5 Reasons Why ERP Implementation Fails and How to Avoid Them

The use of enterprise resource planning (ERP) systems is widely known for its benefits, such as streamlined processes and increased productivity. It is critical to remember, however, that installing an ERP system comes with risks. Improper execution can lead to not only loss of capital, but also time and labor.

That said, do not be discouraged from implementing an ERP solution for your company. By learning more about the problems and issues others face in implementing ERP, a company can mitigate the risks and help assure a successful system change. To get started, here are some of the common reasons why ERP implementation fails.

Ineffective Management

There’s a common misconception that implementing an ERP system is the responsibility of the IT department alone. In reality, a successful installation is highly reliant on a specially assembled project team. It typically consists of a project manager, key users, and IT staff.

The ERP project team should not only have the skills, knowledge, and connections for the job, but also the dedication for it. After all, implementing an ERP system can take years to accomplish. It becomes easy to lose sight of the goal and fall into project purgatory.

Hence, the ERP project team must be committed to the project. This applies to top management and other stakeholders as well. If there are no employees that have the skillset for such a project, consider hiring externally.

Failure to Manage Expectations

Numerous companies approach ERP execution with a high level of enthusiasm and several expectations. An issue arises when those expectations are mismanaged. After all, installing an ERP system is not the same as installing simple software. It is a massive undertaking that requires careful planning and lots of research.

For example, one common problem companies experience is the uncertainty on whether an ERP implementation is successful or not. Hence, the ERP project team must set clear goals and develop metrics for measuring them at the very beginning of the project.

Companies also need to be realistic about timelines and budgeting. As such, the need for extensive research, clear plans, and guided direction become more apparent to ensure success.

Not Understanding Production Processes

Another common misconception some people have is that an ERP system is the answer to all company issues. That could not be further from the truth. An ERP system is a highly effective tool that, first and foremost, needs to be implemented properly to function well. To achieve that, companies must first learn where they are going to use this tool.

Thus, it is paramount for the designated ERP project team to have a solid grasp of the in’s and out’s of company operations. They need to zero in on pain points and target areas for improvement. Most importantly, they need to answer if ERP can address that issue and how.

This task is difficult to accomplish by themselves, so the input of company personnel is important. Conduct a meeting with representatives from each department, discuss their operations, and take a closer look into their processes. In this way, the ERP project team can more effectively determine which ERP system to go for and how it could be modified to better address company needs.

Reluctance to Embrace System Change

A technological upgrade is a welcome change for many people, but that is not always the case for companies. Often, employees get used to a certain manner of doing things. When presented with a new method, some of them are reluctant to change. It is a common problem that companies face when introducing the ERP system and its modules to personnel.

One of the most effective ways to address this issue is to get the employees involved. Inform the employees of the upcoming ERP software, and give them updates of the project through company-wide emails or announcements.

Most importantly, prepare them for the upcoming changes. Hold workshops, webinars, and lectures. Hand out easy-to-understand reference materials. Lastly, give them time to get used to the program after the system launch. If done right, employees—even those reluctant at first—will eventually realize that using ERP is more efficient than their previous working processes.

Underestimating Data Migration

Data migration is often the last thing on people’s minds when implementing ERP. However, this is one of the most critical steps to address in ensuring a successful project.

Before transferring the data from the old system to the new one, they need to be reviewed first. This is because the data that will be moved to the new ERP centralized storage is only as good as it was in the old system. Erroneous figures, missing data, duplicate info, and other errors will not change even when moved.

Hence, the company needs to check this information first and address these issues before transferring them to their new home. In this manner, employees can use the new system with no worries and avoid setbacks.

Overall, ERP implementation is a complex and risky project, but companies do not have to worry about this alone. Reliable systems providers will help and guide them throughout the process while ensuring that the program they are purchasing fits the company’s needs best.

If you are in the market for ERP software, ANSI is here to help you find the best match. In its 30 years of operation, ANSI has gained the experience and gathered the resources needed to level up the operations of numerous businesses—both in and beyond the Philippines. For more information, contact us today and take the step to transform your company through ERP.

Interested? Send us an email.