Efficient teamwork is obviously essential for a successful ERP implementation. Apart from the resistance to change, the company implementing an ERP system faces a variety of technical obstacles. We will list down the 6 most common challenges faced by the SMEs to implement the ERP in their organization.
1. Project Management
Implementing an ERP system in SME is an arduous task as it entails multiple phases. Each phase involves several critical tasks. For that to be executed, all elements need to be aligned. Hence, project management needs to be managed meticulously.
Consequently, to implement an ERP successfully all the groups that are involved in using and developing the system need to participate. That is challenging because all the departments are having their own priorities that need to align ERP project responsibilities.
Strong people and project management, with setting realistic expectations, milestones, and deadlines, coupled with two-way communication are necessary for success.
2. Project Planning
Businesses often underestimate the budget and time necessary for a successful ERP implementation. Two of the major common causes of the company having budget overruns are firstly, underestimating staffing needs and secondly when a business adds features or capabilities to the system that weren’t primarily part of the original plan.
A realistic project plan will simplify decision-making processes if it considers minor cost overruns and possible speed bumps and keep the project on track by addressing these problems in advance.
3. Data Integration
One of the functional advantages of ERP is that it gives a single and accurate source of data for the whole business organization. Data migration is a key step in ERP implementation. It generally includes consolidating and transferring data to a central database from multiple systems.
But first, you must compile all your data. This will be a bit more challenging than we expect. The information may be spread all over, buried in department-specific applications, paper, accounting systems, and spreadsheets.
A thoroughly planned data migration helps keep the entire ERP implementation project on budget and on time. It’s also an opportunity to weed out redundant and obsolete data hidden in the company’s older systems. From the other angle, under-prioritizing data migration can result in duplicate or inaccurate data and go-live delays.
4. Data Quality
Once the business has detected all data sources, it can start planning their migration to the ERP system. But that will require a serious data hygiene exercise. It is due to the interactions of multiple departments with the same orders, products, and customers.
Businesses often possess the same information in duplicate versions in their systems. Information may also contain other inconsistencies or may be saved in different formats.
The team should understand the significance of cleaning up data and assigning related responsibilities for doing so. For example, the customer data will be handled by the customer service group and all the financial data will be handled by the accounting.
5. Change Management
As an integral part of implementing ERP, many companies revamp business processes to reduce costs, increase efficiency, and so forth. In such conditions employees must learn to not only use new technology but also adapt to the new work processes that are occurring day to day.
Resistance to change can be an intimidating obstacle. But the resistance can be reduced by getting buy-in from stakeholders and leadership across various departments early in the process.
Communicate the advantages and features of the new ERP to all leadership and stakeholders all-round the implementation, especially to the end users. We should also make sure that they receive extensive training and support to help them in adopting the system in a quicker and easier manner.
6. Cost Overruns
ERP projects are very infamous for crossing budgets after the implementation is done. Many businesses underestimate the work required to move to a new ERP system, and that often results in spending more than expected. Such cost overruns need to be handled efficiently and effectively for the smooth implementation of the system.
When internal resource runs low, organizations often lookout a third-party consultant or software vendor’s services team. This is very common if the solution requires important customization to meet your business’s needs.
Training costs and other costs also come under the blanket. All the other costs need to be considered to handle cost overruns. Often, handling implementation under the budget is encouraged to keep the SMEs well on its track to profitability.
Conclusion
Above, we saw a gist of challenges faced by the organization to implement an ERP system in SMEs. Once implemented, the businesses use them for a longer period. Hence it is imperative to perform periodic assessments so that they meet SMEs’ business needs. An obsolete ERP system can be a big obstacle to business that can be solved by bringing an appropriate replacement in its place.
© Process Master Technologies Pvt Ltd – July 2022