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Top Reasons for ERP Implementation Failure

In today’s fast paced technological world, every company has to adapt to new trends for their survival in Industry. One of the greatest developments for growing companies is the ERP Software Systems. By integrating ERP, a company could gain overall business control, despite how complex the process is. But still we can see only the large scale industries are utilizing this tool and others are yet to acquire. The reason behind why the small scale industries are hesitating to go for an ERP is due to the fear of ERP Implementation failure. Of course it happens widely but it doesn’t mean that ERPs are not meant for SME sectors. There are many ERPs in the market, specifically designed for small scale industries. Now let us see what are the reasons for the failure and thus the preparations required for a successful implementation.

Reasons for ERP Implementation Failure

  • Not choosing the right vendor :

This is the major part! There are so many software vendors in the market and choosing one among them is a tough decision to make. Always remember that working with a great partner saves you from many troubles. Hence allocate a team or concerned technical person to analyze in-depth about various tools and select the right software that will meet all your requirements.

  • Wrong selection of the product :

ERP comes in different types like on-premises (system based application), Cloud based (one you can access through any system using a browser) and industry specific ERP software. It is important to have a clear understanding on each type and choose the suitable ones according to IT infrastructure and number of users. A company that has many units can go for a cloud based software as it is accessible from anywhere. It is also a cost saving tool when compared to on-premises. And coming to industry specific ones, these are preferred based on industry types as it will give you more advanced features to handle more specific business processes.

  • Missed to check for features that could support you in long-run :

Looking for an ERP that could help run the business smoothly is necessary. But you have to make sure that it also helps your business growth in the long run. For example, some companies may not require supply chain management at present but once the business expands, surely you will need a tool to handle every task with one common tool integrated with all other departments. Using separate tools only when there is a need, won’t be a good choice and after all this should be your one time investment for your business. Hence firstly you should come up with a long term business plan, then choose wisely.  

  • Not focusing on change management :

Change management not only refers to any software systems but also the employees working on them. It may not be easy for them to adapt to a new working environment. It definitely takes time and patience. Even though the software can yield you instant and accurate results, it is the employees who make the tools perform. Hence talking to them, training them with abundant knowledge is a very crucial phase in the implementation process.

  • Not conveying your business needs :

The implementation process involves the major task of transforming all your legacy data into digitized platforms. Hence it is important that you must convey each and every operation and what are you planning to achieve through it in the near future. This will help them to bring out the complete efficient use of software tool’s feature. Also if there is any upgrade that needs to be done, they will make it at the initial phase itself. The easiest solution for this will be to choose industry specific solutions.

  • A mess of old data :

Before the use of software tools, the company might have been using legacy systems like excel or manual methods. Now when all of this data is imported into a software there are many chances of errors to occur. Hence cleaning all your stuff with respect to duplicate entries, eliminating unnecessary data and keeping it crisp & clear would help in smooth running.

  • No proper training :

This is the biggest mistake a company would make. The implementation process not only should involve the digital transition but also knowledge transfer to the employees. Because once the implementation is done it is the complete responsibility of the workers to ensure a proper running of operations. Thus the software training should be promised by the vendors during the implementation. 

  • Lack of technical support :

The next would be the post training support for technical issues. It is common that errors may occur then and there. It is the responsibility of the software vendors to give full support either on call or in person, to solve the issues. So choosing the right software involves a background check about the company’s history and feedback given by other clients.

  • Insufficient funding :

The investment is the major problem for many organizations as they stick to their budgets while choosing an ERP. As per all the reasons stated above, the funds allocated by a company for the software stands out as the major cause of failure. A recent research says that the cost increases by 25% of the allocated funds while implementing a software. Hence a company should be ready to face this one time investment and not compromise the quality instead. 

  • Unrealistic Expectations :

We can hear many people saying that by adapting to the ERP system, you can expect an immediate return of investment and a significant growth in business over a year. But in reality it is not easy to execute change management. Being patient and seeking expertise could help you align with your business process. It will take time for the employees to make out a best practice out of the software. Hence understanding the expectations can help you clear your mind for instant results.

Conclusion :

There are many ERP consultants, vendors and software developers around the market to get help from. This could take some time but it’s worth the time for your business transition. It is nothing wrong to see a demo of a different software tool before making a decision. The stated above are the major areas you should focus on. Irrespective of the industry size, every business needs a powerful tool like ERP to bring out the fullest from any business processes.

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