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Top Challenges in ERP Implementation

ERP implementation

By Kristin Ryan, CPA

Are you currently facing the imminent implementation of a new ERP system, or are you smack dab in the middle of one right now? Are you wondering if your company is in need of a new ERP system, or whether significant changes should be made to your current system? In any case, you’ve likely heard the testimonials of how challenging these implementations can be.

ERP implementations have the reputation of costing considerably more time and money than anyone anticipates. This type of elusive commentary heard through the grapevine – and many times once the dust has settled and the pain begins to fade – isn’t all that helpful when you’re up against an implementation and unsure where to start, or whether your company’s best interest is top of mind.

Generally, implementation costs are the largest unknown cost in a new ERP system, so be sure you know exactly what the implementation process consists of and what is included. For example, you’ll want to make sure upfront costs don’t impair the professionals’ motivation to get it right the first time. After all, years down the line when an unforeseen situation pops up, you’ll be the one with a few more gray hairs on your head, and once you’ve figured out how to tackle the issue, they’ll be no worse for the wear – not to mention that no one knows your company the way you do. Letting someone in from the outside can be daunting; teaching them everything they need to know to ensure the success of the implementation may be more than a tad frustrating.

Top challenges and questions to ask yourself include:

  1. Developing specific objectives
    1. What are the overall goals of the implementation?
    2. How will you bridge inter-departmental gaps?
    3. Which objectives are “make or break?”
    4. How will you ensure that you don’t stray from core objectives?
    5. Are the objectives and expectations reasonable?
    6. How will you build consensus or approach executive decisions?
    7. At what point will you revisit and/or revise these?
  2. Integration with existing systems (both processes and systems)
    1. What needs to be integrated and what doesn’t?
    2. What can be integrated and what can’t?
    3. How do you accomplish this?
    4. Will it increase efficiency?
    5. Will it provide more automation?
    6. Do processes and/or other systems need to change?
    7. What specific interdepartmental challenges exist?
  3. Customization
    1. Will your implementation require extensive customization?
    2. What are the unique needs of each company department/division?
    3. How will you prioritize if certain customization cannot be achieved?
    4. Does the particular customization help achieve the overall objectives?

If you’re in the implementation process right now, presumably you’ve done your research, asked around and hired a reputable company to help you with the implementation. If so, the process will be less exasperating.

However, some of you have not begun the process, but know it will be necessary in the near future. Spend time getting to know potential vendors and those individuals who will be helping to facilitate the process. Do your research on the products to ensure you choose one that best fits your company’s needs.

Ensure the quality of your data is sound so you can avoid issues later in the process that are potentially very costly to fix. With the software-to-services ratio generally ranging from 1 to 1.5, or 1 to 2.5, proper planning is crucial in keeping implementation costs in check. Adequate planning also leads to successful implementation and allows you to minimize the pain felt by your team members, who likely have full-time duties already, and resources devoted to the project.

Think long and hard about your team members on the project. Make sure you invest in both training your team members and in change management. They’ll need your support to ensure the success of the project and that they’re not turning in their resignation to you during or immediately following the implementation, if they are people you’d like to keep on the payroll.

Don’t underestimate the amount of time and resources an ERP implementation requires, or try and cut corners. For example, spend as much time as it takes properly testing the new system and working out the kinks in a real-world simulation.

In addition, communication, flexibility and patience will be particularly important during the process. Many trips back to the drawing board should be expected. The reality is that change is the new status quo, and if it’s not embraced or at least tolerated, your company will be left behind. In the end, the result of the improved efficiencies created by your new ERP system will be worth it.

 

Kristin Ryan, CPA, is an audit manager with PKF Texas; contact her at kryan@pkftexas.com.