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ERP Implementation Challenges and Solutions for Organizations

I have substantial experience strategizing ERP implementations and have been working with Oracle, SAP, Dynamics and Odoo for 20 years

erp-implementation-challenges-and-solutions-for-organizations

Introduction

In this article, I will be talking about the experiences I have had with ERP Implementation Projects over the last 20 years of my professional life. The objective is to advise the best solution or guide on how to make sure that ERP Implementations do not go to waste and organizations can achieve the full transformation as planned and expected.

I have substantial experience strategizing ERP implementations and have been working with Oracle, SAP, Microsoft Dynamics and Odoo for the best part of my professional life.


What is an ERP?

An ERP (Enterprise Resource Planning) system is a software supporting multiple corporate functions from human resources to accounting, marketing, and more. It can be referred to as a fundamental database for the organization, that connects several groups with a single information source that is accessible to everyone. In addition to efficiency and productivity, it provides real-time information to teams, helping them make informed decisions.

A strong ERP implementation enables organizations to minimize Go-To-Market time, adapt to different business situations and guide the top management in taking factually based decisions.

The Objective of the Article, my two cents

When it comes to the implementation of ERP, there are certain challenges that will need to be addressed. Based on my 18+ years of experience with ERP Implementations of multiple Vendors, in leadership positions, I faced multiple challenges which delayed or stopped the complete transformation of an organization or the process. This article highlights the 8 integral concerns associated with the usage and implementation of ERP. Which include data security problems, choosing an inappropriate partner for ERP implementation, inefficient project management and the selection of the project team.


1. Which ERP to select for the organization

There are many top of the line ERP Applications and many second-tier which are doing pretty good. The other set of ERP Applications that could do wonders for your organization is Open Source applications. I have seen many organizations decide their future based on the market trends, the experiences of a friends company or the cheapest ERP in the market.

The best way to move forward is to get a proper analysis done for your organization to decide on the best fit. This important decision helps you with speedy ROI and early benefit realization. One important item here is to avoid interactions with the sales and marketing teams of the vendors.


ERP Applications

ERP Applications

2. The Importance of Data Security for ERP

Many businesses investing in ERP are encountering certain data security issues including data visibility and access, data privacy and, third-party handling. The major threat to the organization is the external sources. When the internal and external employees of an organization have all the rights to access data, it can an obvious threat to ERP security.

On the other hand, if we talk about cloud storage one key problem to understand is data storage. The data of your organization is not stored locally and instead is stored by a cloud hosting service owned by a third party. While there are some popular benefits of cloud ERP such as minimized costs and improved efficiency, it still risks ERP security to an extent.


3. Bad project management can leave you high and dry

In an ongoing project, there are specified key milestones that need to be accomplished in time. Any delays in the defined plan can cost extra time and money. When employees don’t have enough knowledge regarding the effective usage of ERP or if they are not briefed properly, chances are they won’t be able to comply with the system. ERP implementation incorporates multiple phases – preparation, design, research & development, data transfer and testing, distribution, support, and post-launch. Every phase requires some important tasks to ensure all elements stay on track. Failure to effective project management is a major threat to the business and ERP system costing added money. Many businesses are experiencing this challenge of trying to figure out the priorities when it comes to ERP project responsibilities.


4. Select ERP partners as if you’re selecting a midwife.

An inappropriate selection of ERP partners is a major reason why many ERP implementations do not succeed. I face this challenge every day when organizations opt for low-cost vendors and expect them to provide the services like market leaders. No two scopes and no two vendors can be same so sometimes comparing the prices is not comparing apple to apple.

Considering the fact that ERP implementation requires a comprehensive plan and step-by-step breakdown of all the possible phases, a wrong resource choice is a threat to the overall business functionality. Not allocating the right time and resources to the implementation plan can result in failure. Another shortcoming is the project changes affecting the overall scope of the project. This scope can come out challenging and could be contradicting to the initially defined scope. This in turn adds to project costs and time when the implementation partners are unable to adhere to the plan.

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5. Select a team as if it’s a team for Grand Prix.

