Planning, configuration and deployment for ERP is a whole process in itself. No wonder ERP implementation has a wide range of risks and challenges to offer.
In this post, you're going to read what Enterprise Resource Planning entails and some critical risks of ERP implementation.
ERPs help automate the process of business operation management and make them more streamlined. Your ERP system would need to be implemented according to your requirements to support the necessary functions.
Despite a simplified structure for ERP implementation, there could be several risks involved while trying to implement ERP solutions. Listed below are seven significant risks of ERP implementation:
A primary risk is the lack of something that is pivotal to the process of ERP implementation - integration. The key business process areas need to be well integrated during the implementation process or before it.
This involved assuring that all requirements are feasible to access with their functionalities. Also, redundant systems, features and tools should be eliminated to make the process more streamlined.
The usability of these distinct departments with each other is vital. While all these system functionalities and processes are available, are they feasible to use with each other? Are financial metrics easily communicated and updated? Premium software and tools for detailed process management and their proper integration pose a possible risk area.
Trying to cover for the risk of lack of integration involves some key areas. The ERP development team should prioritize these during implementation:
This is lack of expertise on either side - for managing the project and using the system on the other end. To begin with, ERP structuring and implementation is a complex project. If ideas from the assessment table to development, planning and implementation are not managed well, things could go sideways.
The experience of team members, the technology used, structuring, and the management of these dynamic departments is vital to ERP implementation success.
On the other hand, even if you were to succeed in this, unskilled end-users or those not skilled enough for the sophistication of what you have designed will never benefit to the fullest from the ERP system.
In this case, solutions to both end problems involve detailed assessment before getting started. Some things that could help avoid this risk include:
Learn about: Main components of ERP
This risk, in simple words, involves going for something too fancy or "apparently" useful, but not actually so. Often on the ideation table, experts present many plausible options that might not match your business processes.
Despite their high level of sophistication or complexity, while it might seem like a good idea to have these in your software design, you'd never end up using them.
A mismatch between how your ERP software has been developed/designed and your actual core business process will eventually defy the purpose of having an ERP system at all. True expertise on the implementation desk always recommends building around the focal business processes and not to match them!
To avoid the risk of an evident lack of synchronization between your business and ERP design, start from the assessment of focal process requirements.
While most ERP systems are developed to accommodate real-time monitoring and processing, some still fail to consider the dynamic requirements of the business and company as a whole. On one hand, ERPs are designed to make the jobs of ground-level employees streamlined; on the other, it is possible their traditional working methods clash with the same.
Considering changing practices in the business and the practices becomes vital to avoid running a risk of non-functionality. Awareness and prompt handling of this change management at all levels become another necessary aspect for ensuring that the system is understood and used the way it was intended.
Some solutions to avoid this risk can come from creating awareness on both development and user ends for understanding why developing the right ERP specifications can be beneficial.
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Integration of the right technology and prompt planning for it becomes extremely important while implementing ERP. It, thus, also becomes a risk factor that could compromise functionality, scope, complexity, and sophistication all at once.
This includes including new technologies that are scalable and integrable with existing systems. The size of the application to accommodate the required number of users and cross-platform functionality are a few more areas of concern during ERP implementation.
Great planning and technical expertise on the team can help combat this risk effectively.
Running over the budget with ERP projects is not very uncommon. Less detailed plans are often responsible for businesses to underestimate their final budget while retaining elaborate plans for their ERP systems. These result in significant cost overruns, which interfere with the financials of the company at many levels.
In addition to the cost of collaborating with ERP development consultants and vendors, the cost of training staff to bring these new systems to use is often not considered.
Overall, a lack of adequately researching requirements for the design and assessing it against the available budget leads to significantly blowing up the budget.
Research, assessment, and financial planning can be support measures to avoid running this ERP implementation and development risk.
Many roles within an ERP development project are non-specific or taken up by part-time employees. Some of these employees/managers could be unavailable mid-project or be unable to commit to a certain required role within the project.
Along with project officials, the ERP operators also might fit into this bracket. Retention of skilled professionals involved in the implementation process and post-implementation operations pose some risk in the long term.
To overcome these risks, we can propose certain solutions:
Despite the major risks involved in getting your ERP set up right, implementing ERP solutions for your business processes has significant benefits.
Some key benefits of prompt and robust ERP implementation include:
It is safe to say that the risks and benefits of ERP implementation can be juggled with by banking on the right ERP development company.
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Thus, implementing a robust ERP system for your business is a band-wagon that you simply cannot miss getting on.
To be able to focus on key business decisions, work processes, and other strenuous tasks at hand, a central and properly managed system can be the key to communication for employees at all levels.
The only key to success here is to ensure you rely only on the best ERP development to rise out of the tide of these risks of ERP implementation.
Need help in ERP implementation, contact our team of experts and learn how we can help your business.
ERP software implementation has a lot of risks and challenges. Learn about the 7 common ERP implementation risks and how to avoid them.