12 Common ERP Mistakes & How To Avoid Them

In today's world, we have many choices when choosing Enterprise resource planning solution. From industry based solution to on premises to cloud based solutions we have long list available to choose from. We can select ERP system which is best suited to company's business process.

There are many ERP systems available in the market such as MS Dynamics AX, SAP, Oracle and Companies need to make right choices in choosing right ERP for their business.

Here in this discussion, we are highlighting most common mistakes company's do while choosing or implementing the ERP system.

Requirement gathering is one of the most critical phases of the project as in this phase the actual needs of the project/users are identified. It is very important to spend enough time on analyzing the business processes as a part of requirement gathering. If requirements gather properly, it could lead to process improvement and redesigning of the existing processes during implementation. Also it is a very good chance to eliminate the unwanted processes which were problematic earlier.

Business-critical issues must be identified and addressed before they are simply moved onto a new platform. Many companies fail to do so. Either they don't spent enough time identifying what they want or fail to identify issues and pain points at the beginning which could lead to project failure.

Properly investigating ERP providers requires a lot of time but you must remember that this is time well spent as the good ERP vendor you choose, the better you chances of success. Unfortunately, many organizations do not spent enough time in researching ERP vendors and this cause more problems down the road. It is important to ask the ERP vendor for references of different organizations that are using same vendor's service. You can contact those organizations to discuss the success, drawbacks and challenges they have experienced with the vendor. Additionally you should organize and interview with different vendors and ask specific questions about the features they can implement and the success rate they have had with introducing and ERP solution to other organization in your industry sector. You should also come up with some scenarios of potential challenges and ask the vendor how they would go about handling these challenges.

It is very important to communicate organization's objectives and expectation from implementation with vendors, this will avoid any unexpected surprises during the projects

In addition to conducting thorough research on each ERP provides, it is important to be careful of being sold by the marketing team of a specific vendor. Some of the vendors will place you in touch with their sales team that will fill you with a lot of hype about their product. Then when the implementation is complete and the solution is introduced, you learn about the drawbacks in the solution that could have negatively impact daily business operations.

One of the prominent reasons behind project failure is improper estimationof time and cost of implementation. Estimation time should be realistic and not just based on customer's wish or vendor claim. It should always consider all the relevant factors such as end objectives, scope of project, team capacity etc.

It is always important to identify priorities during implementation so that priority tasks can be allocated among team members so that they should have clear vision on the work they need to perform. This should help them focus on the task and work faster. Project Managers/ Leads should priorities the tasks and issue resolution process so that tasks can be accomplished and problem should be resolved in faster time without ambiguity. Failure to identity priorities is one of the common mistakes happen in ERP implementations.

It is very crucial to involve employees from various departments such as Finance, Operations, Manufacturing, Human resource etc. in the decision making process. This will ensure implementation of the right solution in a smooth way. Involvement of the employees who will be using system the most in the planning process will ensure the timely completion of the project as they give correct requirements and proposed what they want for their respective areas. Many organizations focus their time and effort on gaining approval from leadership executives rather than engaging their employees in the decision making process and this is not good for the project.

It is very important that stakeholders of the project should communicate effectively. Lack of communication among the different stakeholders such as developers and consultants, Consultants and business users, project manager and project team could lead to adverse impact on the quality and time of the project. It is always good to have communication plan for all the phases of the project so that communication between different stakeholders will be managed properly. It is always good to set up a small team with individuals from different departments who can communicate and work well with each other and keep them up to date with the details of the project so that they can pass on the information to their respective departments.

It is very important to have top management support to implementation team so that they can have sufficient authority in decision making process related to project. Structuring the implementation team and assigning right resources is very crucial for the ERP projects. Successful team consist of people with right mindset and have enough decision making power to get the job done. Failure to achieve above leads to project delay or failure.

Lack of top management interests is another reason for most ERP projects failure. Top management should always involve in important decision making during ERP implementation projects. There are certain key decisionswill be taken exclusively by top management, for example fund allocation for the project, so their role is very crucial. Top management support is always required for implementation team to succeed. No one expects them to know every single details regarding project but they should be aware of where the project stands, bottlenecks in the project.

Change management is very crucial when implementing a new ERP solution. Typical ERP projects facilitate massive change in organizations that includes changing of day to day processes or eliminating certain processes in total. These changes impact the culture of your company and without careful control, communication plans and workshops, there will be an adverse end user reaction to ERP adoption. Top managements, Managers and employees should effectively manage change failing which business transformation through ERP will not take place. It is necessary to identify process changes early in the implementation project; this will ensure that end users would realize the changes that will occur upon go-live. End-user training must consider not only the transactional aspects of a user's role but also the changing interaction with other users. By delivering proper training, users are likely to accept the new system at a faster pace and with greater success.

It is always important to perform thorough analysis on the amount of customizations required. Highly customized systems will generate higher cost, not only during implementation but during every upgrade as well. Unique requirement needs to be analyzed and figure out if those requirements can be eliminate or could be accommodate in the standard business processed available in the ERP to reduce the cost. Many organizations go for unwanted customizations as they don't want to mainstream their unique requirements due to lack of vision.Companies should take advantage of standard processes which have tried and tested in many companies as many business processes are virtually same like procurement, invoicing etc. ERP is built so as to have common business process all across. If business users think the customization is important then they should be able to prove its importance and how it is useful in coming future. Also how it is different from already existing process in ERP.

Implementing a new system requires extensive and effective training for the users. Users need sufficient time to get familiar with the system as they are going to use it on daily basis. Many organizations don't give sufficient time for their employees to get accustomed to the new system or force them to use the system without giving sufficient knowledge. As training is very critical part of the project, this can be performed by the ERP vendor, or by the independent firms as per organization's decision but it has to be done in right way.

Implementing an ERP system takes time, but the work doesn't stop once implementation is over. It is very important to setup strong support team who know in and out of the solution implemented. Typically people who were involved in implementation of ERP solution should handle the support as they are well aware of the issues and the solutions. Businesses should implement a maintenance strategy to maintain and improve the ERP system on a regular basis so it doesn't become outdated or obsolete.Outdated ERP systems can put companies at risk hence having a set plan will ensure the ERP system is always running smoothly and is up-to-date with the latest applications.

An ERP solution introduced correctly will be a cost saver for the business and it helps organization to run efficiently. If we keep educating ourselves on the mistakes to avoid when implementing ERP, will ensure new system will be a successful venture that benefit organization for long time.

Author Bio: In this article, Microsoft Dynamics AX Company has listed out 12 most common ERP mistakes we make and how to avoid them. Have you been a victim of any of these? Let us know, we love to hear from you.