Even though the ERP system has been proven to be an efficient method of managing one’s business, any system is only as good as the people who operate it. A shocking 75% of all ERP implementation is a failure due to lack of knowledge or training and budgetary constraints.
Benjamin Franklin said, “If you fail to plan, you are planning to fail.” These words ring true in the business environment in many aspects and this is no different.
No matter which industry you specialise in, “proper preparation prevents poor performance”. This saying is well known as the “5 P’s of success” originally created by the British army. How does this link to the failure of implantation of an ERP project into a business? Research, information, training and a high standard of management are essential to the success of this system in a business.
There are obviously a dozen or more reasons why ERP implementation might fail, but below are a few valid points to take into consideration.
Poor Planning in the Initial Implementation Phase
Too many businesses rush into the process of incorporating this complex system into their existing business model. The truth is that Enterprise Resource Planning is a large and complex system. It takes time, dedicated training and adequate management to flourish as a proficient tool within your business. Time devotion to this phase is paramount.
How could something prosper in a business when nobody really knows how to operate it confidently? The relevant trained employee/s should know without any doubt that the results of the data collected is 100% accurate with utmost certainty.
Should this phase be tended too with enough diligence, ERP could prove to be an invaluable aid tool to your business.
Lack of Adaptability
In all areas of life, change is never easy, but necessary for growth. A lack of adaptability often prevents growth and tends to have an adverse effect on productivity. The same applies when it comes to introducing new systems into a business. The more adaptable your business model and staff are, the greater your chances of encouraging growth.
In an ever-changing and extremely competitive business world, flexibility is likely to be one of the key factors to being a step above the rest.
Ask yourself how trainable and adaptable your staff are. How dependant is your daily operation on your current business management system, should you have one? Can the business afford the time needed to dedicate to training? These are a few questions that need to be answered with a positive outcome prior to committing to an ERP project.
Poor Data Quality
Should the ERP system be integrated into an existing operation, the quality of the existing data would be paramount. ERP needs to be well equipped with data to enable it to process information like sales trends, customer data, staff efficiency and the general day to day operations of the existing business model.
Due to the nature of ERP, this data would need to be of a high quality to fit into ERP to ensure accuracy. The data collected by this system is of no worth if the input is not accurate. ERP thrives on the quality of the data used to make it efficient.
A consideration in this area would be to plan the transfer of the data from the current system being used, to the ERP system. Loss of data would cause a negative knock-on effect, resulting in the transfer from the current system to ERP obsolete until sufficient data could be accumulated. You might as well not waste any time on capturing data in any specific department if the data is not good quality, accurate and complete.
There is no use in starting to build a puzzle if you know that pieces are missing, and the full picture will never be experienced.
Lack of IT Support
In-house IT support is a huge advantage to the ERP system. Though this is not mandatory, implementation into a business without an in-house IT department has proven to be costly and time consuming. Even in a case where an IT department exists within the organization, enough and specialized ERP training would be necessary to ensure proficient expodition of any repairs or updates that may be necessary from time to time.
Another option would be to hire prequalified staff who have already undergone training and have experience in ERP operation. Using external IT vendors would strain the organization in costs and efficiency in terms of call out times. This would still make more sense than an untrained employee stumbling around a problem for hours on end with insufficient knowledge and experience to deal with the challenge at hand.
Lack of Data Sharing Ability
One of, if not THE most integral aspect to the successful implementation of ERP into an organization is the ability and capability to share data in the supply chain. Without this the system can be rendered as useless. Keeping up to date with the latest updates and putting them into practice would determine whether this system will make or break your company. Difficulties in the sharing of data could cost time and funds and end up being more of a liability than an asset to an organization.
Customization add-ons and the migration from an older system to ERP may pose as a challenge in this aspect and would need careful attention in the beginning phases of implementation.
75% is an alarming number of failures of the implementation of ERP. All factors above considered, it is paramount that all of them be investigated and thought through thoroughly prior to the implementation of ERP into a business.
Has the right software been chosen? Has there been enough training offered to the right employees to optimize productivity? Does your current data match up to the standard? Do you have informed and capable support available? Is your system correctly customized to the specific business? Does the business have the capacity to carry the cost of such a system? These are all important things to consider before implementing ERP in a business.
The efficiency of this system has been proven for decades, but if not managed correctly, could have a negative effect on an otherwise stable business. On a positive note, if the answer to the above questions are yes, Enterprise Resource Planning software could revolutionize your business.