The 5 Biggest Pitfalls for Implementing an ERP

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One of the things we typically don’t like to discuss is failure: we prefer to focus on how we can make situations better and more successful.

However, the reality of what our team does in working with ERP software is that there is a chance of failure. In fact, IT analysts have said that over 60% of all software implementations fail, and some people in the industry say it’s closer to 70% or 80%.

While most people don’t like to talk about failures, we think it is important that businesses understand the risk involved in implementing not only ERP software, but also human capital management HR software, supply chain management software, or customer relationship management (CRM) software.

At ERP Advisors, we are fortunate enough to have a very high success rate of implementations, but that doesn’t mean we never run into problems. On our most recent episode of the ERP Advisor Conference Call Series, we discussed the 5 biggest pitfalls that occur during an ERP Implementation and how to avoid them. You can download and listen to the podcast above, or find a summary of the call below.

1. You don’t know what you’re implementing.

A lot of discussions about software revolve around functionality and, specifically, what the functionality is that you’re looking to buy. As soon as you dive into the marketplace though, and begin looking at these tools, it’s easy to lose the viewpoint of what the overall (big picture) solution is that you’re looking to implement. For example, if you’re a growing organization that has multiple entities throughout the country and are looking to go international, you start looking for a software application to support international growth. So you choose a software application that supports a variety of currencies, tax scenarios, translations and other international requirements. But while focusing on that one aspect may help your accountants become extremely productive, you may have lost sight of the rest of the organization.


 

The key here is that when implementing software applications, you are basically implementing tools to help your people and your employees be more productive.

Therefore, you must keep this in mind and look at the overall picture when selecting and implementing a software application. It’s really important to understand what it is you’re implementing and for whom.

2. You picked the wrong application

Many times we see businesses start talking to sales people or even customers of a certain application and dive straight into the sales and buying process because — on paper — it appears that this particular solution makes the most sense. What happens though, is that sometimes the manager in charge of the purchase didn’t understand the business requirements thoroughly enough, and made the decision based on superficial factors like what other people said worked for their company or what they heard that a competitor was using.

You must base your selection off of needs specific to your company, the direction that the business is going, and what your operational requirements currently are.

One way to help ensure that you choose the right application is to push your salesperson to show you exactly how the software application addresses your specific business requirements so you can evaluate the features most relevant to you rather than just the features the salesperson feels are most popular. You can also require a clause in your contract that states that the solution the software company delivers must meet your requirements precisely.

Implementing the wrong solution will always end in failure.

3. You didn’t have the right implementation vendor or partner to help with the implementation process

We’ve addressed the importance of the selection process but once you select the right application, you must have a good implementation partner or vendor to help with the implementation. It may sound obvious, but the firm you partner with must have significant experience with the application that you have selected. Believe it or not, we have seen many instances where a company chose the correct software application but the wrong implementation person or team and the process obviously suffered for it.

Don’t be afraid to dig deep with a person or company to find out exactly what capabilities they have. If you choose an implementation partner and discover that they don’t have the ability to handle the project, you absolutely must cut bait and find someone who can. It’s also helpful to forge a personal relationship with your vendor, they are someone you are going to be calling at 2:00 am if the project goes bad, so they must be willing to take your calls. If this doesn’t sound like the person you’re talking to about your project, there’s a good chance that they should not be helping you through the implementation.

We feel very strongly about having a good, strong implementation partner and the difference they can make in the process.

4. You didn’t staff appropriately from the client side

You have now chosen an application that is right for your business and your needs, you have chosen an implementation partner that is going to work for you and the application, but now you need subject matter experts to help the consultant understand your different business processes.

However, if your subject matter experts — your key employees — are busy dealing with supply chain issues, the latest round of financing, or a new acquisition, you’re basically paying the consultant to sit around and wait until your employees have time to devote to the project. Ultimately, they could be waiting a long time.

Your subject matter experts have a day job, and it can be tricky to get the people you need available to help. One thing you can do to mitigate this problem is by backfilling people, whether it’s hiring a temp or letting a junior person step up to handle some of the regular responsibilities your subject matter expert handles on a daily basis, freeing them to help you with the software application implementation process.

Making sure your people have time available for the implementation is critical to the success of your project.

5. Data Migration, Integrations, and Customizations

When we start the process of selecting and implementing an ERP software with our clients, one of the first things we discuss with them is data migration, because this can be a huge hurdle in the implementation process. In a lot of ways, this is really where the rubber meets the road because a properly selected and perfectly implemented software suite is useless until all the legacy data from the old system can be successfully brought over into the new system. This includes all your core data, as well as any open transactions, employee, customer/vendor lists, historical data, contracts, etc.

Often times we have found this data has to be cleaned up prior to migration, which can take a long time and ultimately stall the project. Again, it’s important to think of these potential issues beforehand and make sure that you have the right people available to work on them if or when they come up.

Another area that can create problems is in how your existing system works with other tools/applications that your organization depends on and how those integrations will be replaced when the new software goes live. This is, again, something to think about before even selecting the software. If there are specific processes or data formats supported in the old system that need to be replicated by the new system it is important to be aware of these ahead of time.

A third common source of issues is the need for customization. If your chosen software doesn’t natively support the needs of all your business teams, you might have to build custom functionality to address those requirements. Yes, we are repeating ourselves at this point, but you don’t want to get halfway through the implementation before you realize you need to pay for additional customizations.

Throughout our years of experience, we have seen many implementations fail. This typically happens because companies don’t know what they are implementing, they picked the wrong application, they don’t have the right implementation partner, they didn’t staff the project appropriately, and they come across issues with data migration, integrations, and customizations. By being aware of and possibly avoiding these common mistakes, hopefully, your implementation can be a success. Next week, we will discuss 2 additional reasons why implementations fail that are a little less common.

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