In today’s world, many digital transformations are unable to accomplish the pre-defined milestones. The key reason behind this failure is the inability to humanize the change. The hierarchy of employees contributes to the right selection of ERP. The foremost thing is to understand the fundamental requirements from bottom-up instead of top-down, only then an organization will be able to acquire the true benefits.


6. Don’t fall for overselling and understand your worth

The top management of an organization or the individual who is well versed with the ERPs is usually responsible for buying the ERP. However, they are not assisted by the local teams which can lead to a drawback to this inclusive procedure. For instance, the local team can help them with mapping the processes. I have witnessed certain suppliers/partners who either wrongly sell or oversell leading to further delay of the ERP implementation.


7. Own the Implementation

It is important to carry out comprehensive research on your own instead of entirely depending on your partner. This approach is rarely seen among many organizations. The term vanilla implementation or off-the-shelf implementation might not be able to proceed with long-term goals and soon businesses come across challenges when they decide to expand. It is recommended to set future implementation goals.


8. Up your game before going for ERP

Businesses depend on ERP implementation to streamline the processes. However, this may not work well since ERP is more sophisticated than an Excel sheet. It is important to go through the BRP process, streamline the organization’s functionality and, try to match them with one of the ERPs without any support from the ERP. The BRP activities can significantly contribute to the changing work culture

What you should do?

To conclude this, I would say that ERP implementation is a complex process and there are many loopholes in our corporate system that need to be addressed and overcome to have a successful ERP Implementation.

Data privacy, cybersecurity, and data administration are at the top of the agenda for the last couple of years. While many hackers look forward to exploiting applications and data theft, it is important to focus on data privacy and governance. The organization’s ability to proceed with regular corporate functionality while considering data exploiting and theft have the utmost significance.

Improve Data Security

The very first thing organizations must do is to establish standard and strict frameworks to support data administration and privacy. These have to include the technical controls to implement those policies. With the defined risk, implementing strong data governance is an important objective that may require extra investment. However, this added investment is worth it.

An investment such as data masking, advanced authentication, data access & storage and, GRC can considerably contribute to reducing the risk of data security and privacy. On the other hand, tracking user behavior in ERP solutions allow organizations to identify any potential deceitful behaviour in real-time.

For credential theft, identifying outlier access with background controls can reduce the risk. While the internal actors must have legitimate access. Considering many employees across the world work from home, they have relatively more opportunities to misuse the access. Organizations should implement authorization strategies that are both risk-aware and dynamic to manage access and networks.

To prevent data deceptions and thefts, organizations should carry out and maintain audit logs to track any changes. They can opt for authorization when hiring new employees and promotions. Any change in the system must require the consent of the administrator.

At the same time, businesses should take into account when choosing cloud providers and specifically pay attention to data regulations and security procedures.

Hire Knowledgeable Project Managers

It is also important for organizations to hire knowledgeable project managers and other relevant stakeholders that can set realistic expectations, milestones, and time frames along with two-way timely communication.

Select the best team internally

Likewise, with change management, support from the top leaders of the organizations and executives is crucial to success. Organizations who want to effectively execute the ERP system must allocate the best employees who are well informed about the system, organizational process, organization vision and intended benefits. While many companies choose external support, internal employees are recommended for long-term functionality. Upon evaluating the corporate processes and requirements, businesses must analyze potential vendors according to the ERP goal and objectives.

What to look for while selecting the right Vendor

A good partner will get to know your team and learn your business. There are certain things that need to be considered when choosing ERP partners including their experience in ERP implementation, what are the issues they have proactively addressed, the type of industries they have worked in, and how they apply the core ERP features to the corporate requirements. According to a TEC survey, about 50% of the respondents have said that the inappropriate choice of implementation partner is a major reason why ERP implementation fails. Therefore, organizations should choose a partner that works closely with the team from the planning and evaluation to the implementation process. This way, they can better analyze the goals and objectives of the organization and recommend processes that can influence the business functionality positively.


References

https://www.decision.com/how-important-is-data-security-when-choosing-an-erp-system/

https://financesonline.com/top-10-erp-software-company-analysis-popular-tools/

https://www.investopedia.com/terms/e/erp.asp


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