP system increases in complexity to grow along with your business, you may require the use of outside consultants and ERP specialists to overcome new challenges.
ERPs don’t provide easy data access and analysis
Even though ERPs are designed to collect and store data for businesses, more than 60 percent of organizations suffer from poor visibility of data and poor integration in their ERP systems. Getting access to this information is necessary to make smart business decisions and stay ahead of the competition. Instead of revamping the ERP entirely, CEOs should consider looking for third-party solutions that will integrate with their ERPs to provide top-of-the-line reporting tools and insight dashboards.
An ERP system can be a powerful tool. If you’re tackling this project, it’s most likely because your business is at a critical growth stage. You need to ensure you have a centralized, secure way to manage your back-office systems and your data, but it is important to keep an ERP’s limitations in mind as well. Do your research to eliminate potential headaches. Reducing inefficiencies are a top priority for any company, but if your ERP implementation isn’t done strategically, you can face more obstacles down the road.