The 5 Biggest Challenges When Implementing ERP for the First Time

Enterprise resource planning (ERP) systems or similar IT packages have

become widely used in businesses of all sizes and types. From my
understanding, small and family businesses or companies are the only ones
yet to join the mainstream trend of implementing ERP software, although the
vast majority of medium and lower-medium-sized companies have already
performed an implementation at least once (some of them twice or even
more often). But I thought it might be interesting anyway to see how my
personal experience and the conclusions I have drawn for myself correlate to
implementation issues and business practices in different regions and sizes
of businesses. I placed the 5 categories of problems in ascending order
based on the degree of “entanglement.”

1. The selection problem. Say a company has decided for many reasons to
launch a managerial information system implementation project. The very
first question that managers will face is what type, size, and scope of the
future system they actually require and how to choose the most suitable
solution among the hundreds offered on the market. There is no single
answer on how to find what you need; and the whole consulting and research
industry is there to serve these needs. Our company tries to deliver the best
value, as well presenting its core eBestMatch decision support engine and a
long list of other supplementary services. Eventually, this selection problem
arises for all businesses without exception and should be considered as
seriously as possible for the reason that ERP system choice predefines a
company’s strategy for at least the following 6 to 10 years and, no doubt,
has a telling impact on the future success of the entire business.
2. Technical issues. How to successfully select a software package is
important but not the last problem that will appear on the thorny path
toward getting all of the system of software and hardware working together
and bringing any value back to the company. Another set of implementation
issues is related to the technical part of the project, and covers the servers
and workstations to be revised and— probably—the new and modern ones to
be ordered, purchased, and replaced. The internal network also has to be
analyzed and modernized if required; the speed and bandwidth of the
existing Internet access should be taken into consideration, along with
possible technical concerns about the mobile devices being used. If these
questions are underestimated, they can dramatically impact the overall
result of the project and easily delay the “happy hour,” or poison the first
few weeks (or even months) of using a new system with slow performance,
resulting in a slackening of the existing pace of business. However, I must
note that the situation has been changed during the last few years, and
plenty of software-as-a-service (SaaS) applications that have shown up on
the market now allow the cost and headache of hardware problems to be
minimized.
3. Data quality issues. This issue is particularly symptomatic of companies
that are implementing ERP for the first time and transferring their legacy
data into the new system from Excel spreadsheets, manual records, or old
disparate applications. Basically, the question is that old data that have been
used and stored for years can for many reasons appear approximate or even
incorrect in the new ERP reality. For example, in my experience (an ERP
implementation project for a midsize metal manufacturer): in the middle of
the project, we converted existing bills of materials (BOMs), BOM routings,
and hour tariffs into the new system and realized that the products’ new lead
times exceeded real ones twice or more. Thanks to adequate project
planning, we had some time to fix the data immediately by dedicating
engineers and analysts full-time for a few months and accordingly modifying
the implementation plan; but even in this case, the project was delayed for
two months. So, be careful with your old information, as it can be far from
reality, and always make “pilot” tests of new system outputs using legacy
data.
4. Business philosophy changes. ERP implementation brings significant
changes into a company’s conventional business model and the day-to
day practices it has been using for years or even decades. With the
new system, information that a user enters in one screen becomes
immediately available to another user; an employee’s level of
responsibility is dramatically increased as it is more difficult
(sometimes impossible) to fix erroneous data or typing errors; new
approaches to data reporting and mining and, thus, new managerial
principles and practices have to be established; and finally, real
business models and business processes might require massive
changes because of new real-time opportunities and data availability—
these are only a few examples of how serious and meaningful business
transformation can be, post-implementation. Using wise and forward-
looking ideas and conceptions when implementing ERP, it is definitely
possible to return something much more appreciable than simply
screen replacement. This is a real challenge, but at the same time it is
a great opportunity to refresh the business and bring new ideas and
lay a strategic foundation for future breakthrough.
5. Psychological issues. This is the most difficult type of issue to resolve.
These are the questions and issues that originate from the aspect of human
nature that never accepts any change without seeing the visible advantages
of it. This is an “ERP project manager‘s favorite” variety of problem, arising
from users’ habits and their understanding of what’s good for the business in
general and for the user in particular. “It’s been always like this before you
came in,” “I don’t think it will be ever working,” “It’s not working on my PC,”
“I will be talking with the CEO about this system,” or “You don’t understand
how it should work”—these comments sound familiar to anyone who’s ever
tried to implement a new system or change users’ requirements. It is really
difficult to describe or classify the possible troubles in this topic; actually,
any question can appear. I would recommend trying to predict such
problems at the planning stage of the project in order to reduce the potential
negative impact of users’ possible contra-collaboration activities. The best
way here is to interest different groups and categories of system users
ahead of the project; inform them of any news and project milestones;
establish reliable feedback communication channels; stimulate people to
generate new ideas and provide suggestions; organize interesting and
promising training sessions; celebrate the best user’s achievements; and so
on. In other words, ERP project leaders must become respectful allies;
otherwise, ignoring the users’ experience and concerns puts in doubt the
entire project and can kill any excellent undertakings.