5 Mistakes to Avoid When Implementing an ERP
Regardless of who the user is, a properly implemented Enterprise Resource Planning (ERP) solution will quickly become the core of a business’ process. It is therefore vital that an ERP be integrated with the same attention other core operational operations receive. ERPs can be an expensive undertaking, a cost often compounded by a daunting investment of time and manpower. But even with a massive investment of resources, an ERP is not guaranteed to make life better. A poorly implemented ERP can result in delays of business processes, lowered productivity, instability and slower turnaround time. The key is doing it correctly.
If implemented correctly, an ERP will help propel your business forward with streamlined operations, increased productivity and enhanced efficiency. When the process is properly planned and the right software is chosen the ERP implementation process can be quick and easy, with an immediately evident return on your investment. The potential added value offered by a properly executed ERP has been largely responsible for the burgeoning interest in ERPs within the entrepreneurial community, a group naturally drawn to innovative electronic business platforms.
But while the entrepreneurial community may look on with eager acceptance there are still a number of factors that require consideration before the benefits can be reaped, and not all industries look past the barriers so readily. Fundamentally, resistance comes from a dearth of understanding. ERPs are, quite simply, tools. They are powerful tools, but a drill isn’t going to help you cook dinner. You have to know how to use the tool to make it effective. Likewise, a tool that is poorly assembled will be of little use. That’s why having trained professionals set up your business’ ERP is always a good idea.
The Two Types of ERP Implementation
ERP implementation comes in all shapes and sizes, but the two primary implementation methods for an ERP are on-site solutions (the traditional method) and SAAS implementation (the more recent method).
An onsite solution involves the installation of software on your company’s server and user devices. Unfortunately, by using this method many businesses lock themselves into a software prison of sorts, where their conditions are subpar, escape is expensive and waiting out the return on investment is strenuous. Because of this on premise prison effect, two thirds of businesses are using an outdated version of an ERP, or an ERP that’s dated to the point where support for it has been abandoned. Unfortunately for those two thirds of businesses, keeping an ERP up to date and in line with recent innovations is the key to maintaining a company’s competitive advantage. Thus it is essential that the ERP be implemented in a way that allows for updates and the integration of the latest developments.
The superior alternative to onsite ERP implementation is SAAS, or Software as a Service, implementation. This cloud-based solution results in dramatically reduced upfront costs because it takes the IT and hardware needs off of your shoulders, leaving them with the provider. While this does come with the addition of a subscription fee to supplement the expenses of the provider, this expense is dramatically lower than the cost of hosting the software for an end user thanks to economies of scale. Additionally, when your ERP is delivered as SaaS you needn’t worry about your system going out of date by the minute. Through active support and automatic updates your system receives upgrades and maintenance whenever needed.
While SaaS offers some clear benefits, both implementation types have lots of moving parts, which can lead to complications. However, being aware of the challenges you may face will help you select the right software and its implementation to a desirable end.
Five Common Risks of ERP Implementation
Risk 1: Questionable customization
Many companies go into the ERP implementation process with the understanding that they must either customize the software extensively or miss out on certain core processes. While this belief is reasonable it does not reflect the malleability of modern ERPs. We have talked about this at length before: hardcoded customizations are expensive, laborious processes that have the potential to compromise the stability of your system. The useful alternative is to instead opt for software that more tightly fits your needs, or opt for a configurable software that offers customization while limiting risk.
Risk 2: Poor training
While not a part of the physical implementation process, the training of staff is critical to the overall success of the software. For the vast majority of ERP implementations, you are bound to end up with a system that handles differently from your last system, leaving your staff with a new way of doing things. When users aren’t properly trained to use a new system they cannot take full advantage of its features. Inadequate training also leaves users disheartened by their inability to complete tasks and unwilling to use it. Ultimately, failing to educate your staff may leave you with a very expensive digital paper weight and a heel-turn back to Excel.
Risk 3: Saving money in all the wrong places
There’s no way around it: when you are implementing a large scale on premise ERP, investment in infrastructure is not negotiable. Often companies implementing a solution pay lofty prices for the software itself, but when it comes time to purchase the hardware on which it will run, they seem more than willing to cut corners. When your infrastructure is not updated to handle new software it can prevent optimal functionality. When your software is running sub-optimally you are not only wasting time, you are also fostering low morale among employees and a deteriorating level of customer satisfaction. So when it comes to infrastructure, you’ve got two primary choices for a successful implementation: either bite the bullet and invest in infrastructure that can handle your software, or choose a cloud based implementation and save yourself the hassle of managing and upgrading infrastructure all together.
Risk 4: Unrealistic expectations
Many ERP systems leave companies surprised by the money and time required for implementation. It’s important to understand the actual cost of implementation, especially in the case of traditional on-premises solutions. Customization to fit particular business purposes can add on to the sticker price of a system when we’re talking hardware.
The time and money required is significantly reduced for SaaS implementation, and in the case of Sandbox ERP solutions, the costs are reduced further by exchanging time-consuming hardcode customization for module based, intuitive, configuration.
Risk 5: Lacking an understanding of key features
People often go into their ERP purchase starry-eyed and confident that their new platform will meet all of their needs. Then they find out about functionality restrictions, poor performance and missing competencies. When your platform isn’t meeting expectations the impact can be devastating for your business and leaves little choice but to adjust to the new system and change your company’s established practices. While staff can adjust and recover, even successful transitions can be time-consuming.
Avoiding the Common ERP Problems
Implementing a new ERP system is one of the biggest moves your business can make. ERP solutions have changed the face of the goods and service marketplace, and despite the numerous challenges a business can face when deciding to take the plunge into the murky waters of ERP implementation, doing it correctly means significantly improved workflow, efficiency, and decision making. How a company implements their ERP, and the ERP which they choose, has a profound impact on whether the new system becomes a dream-come-true for efficiency, or a nightmare for your team.
We here at Pareto, having heard countless nightmare ERP implementation scenarios, set out to build a product which alleviated these risks. What we came up with was the pioneer Sandbox ERP system: the PBE3. By moving away from hardcoded, on premise ERP implementation and customization, PBE3 revolutionizes the way we look at ERP implementation and selection. Built with your core business processes in mind, PBE3 is tailored from the bottom up to fit your particular needs, eliminating any risk of getting a product that doesn’t meet your requirements. This shift away from hardcode customization additionally cuts down on implementation time and costs, is flexible and eliminates many of the common risks and downsides of ERP customization. Finally, by using delivering via the cloud, PBE3 lifts the weight of infrastructure costs from your shoulders.