Getting an ERP system implemented is one of the most complicated, time-consuming and expensive tasks that can be undertaken by an IT department. Around every corner lurks the potential for unexpected delays and expenses. We wanted to help you avoid making these expensive mistakes, so we asked technology consultants, ERP vendors and IT executives to offer some advice on how to avoid the most common mistakes when it comes to ERP systems.
Enterprise resource planning (ERP) systems can cost several hundred to millions of dollars to implement, along with hundreds of man hours. These systems are a substantial investment of time, resources and money. When an ERP implementation is successful, it can really help to cut costs and streamline your organization’s workflow. On the other hand, an ERP roll-out that is planned and implemented poorly can be very costly for an organization, both in terms of delays and lost productivity.
To help ensure that your ERP implementation is successful, or minimize possible problems at least, we sent out surveys to dozens of ERP experts (ERP vendors, consultants and IT executives) to ask them to detail the most common mistakes made by organizations that relate to ERP systems, and how they can be solved or avoided. The 5 most common ERP mistakes are detailed below.
1. Not vetting ERP vendors properly. Shawn Casemore, Casemore & Co. president, states that many of his top clients are ‘sold’ by a vendor’s marketing team. Then after the implementation has been completed, they are caught by surprise by lack of capabilities, system functionality and the impact that it has on the organization’s internal best practices. His recommendation is to make sure to ask for references. Get names of three companies at least from your business sector, along with a contact person that you can talk to about the software. Call them and ask about the challenges, functionality and features. If the vendor won’t or can’t provide you with three names at least, find another vendor.
2. Failing to decommission legacy applications. According to John Picciotto from Accenture’s Application Modernization and Optimization, if organizations don’t work on decommissioning applications as part of the implementation process, it will result in an ERP system with the original legacy applications all hanging from it. This results in having extra software that you have support and maintenance costs for, paying for upgrades and hardware, as well as pay for interfaces back to the core ERP, despite the fact that the main point of acquiring an ERP system in the first place was to reduce waste and cost and streamline workflow.
3. Failing to have an active load testing environment. The true results of the changes that you have made can’t see seen from just a few test users. You need to simulate your specific user load to be able to see what the real-world effects of the changes you are making will be to avoid unplanned downtime, which can be very costly.
4. Ignoring third-party support options. According to Jon Winsett, who is CEO of NPI, many companies insist on having premium vendor support, even though maintenance rates have reached all-time highs and the same service levels can be obtained from third-party support providers. All support options should be explored by companies, including hybrid support providers who work with their vendor directly to provide service (like Starbase who provide Microsoft Dynamics AX testing services), in addition to vendors who work independently from the vendor partner program. Using a third-party support alternative can reduce overall support costs by as much as 30-50 percent.
5. Failing to have a maintenance strategy. According to Upgrade Office vice president Marco Valencia, customers who fail to have preventative maintenance performed are not fully taking advantage of their maintenance dollars and ERP investment. When maintenance is not applied, their systems become obsolete very quickly in addition to their business processes. He adds that keeping the kernel up-to-date is very important, with the correct legal changes applied in order to prevent any potential problems from occurring. In addition, installation technology improvements means that customers currently experience only limited amounts of disruptions whenever support packs are implemented.