The complex interplay of various factors leads to ERP implementation challenges, ranging from inadequate planning, to poor people management and technical issues. Organizations must recognize that ERP projects demand meticulous planning, specific technical skills, comprehensive change management, and the active involvement of senior management. By understanding the challenges, organizations can increase their chances of achieving successful ERP implementations, reaping the intended benefits, and driving long-term growth.
The various factors involved in an ERP implementation
Challenge 1: Lack of executive support
Executive buy-in is essential for driving the organizational change and overcoming resistance to ERP adoption. Without support from senior leadership, ERP initiatives will struggle to succeed as employees may see it as a low-priority initiative and the ERP team won’t get the resources they need.
One reason for an ERP steering committee comprised of senior executives is that the project is ‘owned’ by the business. The committee will reduce the tendency to delegate the project once it is underway. It ensures that top management remains not only accountable but also responsible for the project.
Challenge 2: Poor planning and strategy
One of the primary causes of ERP implementation challenges is inadequate planning and strategy. Organizations must thoroughly assess their requirements, set clear goals, and develop a well-defined implementation roadmap. A lack of proper planning can result in misaligned expectations, budget overruns, and delays. This also includes the project’s scope, planned deliverables and schedule.
The ERP project should align with existing business processes to maximize its effectiveness. Failure to map ERP functionality to business requirements can lead to resistance and inefficiency among end-users.
The solution to this ERP implementation challenge is to focus on strategy, involve stakeholders and define the project team with its responsibilities and accountability. At the outset of the project, success should be clearly defined. For example:
- What are the stakeholders looking for?
- What specific measurable benefits should the system deliver?
Be wary of relying too heavily on the metrics of ‘on-time, on-budget’ to measure project success. If you only use those metrics other important objectives can get omitted, such as customer or user satisfaction.
Challenge 3: Project management
A major issue that project managers face is scope creep. This is the uncontrolled expansion of project objectives. As an ERP implementation progresses, additional features and requirements may be requested without proper evaluation, leading to project delays and budget overruns.
The unavoidable fact is that issues can be overlooked, or valid change requests appear which had not been considered earlier. Therefore ensure that the project team and all staff involved are aligned to work towards common project goals. It is important to establish a process for handling change requests that will also communicate the impact on timelines and budget.
When determining the scope, the steering committee and project manager should focus not only on what is ‘in scope’, but also make explicit what is ‘out of scope’.
Another issue is unrealistic expectations regarding the timeline, cost, and benefits of the ERP application. Organizations often underestimate the complexities involved, leading to disappointment when expected results are not achieved within the anticipated timeframe.
To address unrealistic expectations, early and frequent communication with stakeholders and staff is imperative. In addition, clear and detailed documentation will ensure that requirements, timelines, and acceptance criteria are available to everyone.
Challenge 4: Data management
In many ERP projects, data issues such as definitions and the migration to the ERP system, are a reason for timeline overruns. Poor data management can also lead to incorrect insights, erroneous decision-making, and decreased trust in reports from the ERP.
Implementing a data governance policy is essential for maintaining high data quality. It can ensure that data quality standards are maintained, and bad data — such as duplicate and incorrect data do not get into the ERP database.
Challenge 5: Change management
A new ERP system brings significant changes to an organization’s processes and roles. Poor change management, including resistance from employees, insufficient training, and a lack of communication, can hinder successful adoption and create an ERP implementation challenge.
The success of an ERP project can hinge on the commitment of the people who use it. Therefore it makes sense to communicate with employees – early, often and in-depth.
A recommended change management process
Challenge 6: Inadequate testing
Thorough testing is essential to uncover defects and usability issues before they impact end-users. Without adequate testing, organizations risk encountering critical issues during production deployment.
Businesses need to carefully identify who will be testing the software and what is going to be tested. This includes:
- missing and inaccurate data;
- missing functionality and reports;
- impractical processes.
ERP testing is an iterative process that requires the testing team to repeat certain stages multiple times until all issues have been fixed. Testing should cover issues such as:
- functionality;
- performance;
- security;
- usability.
Challenge 7: Insufficient training
Poor training will result in the ERP system not being accepted by the staff who are supposed to use it, and hamper any benefits the organization was hoping to get from the system.
Training should not be considered a secondary, optional aspect of the project. Users need to be educated on how the system works as well as trained on how to complete a task. It should also be part of a long-term plan to ensure staff will continue to get the most out of the system.
Why there are ERP implementation challenges
An ERP implementation is much more than an IT project. Its main drivers and objectives are business-related, and it has a major impact is on people, processes and organizational structure. The way to ensure that an ERP project is successful is to understand the various components involved in the implementation.
See these previous blogs:
Implementing an ERP system for manufacturing Part 1
Implementing an ERP system for manufacturing Part 2
