7 Reasons Why ERP Systems Fall short
ERP is generally the single costliest software acquisition a company can ever make, sometimes more expensive than all of the standalone bundles a company may have combined. It’s not only traditionally expensive, but firms rely completely upon the idea. So why do many find it hard to implement such a system, or maybe limp along for several years applying partial functionality before walking away from it?
During the last decade, We’ve interviewed dozens of companies which may have moved away from existing ERP systems. While the reasons change, they can be grouped into eight categories:
No sponsorship in the top
It’s all adequately the production manager wanting (and getting authorization for) the latest manufacturing system. Still, if it is far from driven from the top straight down, then he’s fighting the losing battle. He will not need the authority to infuse change in other departments, and in larger organizations, he might not have relationships with the appropriate managers of each department impacted.
All key staff at the top level need to be within agreement when selecting a program, and this desire for change needs to make its way very noticeably down the chain associated with the command. Internal politics may also play a part here – individuals sometimes have their own concealed schedules, and because of inter-departmental conflicts, decisions detrimental to the company’s good are often made.
The worry factor
Staff can be afraid of change, seeing improvement as a possible threat to their employment. Companies are often picky on the number of staff these people send for training. Individuals also move on, taking the knowledge that the company offers paid for them to learn, and maybe leaving behind a much less experienced staff.
These factors play a massive part in the failure or success of a system. People naturally will take the easiest route to finish a task, which will be how they presently know. More often than not, executing a new ERP program does not equal mass redundancies. Still, it does ensure that an organization can grow without needing much more human resources.
Knowledge is energy; staff must be educated about the positives the system brings to them, their company, and ultimately their customers. Make them conscious of how the system will confidently affect their position.
Personalize it! Fear of often the unknown can be replaced through anticipation of how it could enhance their working experience. I thought one client told my family that one of the people most resistant to change was now the main advocate after discovering how their new process would make his life less complicated.
Remember also that while a head unit administrator may need to understand the degree and breadth of the process, many staff will only understand their job-specific regions of it, so don’t shutter them with science.
It’s not just simply I. T.
Many foolishly believe ERP is only an I. T. challenge rather than an enterprise tactic – it spans virtually any department within a company, impacts decisions and is often the infrastructure upon which the business is placed.
So why do many businesses under-resource their selection or implementation process, either the number of staff or their particular experience and understanding of the business enterprise? You need to ensure that the people in charge of it don’t just know me. T, but understand how the business enterprise needs to run so they can enjoy how the software has to perform to support the business operations.
An engine can still work when it’s poorly tuned, yet it’ll drink fuel and suffer from poor performance: the same can be said for an improperly implemented ERP system. As opposed to an off-the-shelf package deal, e. g., MS Business office, no two ERP sets up are the same, as the companies they are there to serve should work in their one-of-a-kind way.
Instead, companies are often encouraged down the consultancy click to customize the system beyond all of the recognition but pass the property of the problem to an outside consultant that may not, in the end, understand their business.
This specifically relates to our 1st point; as well as having sponsorship from the top, the system also needs to be championed from within, as opposed to wholly trusting consultants, which often do not have a true understanding of your organization and only their commercial things to consider at heart. Employ a professional to assist with specifics like server implementation or info migration, but the overall job should be managed from within.
Any core internal team gift wrapping all affected departments must be set up to understand the work. Many believe they have to write specs spanning reams of the document, but this causes customization that may not often be needed. A simple ‘top level’ bullet list of core features is required.
The butt wagging the dog
This problem resembles poor implementation but takes place when the wrong solution has been integrated with the belief that it may be somehow shoehorned to meet you’re able to send needs. There is often no chance out of this situation other than to help bite the bullet, in addition, to write off the cost, as well as spend even more on high-priced customization that ensures that you might pay over the odds to get maintenance and further modifications having every new future let go for years to come.
A good ERP system will be designed to cater to most of its users with small or no customization. As mentioned above, you tend to overcomplicate your original requirement brief. If you match up an ERP system not having preconceptions, you may be pleasantly surprised by the solution they already have available.
‘It’s an EX ERP process, sir. ‘
Over the years, they have been common to see companies performed given industry perform mergers and acquisitions of very similar organizations. Invariably there will be casualties, and if a much larger fish acquire your ERP dealer from the same pond in that case you may get a letter saying the fact that the product is no longer being formulated, followed by one month/years in the future saying it’s no longer held at all.
While the system will not stop working overnight, you are hanging your entire company for a ‘mission-critical’ system that will bring your enterprise to a standstill if it doesn’t work. According to a University connected with a Texas study, where organizations suffer catastrophic data loss, 94% will not be trading a year later, departing just 6% standing.
Although your data is still there in this particular scenario, it’s no good to you personally if you cannot use it. If you are around the receiving end of a ‘discontinued product’ letter, then security alarm bells should be ringing! You can no longer be able to obtain assistance with writing new reports as well as customizing the product, so your method will no longer be adaptable to be able to business model changes.
The rusted handcuffs
Discontinuation is not the only problem with age; obsolescence applies to your ERP and the OS and hardware it runs in. Even in 2011, I regularly talk to companies running 2, UNIX or AS/400 devices that have been live for twenty years or more. But technology progresses.
Windows has become the standard OS IN THIS HANDSET, with PCs falling in cost and much more staff knowing how to apply them. So nobody wants to fork out maintenance on the bespoke appliance that it is increasingly difficult to find replacement parts for or pay the ever-shrinking number of seasoned people to support legacy OS IN THIS HANDSET, network or application program.
One client that was recently running an AS/400 process ended up buying a motherboard from one of their clients managing the same hardware platform because they couldn’t find a supplier along with a replacement.
Often when a corporation contacts their vendor, the expense to upgrade the software may be prohibitively expensive and will also demand a complete hardware infrastructure at the top, making the pill doubly nasty to swallow.
Ensure that no matter which system you select is based on the latest application development program, such as Microsoft. NET has a well-supported and industry-standard database structure such as SQL. By doing so, you will future-proof your investment and ensure that you can quickly interface to your data from their internal systems. If you must do much (or any), interfacing asks your vendor if they have a software growth kit (SDK) or if they have to handle custom growth, as this could considerably improve the overall cost.
Most of these problems are difficult to avoid without having a crystal ball, but advised is forearmed. The old pensée of ‘the bigger they can be, the harder they fall’ still rings true below, with a failed implementation not simply bringing financial burden but often leaving your business in a worse shape than it had been before.
Before you even begin to select a suitable system, get the house in order. Assign your team and ensure they have worn out an agreement that a new or even replacement ERP system is the way forward. Select a system that best fits your company on a well-supported platform; however, go in with an open eye and a simple specification. Crack the implementation into workable chunks spread across your team, and frequently meet for progress updates. Along with any large-scale implementation, you will see challenges along the way. Still, with the best mindset, your company will make the actual transition with relative relief and avoid becoming another figure of failure.