An ERP system lets an organization to establish a completely synchronized configuration that connects all the business processes together. It enables an enterprise in gaining an advantage over competitors by saving resources and responding to an ever-changing business environment. But Implementing a new enterprise resource planning (ERP) system can be a humbling challenge for any organization There are some risks that one needs to be considered before implementing an ERP system. Let us look at 8 major potential risks involved in ERP implementation as below.
1. Failure to Redesign Processes to Fit the Business software
There is a strong desire to fit the new ERP system to fit to the current process. But this is hardly the case. In fact, the right thing is to redesign your current processes to fit to an ERP system. Neither of the option is easy. It is very difficult in most businesses to change old or existing processes and to customize the ERP system to fit to current processes is a costly and time-consuming venture. Implementing a new ERP system is an opportunity to identify and improve/redesign your business processes. Automating a bad process only makes a bad process run faster. Employees who are using the same old system for the last 10 years may feel uncomfortable to change or even do not feel the need to change. They may feel they are already doing a fine job with the existing system. The people who are proficient in what they do and know the business inside-out may be the most reluctant to ERP deployment and implementation thinking it will not work.
2. Lack of Senior Management Support
Lack of senior management commitment is routinely listed as one of the major risk factors for ERP projects. Support of top management is crucial for accomplishing ERP project objectives. It is easy for senior managers to become a sponsor but very difficult to let go the crucial team member for pilot testing or superuser training. Here’s a scenario that many ERP project managers will recognize: the ERP project team has been selected and the project has kicked off. Two weeks later, just as you’re in the middle of initial workshops and training with the team and the implementation consultants, your Manager/MD/CEO pulls your QA team member off the project for two weeks to deal with a forthcoming regulatory audit.
3. Insufficient Training
Most ERP implementation comes with deadlines that need to meet. As a result, there is hardly enough time to train most people and give them skills they need to reach the satisfactory performance state. The training needs must be clearly described when there is a change from a legacy process to a new process. You need to explain how the old software for example, has upgraded and why you should adapt to it. Target audiences will not adapt the new system or process completely or quickly if you do not explain the advantages, specific steps, process cycle, reasons, etc. You must clearly tell them the difference between the old and new processes/system and the changes that took place.
4. No support from Key users to project activities
The unfortunate fact is the people who need to be trained as “Super Users”, are the same “key” people who run the business. The lack of people supporting to give time away from the desk, as they are too afraid to miss sales, delivery to customer. In some cases, there is no back up for their day job while busy in implementation and testing causing backlog of work, up-setting customers, and compounding stress as a result. This is one of the most common ERP implementation risk.
5. Unexpected project scope changes or lack of appropriate scope details leading to assumptions and misunderstandings
The scope, deliverables, or features on a project expand from what was originally set—without being accounted for any additional time or budget. It can affect any fixed scope project. Constant scope changes, whether increases or decreases, cause confusion among project team members. The primary focus of scope management is on defining and controlling what is and is not included in the project.
6. Change and Cultural Adoption
It is very easy to take for granted that all employees will accept that implementing an ERP system is ‘Good Thing’! It might not be the case when you talk to the employer who is using the same old system for the last 10 years and feels the things he/she is doing a fine job for business and customers with the old system. The people who know most in business and are very good at their job sometimes can be the biggest roadblock of new system deployment and can come up with all possible reasons why it will not work as they know the business inside out! Hence, imposing significant ERP implementation risk.
7. Unnecessary customization: replicating old practices
Very often there is a temptation to customize the new ERP system to mirror the functionality in the legacy system. This may diverge from the objectives set out in the scoping exercise and the need for customization should be reconciled with this and assessed as part of UAT. The key point here is that unnecessary complexity can be confusing, unproductive, and costly, certainly in the long term as software upgrades emerge.
8. Selectivity and relevance of migrated data and its accuracy
When implementing a new system there should be a very early review of the nature of data to be migrated from the old system. This process should allow a step to recognize the viability or non-viability of data to be imported, especially historic data. Too often a desire for ‘wholesale’ migration is present and this is not always necessary. Not only might the data that is several years old, can be inaccurate or ‘map’ poorly into the new system but invariably represents an unattractive return on investment of time and money.
Any of these above risks could potentially cause an implementation to fail. ERP implementation risk is a significant issue and one that deserves detailed analysis. A successful ERP implementation is significantly more than just exchanging one software program for another.
What ERP implementation risks have you encountered and how did you address them? Connect with us for knowing more of such potential risks involved in ERP implementation projects and the better ways of mitigating it effectively. You can reach to us at info@nicheBees.com for more details.