It can be a difficult job if you’re dealing with multiple, disparate systems continually amassing data. For CFOs to help their business scale, soar, and stay afloat as one entity, especially during a crisis, the siloed data must unify to churn meaningful insights.
Enterprise Resource Management (ERP) is the brain of businesses worldwide. Its indispensability is reflected in numbers, too — 50% of companies are planning to acquire, upgrade or have plans to update their ERP soon; in its current pace, the market is all set to surpass $49.5 billion by 2024. Implementing an ERP into your core processes can offer an array of benefits but be aware of the difficulties that may come along with it. Let’s discuss the top seven challenges CFOs face in their own ERP implementation journeys and how you can avoid them.
Challenge #1: Not Enough Commitment from Upper Management
Lack of full support from senior management can result in significant disruptions during ERP implementation.
Imagine this: There is a dedicated ERP team ready to go, but just one week into the project, the CEO pulls out team members for a few weeks to deal with an upcoming financial audit. This brings your ERP implementation process to a complete stop. When the members return to the project, all of their tasks are on critical paths, causing them to feel overwhelmed and rushed.
Implementing a new ERP solution should be a collaborative effort. Stakeholders from all departments should be involved, and that involvement should go beyond fund approval. They need to be involved in deciding how the ERP will align with the organization. The project may also require hefty contributions from internal employees, and executives must make these resources available.
Active involvement from the executives has another added benefit — the enthusiasm of leaders toward the new solution can make the ERP adoption a smoother and more welcoming process.
Challenge #2: Underestimating the Total Implementation Cost
A new ERP system is a considerable investment. It’s critical to be prepared for cost overruns and be strict with your budget, or it can quickly dissipate.
Take the case of the U.S. Air Force: They wanted to consolidate hundreds of siloed financial data into one streamlined system. After seven years and a billion dollars, they decided to cancel the project. They didn’t expect the cost to reach billions of dollars, and if they continued, it would cost them even more. This was the result of not setting expectations before starting their implementation project.
This large loss, both in terms of time and money, isn’t something from which many businesses can rebound from. To avoid getting hit by surprises, consider implementation expenses such as type of deployment, customization level, maintenance, training, hardware (if choosing an on-premise solution), customer support, and most importantly, the talent and consultants who will be driving the project hands-on. If you’re considering bringing in temporary employees to support your ERP implementation, know that comes with a group of expenses of its own — recruitment, onboarding, training expenses, and more.
Challenge #3: Setting an Unrealistic ERP Implementation Timeline
Timeline overrun is a common setback. In most cases, unrealistic expectations are set by overly optimistic vendors and ERP implementation partners. However, vendors and implementers are just one part of the whole transformation. Internal stakeholders are also an essential part of the timeline. They need to be part of the conversation to discuss what resources are available and when they’re needed.
Another major reason for delay is if the executive team doesn’t have a clear vision for the project. They know they want an ERP but don’t know why. Without a clear objective, the project team will be misaligned with the organization’s needs, which leads to even more issues after implementation. This can also result in slow decision-making and friction. For example, when stakeholders from different departments can’t decide on common business processes, it can take time to find common ground.
Challenge #4: Not Considering ERP Maintenance
An ERP is just like a car — even the new ones require ongoing maintenance. However, this is a recurring expense most companies forget to consider. It’s essential that any post-implementation issues can be addressed swiftly. Unresolved issues can affect your entire organization, especially the cybersecurity, HR, and finance department.
Outdated ERPs can freeze operations and cause security risks. Two years ago, the U.S. Department of Homeland Security announced that hackers are targeting ERP applications to exploit vulnerabilities and gain access to sensitive information — after all, it’s the heart and brain of all critical business processes.
Some businesses may have in-house ERP specialists capable of performing maintenance, while other companies may rely on external consultants who specialize in implementing and maintaining specific ERP systems. It’s vital to set up a maintenance plan with ERP health checks to ensure that your ERP is always up-to-date and running smoothly with the latest applications.
Check out our popular managed services solution for ERP maintenance.
Challenge #5: Choosing the Right Software
80% of experts stated that finding the right ERP solution is something most companies overlook. The ERP solution you choose must seamlessly integrate your current business-critical operations, which typically includes CRM, HR, order processing, supply chain management, data services, management accounting, financial accounting, manufacturing, and project management.
Find the right ERP for your needs with a 3-step process:
- Assess your company’s current suite of software, systems, and applications that it uses for everyday operations.
- Figure out the issues within them that made you decide to adopt an ERP.
- Vet the type, size, and scope of the system that could be a good contender for resolving those issues.
ERP implementations are a capital, labor, and time exhaustive procedure; you don’t want to be at the end of your process and realize that your company invested so much in a tool that only meets some of your needs.
Challenge #6: Maximizing Your ROI
An ERP solution is a hefty expense that requires buy-in from multiple key-decision makers. But the good news is, if done correctly, that expense is only a short-term headache. With the right strategic and tactical groundwork and a solid maintenance plan, you can expect your ERP to continuously provide value to the company.
The wrong approach is looking at ERPs as a one-stop-fix to all inefficiencies. ERP streamlines and unifies core operations, but it is just software at the end of the day. If it’s running the same, faulty processes on it, your business’ performance won’t improve. It will just exacerbate the problem. Remember that an ERP is a magnifying glass — it can amplify the strengths of your systems or make any shortfalls more pronounced. Make sure your key stakeholders and project team have thorough discussions that lay out their current pain points to develop new processes that the ERP can support.
Challenge #7: Picking the Right Implementation Partner
An ERP implementation is often compared to a brain transplant. It’s a complex, highly intricate process that deals with one of the most critical organs of your business. As such, picking the best “brain replacement” is only half the battle. The other half is choosing the right surgeon, in other words, the ERP implementation partner.
You never want to partner with a company that gives you false hope, downplays the challenges, or promotes “quick-easy implementation service.” These kinds of partners bring issues such as project delays, cost overruns, or project failure. ERP implementations are supposed to be a thorough process that cater to the most critical aspects of your business. The ERP partner you choose should be 100% vested in making your project a success and committed to a long-term partnership.
A Successful Outlook
A correctly implemented and managed ERP system can bring your business more rewards than you can reap. Take a look at some of the benefits that it provides:
- Improve employee productivity
- Provide access to real-time data
- Boost customer service processes
- Reduce inventory costs
- Forecast accuracy
- Drive cash flow and cost savings
- Remove production and productivity bottlenecks in every department
- Deliver transparency to businesses with complex structures
ERP implementations can be filled with challenges. But don’t let that scare you — the right strategic partner can help guide you through the process and to ensure you choose the right system that meet your goals.
About 9Gauge, and E78 Partners Company
9Gauge will work with you to make sure you leverage your ERP system to its fullest potential. We conceive and build a solution for your business from the ground-up, so your ROI is supercharged. Let us help you navigate these changes to ensure a seamless transition into growing your business and accelerating your vision. We look forward to using our technology and management expertise to help your business grow, pivot, and transition to new heights of success.
Are you ready to get started on your ERP journey? Contact Us today to set up a discovery call to help you align the right ERP system with your business objectives.
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About the Author
Dave Taylor, NetSuite Principal Solution Architect
Dave is a NetSuite Principal Solution Architect, where he serves as the central resource and driving for the design and delivery of NetSuite to meet customers’ needs. He has over 20 years of experience with ERP and accounting systems, which gives him a deep understanding of how they relate to NetSuite.
eBook: ERP Considerations in Mergers and Acquisitions: Are You Overlooking Revenue Leakage?