Costing anywhere from hundreds of thousands of dollars to millions of dollars, and requiring hundreds of man hours to implement, enterprise resource planning (ERP) systems are huge investments of money, resources and time. And while a successful ERP implementation can help your organization streamline workflow and cut costs, a poorly planned and implemented ERP rollout can severely cost organizations, in terms of lost productivity and delays.
To help ensure your ERP implementation is a success, or at least to minimize potential problems, CIO.com surveyed dozens of ERP experts (IT executives, consultants and ERP vendors), asking them to describe the most common ERP-related mistakes organizations make and how to avoid or solve them. The 13 most commonly cited ERP mistakesand their fixes—appear below.
ERP Mistake #1: Poor planning . "Planning is absolutely necessary if you want your ERP project to succeed," says Erik Kaas, vice president of Product Management for Mid-Market ERP products at Sage. "You simply can't wing ERP."
Kevin Beasley, CIO of VAI, a provider of ERP software and solutions to mid-market and enterprise-level organizations, agrees. "Many organizations do not do enough up-front planning before they begin an ERP software evaluation," he says. "This often leads to confusion down the road because they might not fully understand their current processes and how to evolve them to maximize business benefits and efficiencies."
To solve this problem, organizations should conduct an internal audit of all of their processes and policies before choosing an ERP system. In addition, Beasley recommends putting together an ERP evaluation team composed of stakeholders from across the business. And, if you feel you do not have the in-house capability to properly evaluate ERP systems, consider hiring an experienced third-party, vendor-neutral consultant, who has experience implementing ERP solutions at companies in your industry.
ERP Mistake #2: Not properly vetting ERP vendors ."Many of my best clients are 'sold' by the [vendor's] marketing team; however once the implementation is complete they are surprised by system functionality restrictions, lack of capabilities, and the impact on existing internal best practices," says Shawn Casemore, president, Casemore & Co., which helps clients improve their operational performance. His advice: Always ask for references. Request the names of at least three companies "who are in your business sector, who you can contact and discuss the software with, then call and discuss features, functionality, and challenges," he says. If the vendor can't (or won't) provide at least three names? "Walk away," unless you want to be a guinea pig.
ERP Mistake #3: Not understanding or using key features. "In our annual ERP survey, only 46 percent of respondents reported having a good understanding of which features they were using in their ERP system," says John Hoebler, managing director, MorganFranklin Corp., a business consulting and technology solutions company. "This is shocking, considering the millions companies invest in [their ERP systems]. Without knowing features, companies miss opportunities to automate business processes, complete functions faster, and meet business objectives," he says. In addition, "upgrades, enhancements, and maintenance are more costly, and less likely to succeed."
Sign up for CIO Asia eNewsletters.