[vc_row][vc_column][vc_column_text]In today's post, we will present a summary of the article published by Jennifer Lonoff Schiff in IDG's CIO magazine, which reports 11 common mistakes in the ERP system selection process and some ways to avoid them. Check out the article.
When should you invest in ERP?
Currently, executives who choose to implement an ERP system in their companies have several options, ranging from on-premise systems to cloud-based ones. Therefore, the article from... CIO.com He asked ERP systems experts to identify the biggest mistakes executives make when choosing and implementing a management system. These experts also suggested how to avoid these mistakes.
1. Failure to carefully gather requirements.
“It’s common to simply transform an existing business into an ERP system,” says Ed Feartherston, vice president and principal architect at Cloud Technology Partners, a consulting firm.
"While this is understandable from a conceptual standpoint, you should dedicate time and effort to analyzing current processes as part of gathering ERP requirements. Implementing a new ERP system is an excellent opportunity to identify, improve, and redesign your business processes. Automating a bad process only makes a bad process run faster."
Similarly, “many companies fail to identify crucial software usage points and map critical processes before initiating migration to a new ERP solution,” says Brian Berns, CEO of Knoa Software. “Critical business issues must be identified and addressed before deployment so that necessary adjustments can be made to outdated, inefficient, and complex processes before they are simply moved to a new platform.”
2. Not including end users in the decision-making process.
“When implementing an ERP system, many organizations focus their time and effort on executive approval, when they should be involving the key employees who will be using the system,” argues Kevin Beasley, CIO of VAI, an ERP software company.
“It’s crucial to involve employees, not just from IT, but from across the organization, from finance, operations, manufacturing, inventory, etc.,” he says. “Engaging stakeholders at every stage of the decision-making process will ensure that everyone is committed to finding and implementing the right solution in the best possible way.”
3. Failure to adequately budget for technology resources.
“Often, leaders underestimate the expenses involved in an implementation, which includes maintenance and the level of talent required to achieve project success,” says Tim Webb, Director of Corporate Technology Services at Robert Half Technology, a technology resources provider. “Organizations are trying to accomplish more with less, and this results in failed implementations. Therefore, it’s necessary to take the time to create an adequate budget, taking into account the talent driving the implementation, so that the company doesn’t face problems or surprises in the future.”
4. Not considering the pros and cons of on-premise ERP versus cloud-based ERP.
Before deciding between an on-premise and a cloud-based ERP solution, “companies should evaluate several factors,” says Mark Canes, president of Blue Link, an ERP accounting and inventory software provider. “For example, a cloud deployment requires adequate internet connectivity, ‘subscription’ type payments, and includes benefits such as catering to employees working remotely. On the other hand, an on-premise deployment requires a dedicated IT team, up-to-date servers and in-house hardware, plus a high initial investment, which is suitable for those who want to host the software on their own servers.”
The analysis for choosing the right solution should be done according to the reality and needs of each company.
“With the acquisition of ‘software as a service,’ which is rapidly becoming the predominant platform in new ERP implementations, SaaS can be the perfect solution for organizations that have had difficult implementations or struggled to support their previous investments in on-premise ERP,” says Nathan Frey, partner at Information Services Group, a technology research and consulting firm. “While SaaS offers many benefits, customers need to understand the new organizational challenges with this new model.”
SaaS ERP solutions cannot be customized, and users are "forced" to use the system as it was designed. Choosing a flexible and adaptable system is very important for integrations to work well and for processes not to be "rigid"."The major exception to this rule is Oracle NetSuite, which guarantees users a high degree of customization through a suite of native customization, integration, and development tools." Translator's Note[dt_quote][/vc_column][/vc_row][vc_row][vc_column][vc_empty_space][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Furthermore, it is essential that the SaaS solution automatically migrates its versions, as these additional version migration costs can compromise system maintenance in the medium and long term, in addition to making the TCO (Total Cost of Ownership) of the implemented solutions unfeasible.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
5. Not including a business segment-specific solution in the ERP decision-making process.
When choosing an ERP solution, executives often overlook the fact that there are very good small software companies that serve specific sectors with specialized needs, such as pharmaceutical distribution. These specialized solution providers “can offer more industry-specific software customization features, which may be better suited to your business,” says Canes.
