It happens all too often, companies spend years and big-money implementing a new ERP system. But, it never lives up to its potential. Some of these cases are so extreme they even make the news. Consider waste management, whose 18 month original project timeline turned into several years and ended with they and their ERP vendor going to court. Or Hewlett-Packard, who tried unsuccessfully to implement multiple ERP programs over the course of a few years. Like many businesses who implement an ERP system, their goals were to cut costs and simplify their processes. But, what they got instead was lost data and a bill for over $160 million.
Though these are extreme cases, these stories illustrate just how high the stakes can be with an ERP project. Even if you’re a small to medium-sized business who is implementing a business management system on a much smaller scale, failure may not cost you $160 million, but it can still profoundly influence the success of your business.
The good news is, these stories, and others like them can teach us a lot about what not to do when buying a new business management system.
Biggest ERP buying mistakes businesses make and how to avoid them
ERP buying mistakes #1: Not taking stock of your needs
Before you begin even researching ERP systems, you should have a clear list of problems you are trying to solve and goals you would like to achieve. Get input from every department who will use the system. Don’t just get input from a few. After all, if users feel like the ERP system makes their job harder or doesn’t give them what they need, they will not use it. And, if people don’t use the system, it cannot deliver the ROI you expect.
ERP buying mistakes #2: Not comparing multiple vendors
Once you have a detailed list of your company’s needs, it is important to research and compare several vendors. If you go with the first one who looks good, without considering others, you may overlook one that might be a better fit or give you a bigger bang for your buck.
Comparing ERP vendors can be a tedious and time-consuming process. So, it’s important to set aside time in the evaluation phase to do this. You’ll thank yourself later. Also, to avoid confusing products, it's helpful to lay out each of your needs in a matrix where you can check off whether a product meets each one. Acumatica has published a great example of an
ERP buying mistakes #3: Letting unimportant features distract you
When you are just beginning to research ERP solutions, or getting demos from your short list of vendors, it's easy to get distracted each program’s standout features. But, before you let them sway your decision, refer to the list of needs you created when you started your ERP buying journey. If a feature doesn’t help you solve a problem or reach a goal, it is not something that should be a major factor in your buying decision.
ERP buying mistakes #4: Ignoring the fact that a new ERP system is a major change for your business and its employees
It is well-known that user adoption is one of the key factors that decide the success of ERP projects. However, many companies choose an ERP because they want to streamline or unify business operations without considering who will use the new system and how it will affect them. This leaves users reluctant to adopt the new system. To avoid this, it is important do two things. First, during the evaluation phase, get users' input into what they need in an ERP system. And second, once you have chosen your system, make sure all users get the training they need to learn how to use the system effectively for their role.
ERP buying mistakes #5: Failing to weigh the pros and cons of cloud versus on premise ERP systems
With cloud ERP systems getting all the attention in the press today, it's easy to just assume that one of these new shiny systems is the best fit for your business. It goes without saying the cloud offers many benefits and will be a great choice for a lot of companies. For example, if you have remote workers on your staff, cloud systems make it easy for them to access the information they need. Plus, you no longer need to invest in server hardware to run the system. And, you can reduce your IT staff’s workload, as the vendor handles software maintenance for you.
But, on the other side of the coin, it is worth noting that many cloud solutions bought as a SaaS subscription cannot be customized as much as they are on premise cousins. That means, if you have a legacy system that is still critical to your business, it may be difficult to integrate the two. Also, users will have to adapt to the new system’s way of doing things. So, training becomes even more important.
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By: Laura Schomaker, Intelligent Technologies, Inc., A South Carolina Microsoft Dynamics and Acumatica partner