Why Does ERP Implementation Fail?

An ERP system can help an organization streamline its day-to-day processes, and an ERP system that’s implemented well can position a company for increased growth. However, ERP implementation often fails.

What Is An ERP System?

ERP stands for enterprise resource planning. It’s a type of software many organizations use to manage daily business activities, including:

  • Accounting.
  • Procurement.
  • Project management.
  • Risk compliance and risk management.
  • Supply chain.

Complete ERP suites typically include enterprise performance management software to help organizations budget, plan, and report on their financial results. Companies implement ERP software to boost operational efficiency and governance. ERPs offer an array of benefits, including better operational visibility and accelerated revenue growth.

All in all, ERP systems bring together diverse business processes and enable data to flow between these processes, eliminating data duplication and allowing for data integrity. It’s no wonder that ERP applications are at the heart of many companies’ operations these days.

Why Does ERP Implementation Fail?

Unfortunately, the fact that ERP applications are so important for business operations means that failed ERP rollouts can prove disastrous for a business. Though building ERP systems has become less risky for businesses over time, the need to configure a system to meet particular needs and demands still comes with the risk of failure. ERP systems are all built differently, so each has specific details that must be considered before the system is implemented.

When an ERP implementation fails, it often happens because of one of three common reasons, or a combination of all of these reasons. The main reasons for ERP implementation failure include:

  • Changes that occur during implementation.
  • Lack of management support.
  • Poor planning.

How To Implement ERP Properly and Avoid Implementation Errors

Thankfully, the reasons for implementation failure highlight strategies to ensure ERP systems are implemented properly. To avoid ERP implementation errors, organizations should:

  • Clearly communicate goals: Organizations that can clearly communicate strategic goals when it comes to ERP implementation set themselves up for success. Communicating goals gives management teams a clear idea of the organization’s desired future, underscoring why the ERP implementation is essential to that vision.
  • Develop a plan: Developing a plan starts with setting goals and continues with establishing implementation phases. Typical phases of an ERP implementation plan are pre-evaluation, gap analysis, reengineering, customization, screening, testing, and post-implementation activity. The plan should also cover user training and go live.
  • Select the right software: An ERP system imposes its logic on a business strategy. Organizations must carefully choose a system that provides a competitive boost.
  • Ensure organizational commitment: Employees will need to change how they work so they can take advantage of the technology advancements the ERP system delivers. If employees aren’t strongly committed to the goals of the ERP implementation, the capacity potential of the ERP will go to waste.
  • Ensure accurate data: Before the ERP implementation starts, an organization must ensure data accuracy. If data is not accurate from the start, it can stand in the way of standardizing processes. That, in turn, can cut productivity.

Working with the right partner can ensure that an organization’s ERP implementation goes smoothly, setting the business up for continued success. Contact Clients First Business Solutions today to get started.

sudarsan

Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.