Enterprise Resource Planning (ERP) systems secure business efficiency by tying together different systems and services in an organization into a collaborative whole in order to gain optimal productivity. Businesses rely on ERP systems to keep their operations running smoothly, but the integrated nature of ERP software makes it tricky to maintain and update.
With this in mind, an ERP software implementation can quickly unravel and cause chaos if you don’t look for the warning signs. Bruce Harpham, technology and project management writer for CIO.com, reached out to experienced ERP consultants to discover the 10 early warning signs that your ERP project may be on the verge of suffering major issues.
1. Lack of Software Knowledge
For ERP systems, it’s important to take your time and research the specific solution you want and one that will work best with your business or organization.
“If you are an early adopter of a new ERP technology, you may be in for greater challenges,” says Michael Hughes of West Monroe Partners, a consulting firm based in Illinois. “If your ERP is several versions behind the version you are planning to adopt, you may also encounter challenges in the transition.”
2. Neglected Business Engagement
Technology and business units may struggle to find a common alignment, especially when it comes to ERP systems.
“No ERP project goes perfectly — there will always be hiccups and problems. If you have a strong engagement with the business, you are likely to be forgiven as you work through the problems. On the other hand, if you neglect to engage users, you can expect resistance and protests when problems occur,” says Ed Featherston, vice president and principal architect at Cloud Technology Partners, a technology consulting firm.
3. Vague Project Requirements
ERP projects require a lot of thought about upgrades, enhancements and transitions. The fundamental phase of an ERP implementation is one you definitely want to get right.
“When I see inadequate requirements on an ERP project, I expect to encounter problems later in the project. There is an increased chance of dissatisfaction and related problems,” Hughes says.
4. Reliance on Legacy Systems
Unfortunately, some ERP implementations are focused on maintaining old, legacy systems. Paying additional fees for extended support is a warning sign that your systems are stuck in the past. Continuing to use legacy ERP systems expose you and your company or organization to increased cybersecurity risks. Do not allow this. When starting an ERP project, be sure that you focus on the future and one that will keep up with your ever-changing business needs and strategies.
5. Too Many Exceptions
In a large organization, you encounter a fair number of requests for exceptions. This is usually the result of weak governance processes that could eventually undermine your ERP system.
“A lack of governance processes to make decisions on ERP causes frustrations and delays,” Hughes says. “Take the case of purchase orders or expenses: you design a standard process, and then you encounter a case where an executive or special case comes up. If these requests are handled in an ad hoc [arranged] manner, you are likely to have problems because users will think they can get an exception for anything they wish.”
6. Relying on Excel for Analysis
Microsoft Excel may easily be the largest, informal ERP system in the world, according to Harpham. However, if users are routinely using Excel to carry out analysis, your ERP project may be in trouble. Using Excel as a “workaround” may suggest that your reports and data aren’t set up in a user-friendly manner. Users may also have a need to review data from multiple services to achieve their goals.
7. Allowing Technology to Take Over
It’s easy to get excited about new tools and systems, however, the tendency to grab at the latest technology has a downside that could undercut your ERP project.
“Letting the technology drive the process is a mistake. I have seen many companies start large projects by focusing on the product’s capabilities,” says Featherston. “Fortunately, technology vendors are starting to help address this issue. Few vendors now claim that the new product will work out of the box.”
8. Treating Compliance as an Afterthought
Speed efficiency is often one of the driving priorities in technology projects, but cutting corners on compliance can come back to haunt you. Engaging compliance and other control functions up front will help to prevent compliance issues from cropping up down the line.
“If you have an ERP project leader take the view of ‘get the project done now, and we will sort out compliance later,’ you are likely to have problems,” Featherston says.
9. Carrying On-Premise Assumptions to the Cloud
In order to successfully transition from an on-premise ERP solution to the cloud, IT leaders need to reconsider their ways of doing business.
“For on-premises ERP implementations, I estimate that most companies are using a 70 percent out of the box configuration with 30 percent customization. That will not work in the cloud ERP model,” says Rick Cimino, national enterprise solutions network leader at KPMG. “Most cloud ERPs discourage extensive customization because they are made to be used in a standardized fashion to facilitate vendor updates.”
Looking for more information about ERP systems? Download our free buyers guide, where you can find the top ERP software vendors, snippets about their highest ranking ERP solutions and products, plus the top 10 questions and tips to ask yourself and software vendor before purchasing!