ERP transformation is more than just software. It’s usually some combination of structural and cultural shifts mediated by technology. Ultimately, ERP transformation helps organizations automate and manage core business processes to yield optimal performance. With connected processes, systems, and data come the intelligence, acceleration, and adaptability needed to tackle those growth and scaling goals.
The goals of an ERP implementation can include:
The benefits of an ERP implementation are enticing but often demand more of businesses than they expect. Because these projects are about more than just technology and IT, an ERP implementation is a transformational journey that involves and impacts the entire business.
ERP implementations can influence multiple vital business functions including:
With so many moving parts and stakeholder interests, it’s a balancing act to address all the different objectives and priorities. Without relevant experience, expertise, and big-picture perspective, internal teams can struggle to manage and execute a successful ERP project. Failed implementations have devastating effects like financial loss, decreased productivity, damaged customer and vendor relationships, and even legal consequences.
Many ERP system implementations are doomed because they’re run by leaders with little or no direct ERP implementation experience, or they try to follow a generic playbook that doesn’t account for the individuality of their business.
This highly complex project can easily overwhelm an unprepared team, and underestimating the enormity of the job is the first step toward a costly disaster. Some of the major challenges to a successful ERP implementation include:
If stakeholders at every level fail to see the benefits for them, resistance can hinder or derail success.
ERP implementation is far more than an IT project and it’s an ongoing process that requires continuous improvement. The wrong perspective from the outset can ruin the ROI of transformation.
Organizations commonly fail to understand the time and resources required, resulting in unrealistic timelines that expect too much progress too quickly.
*42% of ERP projects were completed later than expected, with 11% finishing “significantly later than expected.”
With so many options in the market, it can be difficult to understand the best fit for the overall organization, and contracts can quickly get complex and confusing.
Without the right program governance structure in place to align and manage vendors, system integrators, IT, and business teams, implementation objectives, budgets, and timelines are easily thrown off.
ERP transformation often involves redesigning entire business processes to align with the new system.
*A 2019 study found 31% of respondents listed inadequate business process reengineering as a reason for lack of ERP success.
When ERP implementation requires overhauling critical business processes, it typically necessitates a shift in mindset and daily work experiences for end-user employees.
Without strict control procedures in place, projects can get carried away with customization requests that increase costs and risks, disrupt timelines, and lead to unrealized objectives.
*35% of respondents cited changing scope as a reason for budget overrun (behind only “underestimated project staffing.”
One of the many technical challenges, getting the data integration wrong limits the effectiveness of the overall project.
End users must not only understand why they should use the new system, but how to use it, necessitating effective onboarding, training, and continued education.
These challenges are discussed in our guide The Secrets of a Successful ERP Implementation, which also details the benefits of having the right advisory consultant oversee the governance and project management of an ERP implementation. Get the guide here.