Choosing and Implementing ERP - Top Challenges Faced by Organizations
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Most of us had lived through the era when technology wasn’t important to individuals and businesses. Cut to 2019; nothing gets done without it. The rapid pace of technological evolution is perhaps why businesses today are struggling to keep up with the digital revolution.
You blink, you miss. New opportunities are hard to come by, tougher to create without a self-improvisational mindset. Chances are, your organization has already started the journey of responding to increasingly dynamic market demands of better quality, the speed of service and personalization. But are you doing it right?
The consensus is clear – evolving your core business systems to drive real-time & data-driven insights is key to turning challenges to opportunities and driving positive business outcomes. That is the only way – no questions asked!
This is precisely where new-age enterprise resource planning (ERP) steps in to help – effectively empowering organizations to be future-ready for you to reap business rewards.
The major impediments to successful ERP implementations are not technologically related issues like compatibility, technological complexity, and standardization. Most are organization and human-related issues including resistance to change, evolving the organizational culture and shifting business processes. It also speaks about effective & proven project implementation methodology as well as a project governance approach.
1. Lack of Senior Management Commitment
An organization goes through a significant transformation during an ERP implementation. The lack of involvement of senior management in the roll-out of the project, analyse business benefits, define and uphold the project vision and mission statements may seriously hamper the implementation and make it ineffective. The leadership, with broad stakeholder consensus, should encourage organization-wide system usage, commit user involvement, resolve conflicts, build co-operation among the diverse groups within the organization – essentially “eliminating information silos” to converge meaningful and decisive insights in real-time.
2. Insufficient Communication With Users & insufficient User Training
One of the major reasons for ERP Implementation failure is poor communication between teams. Building an effective communication system from senior management to project teams to disparate User Groups helps is closing assumption-based errors, finger-pointing and communication gaps. It, thereby, can improve the probability of success multifold in the ERP implementation process.
3. Lack of Effective Project Management Methodology & Project Governance
Poorly defined specifications, business requirements and lack of change control measures may result in project failure unless governed by a proper implementation methodology and governance model. To put it simply and briefly, an effective project management team must ensure the following:
· Project scope management
· Project schedule management
· Project resource management
· Project quality management
· Project change management
· Project risk and mitigation management
4. Inaccurate and Inadequate Master Data Management & Data Migration Process –
Often the result of a successful ERP implementation is guaranteed by the quality of the data that is fed into the system, both during and after deployment. Most of the implementation failures are a result of poorly managed master data.
Interestingly, Over 95per cent of master data is consolidated, cut/over or open data in the organization which stands as a one-time activity during the implementation. This holds as active participation during a run-ERP lifetime. Engaging the business process owners, top-down from the initial stage of the ERP implementation in Master Data Management is sure to yield fruitful results.
5. IT-Driven Project Instead of Business-Driven - For successful ERP implementation, it is essential that the Business stakeholders are involved throughout, and the ownership of the project is built around these Business Process owners. A great deal of collective ownership and Organizational Change management can be ensured if the ERP implementation is Business-driven, rather than being steered by IT alone. The IT team serves as facilitators of the project requirements and system controls.
Fortunately, in most of our implementations in India, Many IT Heads, and CIOs indulge themselves in the progression with complete process knowledge and skills over their business modules, resulting in their pilot converted to success stories accessible for all teams concerned.
6. Composition of the Implementing Project Team Members - Identifying and assembling a core Team for the right functions will give the desired results. Therefore it is essential that for various roles and responsibilities to defined in the project methodology at the outset and the right mix of resources are sourced and trained to be part of the project team.
7. Failure to Redesign Business Processes - Inadequate Change Management - The need for Organizational Change Management and Business Process Reengineering if not taken seriously, results in making the ERP system nothing more than Data aggregation system which cannot be relied upon for decision making.
Enterprise System provides an effective strategy to gain operational excellence and competitive advantage. The team should include members from across the organization including senior management. The inclusion of inter-department members facilitates and reduces the rate of resistance from end users. Secondly, ERP facilitates the integration and convergence of disparate, critical information within an organization for data-driven real-time decision making with ease. Finally, to be successful, an ERP implementation should be considered as an organization-wide project that benefits from the contribution of all stakeholders.