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admin
- May 23, 2022
You’ve heard about the advantages of digital transformation and are ready to roll out an ERP system to your entire company. However, you may be discouraged after learning about the significant failure rate associated with these ventures.
You don’t have to suffer the same fate, thankfully. With the correct measures in place, you can ensure that your ERP, SCM, or CRM implementation is successful right from the start. Understanding the inherent ERP risk factors and what you can do to mitigate them is the first step.
Six Risks in ERP
1. Prioritizing technology over people
Of course, you want to make sure your project’s technology is up to par. You’ll visit with ERP vendors, study technical aspects, and test everything thoroughly to ensure it’s working properly.
However, it’s critical to devote just as much effort to the project’s human resources.
When you adopt enterprise-wide software, you’re directly influencing how your people work. They’re being asked to leave their old workflows and adopt new ones. They’re also expected to learn the ins and outs of a system that they’ve never used before.
You can ensure that you’re devoting the time, money, and resources needed to help your workforce successfully transition by prioritizing organizational change management (OCM).
In our ERP consulting expertise, we’ve seen that most ERP failures are caused by project teams who place a low priority on OCM, expecting that end-user training will suffice to bring their teams up to speed.
A Payroll System That Didn’t Work
Panorama’s Expert Witness team was hired to conduct a forensic investigation and write a report for the court on a botched ERP/payroll system implementation by a large software developer.
Study the Case
2. Choosing the Incorrect Software
When you start looking for ERP or SCM software, you’ll notice that there are a lot of options. If you rush through the software selection process, you risk getting a solution that doesn’t meet your needs or won’t grow with your business.
To avoid this, gather business needs by identifying pain points and laying out your future state process. You should define short- and long-term business goals during this phase.
After you’ve completed these activities, you’ll have a better idea of which requirements to prioritize when evaluating solutions. Whether you’re looking for the finest ERP for manufacturing or the best CRM for your retail firm, compiling requirements before selecting an ERP is a lifesaver (and time saver).
3. Failing to Reengineer Business Processes
Future state process mapping is critical, as previously said. But how do you get to these future state processes in the first place?
Business process reengineering will be used in various scenarios. You’ll modify your workflows to address inefficiencies as you discover them. We propose that you maintain your process maps high-level so that you can implement the best practices of the solution you choose.
The more best practices you adopt, the less likely you are to need to buy third-party add-ons or tailor the solution to fit your non-standard operations.
Only get ERP software from recognized, experienced vendors to avoid this danger. Ask them to detail their approach to minimizing security threats and protecting your business before you agree to their solution.
4. Ignoring Security and Privacy Risks
ERP systems unified and centralized company data across the organization. As a result, having strong security measures in place to protect company data is vital.
Even a tiny data breach could disclose a large number of records, harming both individual employees and your entire company. This can harm your brand’s reputation, ruin your partnerships, and demoralize your employees.
5. Low levels of executive buy-in
A digital transformation needs the full backing of your C-suite to get off the ground. It may appear straightforward, but garnering that support can be more difficult than anticipated.
To get executive buy-in, demonstrate to them how the investment will help the company and what benefits they may expect.
After they’ve approved the project budget, you’ll need to persuade them to stay on board.
These executives should, for example, organize an executive steering group to define the organization’s digital strategy and make choices on resource allocation, project timelines, and budget.
6. Data of poor quality
The data you enter into an ERP system (even one of the best ERP systems) determines its functionality. This is why data cleansing and transfer are critical.
Don’t import records from your legacy systems that are incomplete or erroneous onto your new platform. Transferring several records or files that contain the same (or similar) information is also a bad idea.
Because an ERP system rollout involves departments from all throughout your company, there’s a good probability that dirty data will emerge.
As a result, set aside enough time for data migration and testing before implementing the system to guarantee that all records are thoroughly checked.
Risk will always exist. It Isn’t Failure.
These ERP risk considerations necessitate caution. You may set the groundwork for a successful digital transformation by adopting safeguards early on.
It’s easy to integrate the software with your business goals if you know which actions to prioritize.
Our ERP specialists can assist you in reducing risk and preventing ERP failure. To discover more, request a free consultation here.