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12 Costly ERP Implementation Mistakes To Avoid

Costly ERP Implementation Mistakes

By using ERP implementation you could see a significant shift in your company's fortunes. Either positively or negatively. The effectiveness of a plan is determined by how risky the plan is. The greater the risk, the greater the likelihood of effectiveness.

This is also true when deciding whether to implement an ERP for your company because the entire aspect of your company could be improved, resulting in massive profits. Or perhaps the worst-case scenario occurs, and you are faced with a loss.

Depending on the phases of ERP implementation you are in, you should first consider the system's potential risks and dangers. If you've already decided to go ahead with ERP implementation, you should first understand how it will affect your company. This way you can mitigate the effects as much as possible.

Here are some 11 costly ERP implementation mistakes you should make sure to avoid so that you don't have to suffer a loss:

1. Lack of Effective Planning

The first thing you should think about before ERP implementation for your company is to plan thoroughly. Planning alone may not be sufficient, but having a few ideas will help you avoid some of the complexities that may arise. Changes are often the result of a new program and system implementation in your organization. This calls for team building and teamwork to figure out ways to overcome some of the challenges.

Encourage your team to form a committee. This should be made up of people from all departments to handle and come up with ideas for running the ERP system. This may be useful when configuring a new system. Making plans ahead of time helps to eliminate the possibility of setbacks. These could result in a major loss due to a lack of a solid plan.

2. Lack of Training for Your Staff

Take note of how the ERP system can alter the entire company's processes and operations, resulting in changes in staff operations. If you refuse to provide your employees with training on how to adapt to the new system, you'll face challenges. Also, remember to develop functions in the midst of a new setup to avoid counter productiveness and the endurance of some losses.

This is because a lack of preparation may cause process disruptions. Especially as some employees may not understand the ERP implementation and system's operations. Thus havoc ensues. As a result, make sure to train your staff, hold some dialogues, and improve communication to aid in the system's implementation.

3. Not Fully Evaluating Your Company Needs.

You should be aware of your company's shortcomings and strengths, just as you would with any other system, in order to select an ERP system that will assist you in addressing your shortcomings. Have a talk with your team and assist each other in identifying and noting any challenges you may be facing as a group. You can now use the evaluation of the company's issues to help you choose an ERP system that can compensate for your company's shortcomings.

4. Not Making A Systems Review 

Many times, businesses suffer a loss because they purchased an ERP system that lacked the capabilities that they expected. Some providers have salespeople who provide information that may be useful to you.

For example, they may tell you that the ERP system you're about to purchase will take a few weeks to get up and running smoothly. However, in reality it could take a couple of months. As a result, always obtain at least two references from the purchaser. This allows you to write accurate reviews and avoid setting unrealistic expectations.

5. Lack of Communication Across the Organization

Before you install your ERP, make sure you've taught your employees the value of communication. This is due to the fact that a lack of communication among vital departments could result in a self-inflicted disaster and a loss.

Communication should be of a high standard to ensure you capture data. Implement strategies in tandem within departments. Failure to achieve a smooth flow of communication may result in a system failure which could be bad for your business.

6. Underestimating The Costs 

ERP implementation can be time and resource-intensive. To avoid unexpected costs, make sure you inquire about the expenditure for the entire ERP implementation process. You should think about analyzing both factors so that you don't get caught between expectations and actual costs.

The best way to estimate the time required to set up an ERP system is to divide the cost of the system software by 100. For example, a USD$60,000 piece of software may take a skilled consultant 600 hours to implement. Plus, if you implement the system on your own, the time could easily double.

7. Excessive Multi-Tasking

When implementing an ERP system, always focus on one task at a time. Always keep the most important departments in mind. One of the reasons most businesses become counterproductive after implementing this system is their desire to multitask.

Multitasking, in the end, will only cause delays. This is because there will be a lot to learn about the system's operation. As a result, focusing on one task at a time reduces delays because the first departments to implement the system will assist the other departments. They can help with understanding how certain features contribute to the system's operation. This also aids in the planning process because you complete certain stages before moving to a new task.

Enterprise resource planning implementation

8. Not Having a Rescue Plan

Given its complexities, an ERP system is one of the riskiest tasks any company could undertake. As such, it’s always prudent to devise a backup plan in case something goes wrong. Take note that you have a variety of plans that can be used for both positive and negative outcomes. This ensures that if you reach a tunnel, there will always be a small light to guide you back as a safety precaution.

Having a rescue plan also helps you not to panic because you anticipate both ends—the good and the bad. In the business world, you must always take the risk. The only difference is that you won't have to take the risk of falling into the sea without knowing what you're getting yourself into. Make sure to wear a life jacket! There is still hope for rescue and, thus, avoid the costly setbacks of being caught off guard.

9. Starting Up with Incorrect or Formatted data

It’s critical that you double-check your data before uploading it to the ERP system. The manner in which you begin with your data determines the accuracy of your company's information.

Check your data for any incorrect figures, spellings, and so on. This will help you avoid the costs of re-starting the system or the loss of some important data. As a result, underestimating the importance of setting up accurate data at the start of the ERP implementation stymies your company's progress. This is because the software only uses the data that you upload.

10. Lack Of Proper Maintenance

ERP systems, like any other tool, rely on proper maintenance to function properly. To avoid losing productivity due to slow software performance, consider budgeting for its maintenance. Especially since it’s much less expensive than the costs of losing a significant amount of time and productivity. This is what will happen if the entire system fails or malfunctions.

11. Not Making Use of Key Features

It's disappointing to learn that some businesses purchase ERP software that they know very little about. Especially in terms of its functions. You can invest in the best system out there, but it’ll be useless if you and your team don’t know how to maximize the features. This may remind you that you should train your employees on how to adapt to the new changes. They should become as familiar with the ERP system as possible in order to increase productivity.

12. Using Old Applications 

Make it a point to encourage your employees to use ERP rather than combining it with other applications. Using other applications while using the system will save you money on licensing. Not to mention the other costs that incur when using a slew of software.

When using a large number of software programs, there is also a risk of errors and omissions. As a result, you should take a wiser step and commit to using the ERP system. It will aid the current app, which in turn may aid in realizing the application's efficiency.

Conclusion

An ERP system is one of the most expensive investments that any company can make. As a result, ensure that you do not suffer any losses and that you have a backup plan.

As a result, it's a good idea to start by noting how to thrive in data management. Rise above the mistakes that many manufacturers and businesses make. Once you identify the errors, it'll be much easier to avoid making them on your way to implementing the ERP system. Once you've finished, making sure to avoid these blunders, you're ready to go.

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