Don’t Let ERP Eat Up Your Profits
According to a recent Gartner survey, the top goal of over 3,000 CIOs in 2018 is to power business growth through digital transformation. Nothing drives innovation more effectively than enterprise resource planning (ERP) software. Epicor ERP, for example, has long provided a scalable solution with cohesive modules. With each update, Epicor improves usability, offers more support for global expansion and takes advantage of cutting-edge technology to increase insight and performance.
But an ERP implementation isn’t a guaranteed win for manufacturers and distributors. A successful implementation results in ROI and overall process improvements, but when implementations, subsequent projects or ongoing care of the system go wrong, your software starts eating into your profit margins. ERP failure stories demonstrate what happens when businesses don’t take a vigilant approach to projects and continuous improvement. In this piece, we dig into the five pitfalls that lead to ERP failure. Steer clear of these problems, and you’ll be on your way to meeting business goals with ERP!
1. Lack of Due Diligence
Due diligence is vital for any IT project, whether it be something as complex as an implementation or as simple as a data cleanse. It is the art of laying out business processes from quote to cash, understanding what users need to complete tasks and selecting a methodology that meshes software with people. That’s often too much for a company to take care of alone. More companies achieve project success by sourcing a software consultant who can conduct this process for you, and help a business merge the gap between IT and management. An expert’s job is to ask who, what, when, where and why—a lot. This diligence on the front end can eliminate a lot of unforeseen costs later that dip into profits.
2. Putting Financials First
So many companies make the mistake of putting their financials on a pedestal. While understanding business costs is important, communicating a deliverable that requires financials to be configured first is an expensive decision. Why? The most common reason software projects fail is because of processes and organizational issues. When investors emphasize financials as a priority during implementation, they put in place a top-down approach of the system that the rest of the business must adopt. Essentially, the company is doomed to duplicate the problems of the legacy system into the new system.
What you should do instead is deploy a business process modeling (BPM) expert to approach the implementation with a bottom-up methodology. What should occur is a map of key business processes systematically placed to streamline operations. Thereafter, all costs associated with jobs, labor and machine transactions (i.e., financials) will rise to the top. This alleviates a company from spending thousands of dollars later on reconfiguring the system. Bottom line: always prioritize business processes.
3. Reliance on In-House Modifications
More times than not, companies will look to complete IT projects on their own. This may be one of the the least successful approaches to business software implementation, upgrading or training. Why? Investors end up delegating more costs to the development of the software itself than on creating a solution for business process improvement.
ERP success requires blending BPMs with technical components. That means the people in charge of the project must have knowledge of both sides. IT teams, however, have a more robust understanding of technical components, while other employees understand business needs but not the technical side. It’s difficult to bridge the divide, and the result is often a system that fails to meet business needs and requires extensive customizations throughout your ERP’s lifetime. Rather than offer sizable ROI, your software becomes a money pit, and your IT team dedicates almost all its time on ERP projects.
Don’t rely on in-house modifications. Source an ERP expert who understands your industry, business process modeling and software. A software consultant can serve as the central touchpoint to bridge gaps in your project and build a solid system based on your unique business needs.
4. Poor Change Management
The most common reason projects run well over scope is because there is no plan to manage change. Change management involves constant communication between the project committee, senior sponsors and users. This ensures everyone is fully involved in the changes made to a business process, or a configuration to the system, and are held accountable for that change. This way there are no unexpected issues that either extend the scope of the project, or call for an increase in funding for the IT budget next quarter. Also, change management ensures users will adopt the system since it is tailored on a week to week basis around use cases—documents that detail how employees and software applications interact with each other.
This process inevitably delivers a system that is fully functional and completely purposeful. Source a business solutions expert who implements a change management narrative into each stage of the project. This brings all stakeholders clarity on what to expect from the system. Even more importantly, departments can remain focused on their existing roles without taking on any other projects that move their attention to areas needing their full time and energy.
5. No Continuous Improvement
Continuously improving the system is as important as any project occurring at your company. This should be something budgeted for by your IT department. A continuous improvement plan (CIP) involves sourcing a third party to assist on data scrubs, modular integration, system integration and user edification. Ultimately, it expands the lifetime of your ERP instance. This added maintenance keeps components of the system powerful and agile enough to bring in ROI as fast as advertised. CIP projects are affordable and worth the investment.
ERP can power the digital transformation craved by manufacturers and distributors set on gaining a competitive edge, but when implemented and maintained poorly, it can drain company resources. By teaming up with a trusted ERP consulting firm, you save your business from potential risks and losses.
Datix, an Epicor Platinum Partner, can jump in at any stage of your enterprise software journey to help you achieve major business improvements. Implementations, re-implementations, integrations, upgrades, customizations, error handling—you name it, we do it. We host an array of ERP, CRM, eCommerce and integration solutions under one roof to enable our clients to transform their business through software. Contact one of our experts, and begin your transformation today!