Wednesday, May 31, 2023

Leading Challenges Businesses Face During ERP Implementation

By Anushree Bhattacharya - March 20, 2023 6 Mins Read

Leading Challenges Businesses Face During ERP Implementation

The emphasis of ERP is on-demand technology for enterprises. In light of advancements, several ERP implementation challenges are evident at scale. CIOs should focus on the challenges and manage the increasingly complex hybrid ERP environment.

Leading firms are endeavoring digital technologies to drive technology and business advantage. Yet it depends on CIOs to be promoters of such a new digital mindset. They envision digital technologies as a strategic imperative and a tool for competitive differentiation.

With this concern, many business leaders have understood that ERP is one of the crucial parts of digital technology, and its integration into new business models is essential. The cloud-based ERP is necessary today for driving market innovation, differentiating, and creating profitable growth.

Also Read: Reasons to Use ERP Systems in Businesses

However, every technology evolution and its implementation causes a particular set of challenges. So is the case with ERP systems as well. After being digitally advanced with cloud-based ERPs, still, some business executives face numerous ERP implementation challenges.

Why an ERP Implementation is Challenging

An ERP implementation can be a complex mission as it can adversely affect the existing business processes. And to realize the capabilities and abilities of the new system, businesses often have to modify the functionalities and operations accordingly.

Companies are usually also required to replace longstanding manual processes with more efficient automated ones.

These instances result in a complex business process due to the implementation. Another challenge is the lack of awareness of new technology implementation. They may lack an understanding of capabilities and usability challenges or may take time to get adjusted to the new process. These also add to the challenges businesses face during or after ERP implementation.

There could be numerous ERP challenges businesses may face according to how they integrate it, but there are some leading challenges that come automatically with the implementation of ERP. Business leaders must know about them to prepare beforehand or may find other solutions to overcome those challenges.

Leading ERP Implementation Challenges

Here are the top leading challenges implementing ERP systems organizations may encounter when beginning with enterprise system implementation.

Data Integration Issues

ERP provides a particular, accurate source of data for the organization. Data migration is a critical step in ERP implementation. And this step confronts a key challenge for businesses. How? Migrating an ERP system requires accumulating data in one place, which is a big challenge because it takes time.

As a result of this, operations related to data sometimes need to halt. The data information may be spread across the organization and hidden in accounting systems, department-specific applications, and spreadsheets.

On the other hand, when data is ready to be migrated, it needs alignment with the ERP system and its processes, and this could vary for different businesses, as ERP implementation follows the needs of the business goals. This is a leading ERP implementation challenge many companies face.

In addition, under-prioritizing data migration can cause business disputes such as inaccurate, repetitive, or duplicate data.

Data Quality

Good Data quality is essential as legacy data often doesn’t go well with the new tech stacks. So when legacy data is used in modern ERP systems, the result is poor data integration, a common complaint against ERP in CIO circles.

Data duplication also hurts data hygiene exercises, often resulting in cluttered data that does not comply with modern business operations. This results in the non-acceptance of data by advanced ERP systems. Inconsistencies, inaccurate data, dead data, and duplicate data are all reasons behind rising ERP challenges among businesses today.

So before the plan of integration of ERP systems is made live, business leaders must focus closely on data quality before migration.

Inadequate ERP Project Planning

Organizations often undervalue the budget required and the necessity for a successful implementation. One of the leading ERP project implementation challenges occurs due to inadequate project planning, which mainly includes budgeting.

Statista, in its report Reasons for budget overage for ERP implementation projects worldwide in 2021, mentions that in 2021, 48 % of businesses identified organizational issues as one of the main reasons for the failure of their ERP implementation, that because they undervalued their budget.

That means budgeting is impossible without a clear and realistic ERP project plan, which may negatively impact ERP project planning.

Also Read: 7 Core ERP Features for Every Enterprise

Improvements & Maintenance

An ERP implementation is not a ‘once done for all’ effort that ends when the new system is fully functional. The plans must evolve and upgrade to support new business demands and technology. This is also one of the biggest ERP challenges for ERP solutions and processes.

Many businesses maintain and continuously improve their ERP platforms, but many others fail to leverage the system’s power and may cause different business project hurdles. The systems need to fix issues related to functionalities, software, technology, or others to support new requirements as they come up.

Cloud-based ERP systems require new features and innovations to help fulfill the businesses’ needs for which the system. An outdated ERP system can hinder the business process, make it inefficient, or if the company is aware of this drawback-, it must replace it with a better one.

Technical Challenges

Another leading ERP challenge and risk is the technicalities of ERP implementation. Unless firms adopt a cloud-based ERP system, servers and hardware likely need reviewing regularly and manually. This is one big challenge that business leaders must note.

Technical glitches often occur when ERP implementation happens due to inadequate infrastructure and the absence of particular technology required to align the system with business operations.

The speed and bandwidth of the existing internet access can also be a challenge. If these requirements are not met, they can impact the overall results of the project and businesses also.

Planning for ERP Implementation Success? It’s Not Easy, But It is Worth It

The ERP implementation process requires focused planning, effort, and monitoring. These elements are crucial to business success and minimize the challenges of ERP systems. Addressing the four ERP implementation challenges can ensure they are addressed before the implementation begins with proper planning stages.

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Anushree Bhattacharya

Anushree Bhattacharya is a Senior Editor with Ondot Media, covering stories on entrepreneurship, B2B business sustainability, business strategy, thought leadership, professional development, and corporate culture. She is a quality-oriented professional writer with eight years of experience writing for multiple domains for US, UK, & Europe audiences. She blends out the best of information on the trending digital transformations and pens down technology-driven stories and SEO-optimized content. For the last three years, she has been curating information-driven stories for data analytics, B2B industry trends, and associated strategic planning. With a proven understanding of the current corporate culture and B2b business world, her writing style is more inclined toward how B2B businesses want to perceive information about industry events, best practices, multiple industry insights, succession planning, customer experiences, competitive advantage, and other emerging digital transformations and developments. Her 1.5 years of experience in market research has made her a skilled content curator for major business strategy, current workplace diversity in the wake of digital transformation, changing industry trends affecting business decisions, and organizational effectiveness that’s creating a different angle for business executives to generate revenue. She crafts stories to give C-suits insights into how they can gain a competitive advantage with the help of succession planning and implement strategies to achieve maximum ROI.

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