7 Common Mistakes Companies Make Implementing A New ERP
If you plan to upgrade from QuickBooks, Xero, or another small business accounting solution, you’ve likely considered several solutions that promise to make life easier for you and your business. Challenges abound for mid-size companies looking to transition from small business accounting software, but how should an organization make the right decision for their operation? It can be a tough row to hoe but fear not. We’ve identified the seven common mistakes companies make when implementing a new ERP and provide recommendations for avoiding them.
1. Not identifying the operational challenges you want to solve
The first step in any ERP selection process is identifying the challenge you’re looking to solve. Many companies embrace the notion of transitioning to an ERP, only to discover they have not determined why they need one. Implementing an ERP simply because other companies are doing it is not a good enough reason. What’s needed is a comprehensive review of the operational challenges currently plaguing your operation. If you conclude that your current accounting software is not robust enough to address those challenges, an ERP solution is likely the answer.
When identifying the operational problems that an ERP might solve, it’s worth involving other stakeholders to identify issues in their area that an ERP solution might appropriately address.
2. Not developing a comprehensive plan
If you’ve engaged other stakeholders and, together, the team has identified the operational challenges to be addressed; the next step is to develop a plan that includes requirements, budget, timeframe, and the objectives to be reached. Because implementing an ERP is akin to a change management project, you’ll want your plan – or roadmap – to be comprehensive and account for several contingencies. These contingencies might include difficulty transitioning data from various sources into the new ERP, departure of key staff during implementation, and general resistance to change, to name a few.
Although unforeseen obstacles occur during any change initiative, preparing for them and developing an alternative plan of action is necessary to mitigate the project derailing and ensure organizational goals are met within the specified timeframe.
3. Hiring the wrong team
Once your plan is developed and your requirements defined, you should know the kind of consulting company you can involve to help you with selection and implementation. In the next section, we identify trying to go it alone during an ERP implementation project, but it’s mentioned here as it’s also related to hiring the wrong implementation team. Some of the critical components of selecting consultants who can walk with you through the implementation process include knowing whether they understand your needs, determining if they are a relational fit with your team members, and enabling you to find solutions you need while helping you avoid the ones you don’t.
Hiring the wrong consultants is not only a waste of money; it can set your company back years in terms of helping you finally solve your operational challenges. Companies must do their due diligence, including considering several solutions, exhausting demos, checking references, interviewing experts who will be involved in your implementation project, and knowing how many successful implementations their team has completed.
4. Taking a do-it-yourself approach to implementation
Those in the market for a new automobile would never build their car. Nor would most people build their own house when looking to move into their home. The same can be said of ERP implementation. While some organizations have developed homegrown ERP systems, recent years have seen businesses transition to cloud-based ERP solutions that enable customization and provide the ability to scale.
Companies that attempt an ERP implementation on their own are vulnerable to several things. They lack expertise, experience, and the ability to tailor modules to meet specific criteria. They don’t have years of experience cultivated over dozens or hundreds of implementations involving companies of different sizes and industries. What might take a do-it-yourself implementation team 2 or 3 years to accomplish, a savvy and experienced team can likely complete in 6 to 12 months.
5. Having unrealistic expectations
ERP implementation takes time and expertise. The process is similar to the work a surgeon does during an operation. A procedure that takes 10 to 12 hours will take that amount of time, and there may be some complications along the way as well as a lengthy recovery period. With an ERP implementation, many moving parts must be managed, including selection, transitioning from multiple legacy systems, data gathering and transfer, installation, testing, training, go-live, and maintenance.
Successful ERP implementations can take as little as six months to 2 years. Timing depends on the software selection, level of customization, industry, number of staff utilizing the solution, and more. Expectations are reasonable and should be used to develop the planning and the guidelines the process should adhere to. Incorporating unrealistic expectations, such as a highly customized implementation completed in 3 months, is highly unrealistic.
6. Focusing on bells and whistles and not functionality
It is essential to understand that software developers are in the business of selling software. It is not uncommon to see new features touted every release cycle and in every demo. However, they don’t always apply to your specific set of requirements, and they don’t always add value. Unless a feature is necessary, it’s critical that you and your organization remain faithful to your roadmap. It’s always helpful to regularly revisit your plan to determine whether changes need to be made. If not, what’s critical is to remain on course.
7. Planning only for the short term
Developing and implementing a long-term strategy is necessary for most businesses. For companies that plan to grow beyond their small business roots and firmly take their place in the group of mid-size or global organizations, implementing an ERP solution that can easily scale as your business does is not only smart but a necessity.
Several hybrid business solutions straddle the fence between accounting software and ERP. These solutions might be appropriate for small businesses that hope to remain small. For companies that have their sights on a national or international market, finding a robust ERP solution that enables you to plan for the long term is a must.
How to avoid these common mistakes
Identifying the mistakes companies make with ERP implementation is only the first step. The next step is to find an experienced team that can help you identify the right solution for your organizational situation and allow that team to guide you step by step to a successful implementation.
Frank, Rimerman Consulting specializes in helping companies select and implement ERP solutions designed to meet their unique business needs. We take a consultative approach with an unbiased view to identifying the best solution to meet your needs.
You deserve a partner in this journey. Frank, Rimerman Consulting is the right partner for you.