Several researches and theories have been formulated and tested to streamline business processes. An effective business process is a requirement to successfully execute strategies in keeping the internal and external customers satisfied while honing its profit-generating skills. With the primary goal of every business to set one foot forward from their competitors, companies tend to invest in systems that can automate business functions. Such systems make things more convenient, easier to manage, and less costly in the long run, making business software a necessity for every business who wants to take their business to the next level.
Integrating various functions such as order management, inventory, customer relationship management, sales, human resources, accounting and many others triggered the birth of ERP System (Enterprise Resource Planning). The fundamental feature of the ERP System is the shared database supporting multiple functions essential to run the business. All these functions are integrated into one complete system that can be used by different units across the organization. Based on studies, successful implementation of the ERP system can reduce operational costs and administration costs by roughly more than 20%. With a successful ERP system, it is expected to have real-time and more accurate reports, research synchronization and automated processes.
Common Reasons for ERP Implementation Failures
- Failure to achieve desired benefits from the end product. Such failure roots from poor planning and poor management. From the very beginning of the planning process, every single detail should be well accounted to avoid future problems. The list of requirements should be clear before implementing the ERP. In some instances, there is a mismatch on the system since the decision in choosing the ERP is based on factors such as the price or system requirements. Delayed deliveries from vendors may also be the reason for failure, so make sure to be more objective in choosing your system provider.
- Inconsistent business goals. Ill-defined evaluation of projects and business goals lead to poor implementation. Always begin with a clearly defined scope of the project. Being specific with system requirements and processes means more details to be evaluated by the vendors for a more accurate proposal. The selected software development company should be able to implement your goals and business requirements into a system that will exactly work as you envisioned.
- Poor management execution. With the change of system, the management should create a special team to lead and guide the employees of the changes that are or will be happening. It is necessary to manage the feedback of the employee by being prepared to whatever concern they may raise. Successful organizational management is crucial to the success of the ERP system implementation. Workshops and communication plans may also help to avoid problems in adopting with the new system.
Implementing the ERP system is not as easy as it sounds. Based on the Robbins-Gioia Survey, 51% of the companies believe that their ERP implementation were unsuccessful. To better understand the ERP system, one must be aware of the factors that should not be overlooked and misinterpreted before, during, and after the process.
ERP implementation should be on the right track and timing. Remember, your whole business operation depends upon it. For instance, your service management system maybe flawlessly working, but if your HRIS software cannot deliver as intended, then your ERP cannot be considered a success. To make it work, it should be flexible to allow adjustments. Status of the project should be monitored strictly so that issues and concerns will be addressed right away. Document every single detail and make sure to consult with your business software developer from time to time.
Steps to a Successful ERP System Implementation
- Identify the scope of implementation. Before anything else, the realistic and achievable objectives should be clearly identified and taken down. This can be achieved through brainstorming. There should be an outline of the needs and the challenges to be addressed. How do the current processes work? What are the problems being encountered by the business today? What does the company want to achieve? With all these pre-requisites, you should understand how the business works and all the nitty-gritty of the processes so you would not miss even the tiniest detail in the process. The participants in the implementation should be accurately classified and the tasks should be distributed accordingly. Select people based on expertise and their vision for the company.
- Choose the ERP system and vendor. Selecting the ERP provider is one of the most crucial parts of the entire planning stage. Choose the vendor who specializes in your field or industry. There are many ERP software to choose from. Carefully evaluate your options and get references from the providers if possible. This is only to verify previous projects and for the company to manage its expectations.
- Formulate the project plan. The team should develop a detailed robust project plan. To avoid implementation failure, project management by both the customer and the vendor should be properly handled. They should have matched expectations and supportive approach. An open communication is required from both parties to avoid making the wrong decisions such as coming up with an adjusted version of the system while compromising the purpose of the system itself. The vendor and the customer or the company may focus on different sides – the customer focusing on the business growth and the vendor making sure that the system is working properly. Nevertheless, the end goal is the same – that is to improve the business system for the company to execute well its mission.
You may also want to read about “How Human Resource Information System (HRIS) Software Can Help Your Business?” and learn how it can be used together with your ERP System.
- Define implementation phases and schedule. There should be a clear statement and mapping of the processes and its purpose. The system’s phasing should follow the business workflow. Thus, it is very important to review the ERP offerings and request for customization until it fits the need of your business.
- Plan your testing. Make sure that there is a well-developed master data by the final phase of testing. ERP system is flexible. However, the team should be prepared for adjustments after the initial test. Alpha and beta testing is a common practice in the software development industry. As long as your business software developer knows how to handle the adjustments, then you’re company is in good hands.
- Data cleansing and migrating. This is the process of transferring the present business data to the ERP. Outdated information should be removed before uploading the data to the ERP. Most of the time, this is the part of the implementation that is critical. Therefore, it is advised that careful implementation of system migration must be followed.
- Manage the changes. Before the implementation process, the employees of the company should be prepared for the changes that will take place. It may affect their culture and practices. Hence, they should be guided and assisted properly. One way is to provide them with user guides for each module. Employees must be well informed about the new system and its benefits for them and the company.
- Plan your go-live period. This is the final phase of the ERP implementation. Make sure that all facets are being tested such as the business reports, accounting reports, synchronizations and that accurate data are being confirmed such as the data migration, user acceptance tests, and contingency measures. The last thing that you want to avoid is not being able to generate real-time reports, which is the very essence of implementing ERP, i.e., the execution of inventory management system should be able to produce a timely report that can be used by different divisions of the company.
- Support and maintenance. Results are gathered after the go-live period. There should be a consistent consultation with the vendor or system provider. This is an ongoing process that should be monitored strictly across time to ensure longevity of the system.
- Measure success. After an agreed period of time, success can be measured by the numbers such as the increase in revenue and cost savings. You may also measure production time and customer satisfaction through surveys and feedback.
By determining the goals, you can identify the scope and the areas where you should focus on. This is necessary for the team and the entire organization to identify if the ERP system is effective. Without knowing which area to fix, it is impossible to measure the changes to be brought by the system.
The success of the ERP system software depends on the choices you make before and during the process. It involves the decision makers, the participants in the implementation, the entire organization and of course, the vendor or the system provider. Communication is an integral part of the process. Changes in software should be efficient and consistent to be able to maximize the company’s investment in the new system.
