What are the challenges faced by ERP System?

Different Organizations face different types of challenges while implementing an ERP System. These challenges are mainly due to size of the system and its overall effect on the company’s business operations. An ERP System features provides real-time integrated information and data to all the units of an organization through one single application. Prior planning for ERP Application development is very important to overcome the challenges faced by this centralized application. ERP implementation invites diverse issues and challenges among which value creation and economic returns are some of the critical ones. In spite of multiple potent benefits offered by the implementation of ERP System, these issues and challenges assume particular importance within SME organizations.

ERP issues and challenges are very critical to understand before its planning, development and integration with other applications. Accurate and successful implementation ERP is of great importance otherwise the number of challenges face by ERP will be much higher than its benefits.

Challenges versus Benefits of ERP Software System

Before, during and After ERP implementation challenges:

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Following are some challenges you should be aware of when implementing ERP System:

  • · ERP Module Integration: ERP system consists of many functional modules and the integration of ERP modules could be either the integration of modules from multiple vendors, or the different versions of the modules from the same vendor. The other challenging factor of ERP adoption is the integration with other e-business software such as Customer Relationship Management (CRM), Supply Chain Management (SCM), Business Intelligence (BI), Information Management Systems (IMS) and more.  Moreover, integration of ERP systems with legacy systems is more difficult than the integration of ERP modules and integration of e-business applications. It requires the installation of third-party interface software for the data transfer between ERP systems and legacy systems.
  • Fear of Past Implementations Experiences: Many companies resist ERP implementation when they hear about unsuccessful and failure stories of organizations that have attempted implementing ERP System.  This is why it is even more critical to choose the right ERP system for your specific industry and with an ERP vendor who has a successful track record and rentention rate with other enterprises just like yours.
  • Lack of competitive benefit: The ERP implementation does not guarantee any competitive benefit. The major issue is to ensure that ERP would generate positive results and return on investment.  Therefore thorough analysis of software vendors, systems, objectives, goals and expected returns is required.
  • Time consuming & Expensive Implement: plenty of time and effort needs to be put in into ERP implementation before it actually starts yielding result. ERP cost structure categories:
  • Analysis
  • System designing and customization
  • Implementation
  • Training cost
  • Maintenance
  • Support cost

Commonly, the implementation and support costs are not planned properly as a result of which companies have to cut back on ERP maintenance services and supports.

  • ERP limitations & Resistance to Change: The primary issue is to figure out what system can and cannot do. A trial run of ERP software is very necessary in identifying limitation and errors linked with the application. Moreover, organizational cultural resistance is the major challenge associated with ERP adoption. It’s not an easy job to convince business units of an organization to switch from already running business processes to ERP system.  Usually in these situations the two main threats are replacing known processes with an unknown, and taking away decision-making authority for the routine business activities. If the advantages of ERP systems are not explained well, the employees can even resist and slowdown the development and adaptation process of the ERP system.
  • Full fledged or Partial ERP: To implement ERP full fledged or customized an already existing one is one of the biggest challenges faced by many organizations. The requirements of each company are different so it is not advisable to go for full fledged implementation unless it is absolutely  necessary or in the best interest of the organization. Partial or customized ERP indicates implementation of ERP to perform only selective functionalities and roles. ERP is a flexible application however the major challenge is to add need based functions only.

The above mentioned issues can be faced by any organization before, during or after ERP development. The major factor in implementing a successful ERP system is the ability to handle these changes.

How to handle challenges faced by ERP?

For successful ERP implementation and adoption the support of higher management or top-down approach is extremely critical. People at the top management have the authority to affect changes in the organization’s working pattern. These changes are sometimes very critical for proper ERP operation after its implementation.

Proper handling of management changes are also a significant factor which determines accomplishment of ERP implementation and its function at later stages. From the beginning of implementation, it is very important to keep key employees and stakeholders motivated; they should be actively involved and considered valuable participants in the development process.

Summary

Every company and its departments have its own challenges to overcome that can be quite different from each other. Lessons learnt from ERP implementation, including challenges and failures, should be studied and analyzed properly. By doing so companies can learn more about themselves so as to grow and be prepared to overcome future challenges and achieve overall organizational goals and objectives.

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