If you can anticipate a bump in the road, you can usually swerve before you hit it. That’s the philosophy behind learning about common mistakes that can occur during an ERP implementation.
While no one likes to envision their own project going awry, the reality is that it could happen. Even implementations that seem well-planned and strategically aligned can fall victim to unforeseen issues.
What You Need to Know About Modern ERP Systems
Before we explore the seven common ERP implementation mistakes to avoid, let’s take a moment to understand the nature of modern ERP solutions.
Cloud-based ERP systems and AI-driven analytics are not just buzzwords; they are reshaping how companies approach ERP implementations.
According to our 2024 ERP Report, 88.5% of respondents said they deployed or plan to deploy AI at their organization.
In addition, we saw a year-over-year increase in the use of cloud software as opposed to on-premise software.
Keeping these trends in mind, let’s examine how to avoid the ERP mistakes that can derail your project.
7 Common ERP Implementation Mistakes
1. Automatically Assuming That ERP is the Answer
An ERP platform shouldn’t be an impulse purchase.
Read that again, more slowly this time.
If you’re dissatisfied with your current ERP, CRM, SCM system, or legacy system, then modern ERP software might be the answer. On the flip side, you may be able to conserve your resources and achieve your business goals by fine-tuning your existing processes and technology.
Too often, business leaders rush into implementing an ERP system thinking it’s the only way to save their sinking ship. These feelings only grow stronger as they listen to ERP vendor sales pitches about new features and functionality. Suddenly, they’re caught up in the promise of success, believing that a brand-new ERP solution will solve all their problems.
Before you make an impulsive decision, we recommend assembling an ERP selection team. You should also engage an ERP selection consultant. The right consultant can take an unbiased look at your business operations to help you determine if implementing a new ERP system is the best path forward.
Once you’ve decided that an ERP system is indeed the right path forward, the next critical step is to consider how this new system will integrate with your existing systems. Effective data migration and seamless integration are foundational to leveraging the full capabilities of your chosen solution.
A Failed Payroll System Implementation
Panorama’s Expert Witness team was retained to provide a forensic analysis and written report to the court regarding the failed implementation of a major software developer’s ERP/payroll system.
2. Moving Forward Without Project Sponsorship
In an ERP system implementation, project sponsorship and executive buy-in are key. You need your C-suite on board not only to ensure you have adequate money and time to complete the project but to champion the project to the rest of your workforce.
A common ERP implementation mistake is failing to designate one person in leadership to serve as the official project sponsor.
To avoid this mistake, we recommend finding someone who is an excellent communicator with enough influence to motivate employees to embrace the coming changes. They should be the main point of contact for the project, speaking confidently about it and answering questions as they arise.
3. Not Setting Clear Objectives
Without clear objectives in place, how will you determine if your ERP implementation is successful?
Selecting one of the top ERP systems isn’t enough. Unless the system meets your core needs, it won’t accomplish much.In fact, some of the most expensive and tech-savvy software solutions go unused, turning into shelfware because they didn’t align with business processes.
Your project team should clearly define how you’ll measure project success. This includes setting parameters around the project budget and timeline, as well as establishing key performance indicators (KPIs) to track post-live outcomes.
4. Over-Customizing the System
Before diving into the complexities of customization, it’s crucial to address the significance of data migration and system integration. A well-planned migration and integration strategy minimizes the need for extensive customizations by maximizing the use of built-in functionalities of the ERP system.
You should also build strong project governance to ensure customization doesn’t get out of control. Relying on capable project managers will help control scope creep and reduce the chance of cost overruns.
5. Under-Estimating the Timeline and Budget
In your quest to garner executive support for the project, you might assume that you should oversell the benefits and underestimate the budget and timeline. While this might work for the short term, it will work against you when your team suddenly comes up short.
Instead, it’s better to be honest and realistic from the beginning. Reference key benchmarks such as past integrations and industry estimates to calculate these metrics as accurately as possible.
In addition, you should consider how cloud-based ERP solutions can influence these factors. Cloud implementations can offer more predictable costs and potentially faster rollouts, altering traditional timelines and budget considerations.
6. Poor Planning and Project Management
Yes, you need an ERP project plan. No, that plan shouldn’t remain stored away in a digital file, and only used sporadically throughout the implementation process.
An ERP plan is only effective if it’s actively used and well-managed. This means your project manager should have the skills required to delegate tasks, resolve conflicts, prioritize resources, and more.
It also means attending to the people side of the project and not just the technical side. A successful project manager will focus on success factors, such as organizational change management, to ensure the workforce is ready to embrace digital transformation.
7. Improper Resource Allocation
Do you plan to assign all your critical team members to the ERP project? If so, what happens to their current, day-to-day workloads? Do you have backup resources capable of filling in during their absence?
These are critical questions to ask when making resource allocation decisions. If your employees are only able to participate in the project on a part-time basis due to difficulties with backfilling, then it could impact your timeline and budget, as well as the overall project quality.
Make sure everyone understands the commitment before agreeing to participate. If you can’t keep up with daily operations and the implementation, then you may require third-party support to offset the load.
The Road to a Successful ERP Implementation is Rarely Smooth
Throughout this effort, there will inevitably be sharp turns and rocky terrain, but you should always be able to discern the right path forward. By avoiding common ERP implementation mistakes, you can set your implementation team up for success.
Along the way, our ERP consulting company can help you develop an implementation plan that accounts for all critical activities and mitigates common project risks. Contact us below for a free consultation.
