ERP Implementation: Common Challenges and Potential Ways to Mitigate Them

Embarking on an Enterprise Resource Planning (ERP) implementation journey can revolutionize a business, integrating disparate functions, amplifying efficiency, and providing real-time insights.

Often known as the single source of truth for organizational data and communication, ERP acts as the most critical software platform for an organization.

ERP implementation generally comes with high expectations from business and functional stakeholders. It begins by exhibiting a vision that promises to transform how businesses operate, improving productivity, transparency and compliance as some of the key benefits.

However, this transformative journey is often marred by complexities and challenges. Let’s look at some of the key challenges faced during an ERP implementation and possible ways to mitigate them.

1. Requirement gathering

ERP touches every business and functional department of an organization. Compare it to the challenges we face while building an application for a single business process, and we can imagine the level of complexity staring right at us during an ERP implementation. In true terms, unless there is prior experience in implementing ERP, knowing the level of complexity may not even be possible. Requirement gathering becomes very complex because it rolls over multiple processes within the same function, and then across departments. There is a need to find integration points across processes, which add another level of complexity. For example, an order execution may exchange data with procurement, supply chain, financial and project management systems. It is therefore imperative that requirements are managed by ERP experts who have prior experience in more than one ERP lifecycle management. Detailed joint planning with business stakeholders is crucial to being with.

• Integration

While functional requirement is one key aspect, a proper ERP implementation relies highly on data and communication flow between various functions. Integration is mostly challenging because most times business stakeholders have limited exposure to the processes of other departments. Even if they know what they need from others, they may not be fully aware or concerned about what others need in return. Depending upon the environment, it may be useful to nominate a functional integration specialist who can work across user groups to understand and document handshakes between processes and third party vendors. The functional integration specialist should then be working with a technical integration team to translate functional flows into technical flows.

• Unclear business processes and change management

There are many stakeholders who are not as well-prepared for such a complex implementation. Reasons could be plenty, from no single process owner, manual / semi-manual operation, lack of internal team collaboration and executive support, or a combination of more than one of the above reasons. This generally leads to frequent changes in process flows, leading to change requests. While change request is a normal expectation in any software implementation, the impact if much higher in a large implementation such as an ERP. Change management is one of the most crucial elements in such a scenario. Most conflicts begin here and end up dragging the implementation, which subsequently leads to higher costs, timelines and discontent.

This is where the role of strong Project Management is most crucial. It’s a tricky situation when you are managing changes that are directed from various sources. Strong project management helps secure executive support through trust and transparency, sets realistic expectations and facilitates constant two-way communication.

• Complexity due to excessive customization

Excessive customization leads to issues such as longer project timelines, increased costs, complexities during version upgrades and overall stability. ERP systems are not particularly designed to go through too many customizations beyond the framework designed by the product companies. A more appropriate approach is to build or source specific external applications for needs that are beyond ERP’s standard capabilities and integrate the same with the ERP system.

• Data Mapping & Migration

ERP systems act as the single source of truth, storing and exchanging large amounts of data. This makes data management another big challenge in an ERP implementation. Incomplete, inconsistent and duplicate data are some of the common factors in most environments. Dealing with data issues is complicated and exhausting. A dedicated data management team closely working with data specialists on the business side can streamline data management. A clearly thought through future state data structure will ensure data integrity moving forward.

• Cost Management

ERP implementation is not just complex but costly. It’s a huge investment that can often overrun. Duplication of efforts, missing out on key tasks while scoping and frequent deviation from the original plan are some of the main reasons for cost overrun. Spending more time in the planning phase, sticking to the original delivery plan, keeping certain contingencies in the budget for unknown factors and strong support by project sponsors and executive level to stay aligned with the original plan could limit exposure to cost overruns.

• Adoption

ERP is a massive change of habit for users. When it comes to technology, higher adoption is usually a result of simple design, training and executive mandate. In the case of ERP, we feel the executive mandate plays a more vital role. It’s a push from the top that translates into faster adoption.

Additionally, identifying super users in each function with measurable responsibility to work closely with users and guide them through the transition phase can have a positive impact on adoption. Internal marketing through various platforms should also be utilized. Such communications should showcase the positive impact that ERP is likely to bring.