6 Questions To Ask Yourself To Mitigate ERP Implementation Risk
Want to avoid common ERP implementation mistakes? Here are some factors to consider.
An enterprise resource planning (ERP) implementation has multiple phases that involve redesigning business operations to benefit from the new solution's capabilities, configuring the system, transferring the company's data, and training the users. This entire process typically takes a few weeks to a few months and can be complex as it impacts business processes across the company. This complexity means that a company may face certain ERP implementation risks during the process, which can affect its timeline, budget, or ROI.
ERP Implementation Risks & Challenges
An ERP implementation can be a challenging time for organizations, but some implementation issues occur so often that they can be easily predicted and avoided. Addressing these risks and challenges in the beginning and monitoring the overall process can ensure a streamlined implementation and help prevent issues down the road. Here are some questions to ask yourself to mitigate ERP implementation risks.
✨Does your organization have clear objectives?
Companies with unclear business objectives are often unable to judge whether they made the right decision or not. Defining achievable and measurable goals for the system is the initial planning stage of ERP software. It is essential to know for a company why it needs to implement ERP and what they want to achieve. So, a company must clearly define why they want to opt for this solution to measure the before-and-after effects of ERP implementation. This improves the efficiency of the deployment process and helps you avoid some of the issues associated with ERP integration. Common ERP implementation goals include standardizing operations, reducing manual work, controlling costs, improving productivity and efficiency, and so on.
✨ Have you selected the right vendor?
With numerous ERP solutions available in the market, choosing the right solution for your company can be daunting. Companies that fail to do their due diligence often end up with a solution that does not have the functionality they require or needs additional customization to make their processes work. To mitigate this risk, you should thoroughly understand your company's business requirements to share with a selection of ERP vendors for a response. Your chosen ERP provider should have extensive experience within your industry, supported by positive testimonials from previous customers.
✨ Is there efficient project management?
An ERP implementation involves a number of stages: planning, design, development, data migration, testing, deployment, support, and later updates. All phases involve critical tasks, and all elements must be on track, demanding complete project management. What's more, for an ERP implementation to be successful, all groups within the organization must participate in developing and using the system. Now, this gets quite challenging as all departments already have several ERP project duties and multiple other priorities. Strong project management, including setting realistic expectations, timelines and milestones, and two-way communication, is a must for successful ERP implementations.
✨ Is there proper data integration?
The most significant advantage of ERP software is that it provides a unified and accurate source of data for the entire organization. The major part of a successful ERP implementation is proper data migration, which refers to moving data from different existing systems into the ERP's solution database. The data is collected from multiple solutions spread all over the organization, with some buried deep within accounting systems, spreadsheets, or applications unique to specific departments.
Data migration must be thoroughly planned and managed with great care to ensure smooth and timely ERP implementation. This activity also allows to filter out redundant or obsolete data occupying space in the organization's existing systems. If not done earlier, it can cause problems, such as duplicate or inaccurate data and challenges to your go-live date. Therefore, careful planning is important to ensure data migration occurs without loss, corruption, or downtime.
✨ Is your ERP project at risk of going over budget?
One risk of ERP projects is going over budget or schedule once the implementation begins. Companies often underestimate the amount of work needed to shift to a new business system or fail to assess a project's technical and human requirements at the outset. As a result of a poorly-planned ERP implementation, the initially-estimated cost gets more than expected, and these cost overruns usually show up in different areas. Other than additional costs, the need to greatly change the budget can lead to delays or cause a reduction in project scope.
Another reason ERP projects go over schedule or budget is scope creep. This is when your project's requirements change or increase midway through the implementation. This usually occurs when the customer needs change, when new issues crop up which were not uncovered during the discovery phase, or due to internal miscommunication and disagreements.
To avoid cost overruns, having a solid budget and requirement plan right from the start is a must. Map your relevant business operations and requirements in detail to help your partner hold to their estimates. Also, determine where any changes or integrations are needed. Adding unexpected integration or customization can easily lead to a cost overrun.
At Kwixand Solutions, we help our clients mitigate the risks of going over-budget and schedule during their ERP implementation through KwixSmart, our 2-phase implementation methodology for Dynamics 365.
✨ Is there a change management plan?
Implementing ERP is much more than switching to new software. In most cases, your business processes are reworked and remapped. This transformation is vital to achieve the desired outcomes like increased efficiency and productivity with implementing a new system. This entire process requires a change in outlook and daily work processes for your staff. Despite the significant benefits of an ERP solution, people are typically resistant to change, especially when they have a set way of doing their job. This gets more challenging if your team fails to understand the importance of implementing the new ERP solution.
That's why a proper change management plan must be a vital part of your project if you want to be successful. You must communicate the features and advantages of the new ERP solution to all stakeholders throughout the implementation process. They should know the need and importance of a new system, how it can benefit them and the organization, etc. Hold training sessions where employees can learn to use the system and have their questions answered. This will help remove any fears and encourage active participation to ensure a streamlined transition.
A successful ERP implementation starts and ends with proper planning, preparation, decision making, and close collaboration with implementation professionals. We can never stress enough that an enterprise resource planning (ERP) solution is a considerable investment for your future as it can boost productivity, control costs, and increase profitability.
That's why it is essential to be prepared for the challenges and risks associated with ERP implementation and work to eliminate surprises. Follow all the guidelines shared in this post to ensure the success of your ERP project, and you'll significantly reduce your chances of implementation failure.
Kwixand Solutions Can Help
If you're looking for an ERP partner who will guide you throughout the ERP implementation process and help you minimize common risks and challenges, the team at Kwixand Solutions can help. We are a Microsoft Partner and ERP consultancy based in Vancouver, Canada, and we help businesses digitally transform while helping them mitigate ERP implementation risks.
📌 Learn about KwixSmart, our 2 phase ERP implementation methodology for Dynamics 365
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