These specific solutions don't necessarily replace an ERP; they can be integrated into the project to generate more value for business processes and facilitate the work of users.
6. Being dazzled by resources
“Features are important, but they aren’t everything,” notes Nathan Brown, CTO of EVS. “Often, an organization selects the ERP that has the most extensive feature matrix.” Instead, companies should consider the solution’s “track record, customization, flexibility, and integration capabilities,” as well as customer support, and how well the solution addresses the organization’s needs and requirements.
7. Implement the system all at once.
“ERP systems are complex, and it’s not possible to determine all implementation requirements in advance. After implementing the system, users are trained, and then the system goes live. This is the traditional waterfall implementation model, and it doesn’t work,” says Sunil Pande, CEO of VersAccounts, a cloud-based ERP platform. “Instead, a more agile approach needs to be taken, where implementation is done in small steps, with end-user involvement at each stage to determine requirements, test, find gaps, and then repeat the process until full implementation.”
Often, a phased implementation, with well-defined processes and resources, is an excellent option to reduce risks and achieve objectives more quickly.
8. Ignoring change management
“Change management is a requirement when implementing a new ERP solution,” says Jeff Carr, founder and CEO of Ultra Consultants, an independent consulting firm specializing in enterprise research and solutions serving the manufacturing and distribution industries. “The ability to effectively manage change may be the most important skill that executives, managers, and employees need to master. Business transformations through a management system will not occur without effectively managing change in the three main organizational areas: people, processes, and technology.”
“Too often, organizations look only to technology to unify and simplify business operations,” says Akhilesh Tiwari, Global Director of Enterprise Application Services at Tata Consultancy Services. “While processes and systems require in-depth analysis, the people factor needs just as much care and strategic planning as the rest.”
Even cloud-based ERP solutions require change management. “SaaS solutions bring the promise of configurable business processes and more intuitive user interfaces than previous ERP software offerings,” says Frey. “This often leads organizations to assume that organizational change management and training are less important for SaaS projects. To avoid rework and ensure end users fully understand the changes that will occur at the time of ERP launch, organizations should identify the necessary process changes early in the implementation project,” recommends Frey. “Furthermore, end-user training should consider not only the transactional aspects of a user's role, but also interaction with other users and with systems that are not part of the new solution. With training, users are likely to accept the new system at a faster pace and with greater success.”
9. Not investing in and supporting the implementation team.
“Structuring the internal implementation team and giving them the time and resources needed to execute the implementation and associated business transformation is one of the most important steps in an ERP project,” explains Carr. “A successful team requires the right people, with executive power and decision-making power, to do the work. This often means redistributing day-to-day responsibilities.” This can be the difference between a successful turnaround and a failed one.
10. Having communication failures between departments.
To avoid this problem, “create a project communication plan for all phases,” suggests Dave Goossens, executive vice president of professional services at Unit4, an ERP provider. “It’s important to assemble a small core team, composed of people from different departments, who communicate and work well together and who have influence in the business areas most affected by the new solution. Then, make sure everyone involved is always up-to-date on the project's progress and, in turn, keep everyone in the affected areas updated.”
11. Not having a maintenance plan.
“Implementing an ERP system takes time, but the work hardly stops once the system is successfully installed,” says Beasley. “Companies should implement a maintenance strategy to ensure employees are aligned with what needs to be done to maintain and improve the ERP system regularly so it doesn’t become outdated and/or obsolete. Outdated ERP systems can put companies at risk due to security issues and failures in their business processes,” he explains. “Having a defined plan and designating who in the company is responsible for the project and maintenance at any given time will ensure the ERP system is always running smoothly and is up-to-date with the latest applications.”
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