Common Mistakes of ERP Implementation

The global ERP software market is expected to be worth $41.69 billion by the year 2020. ERP software is undoubtedly one of the most important software businesses must invest in. However, one of the crucial things is how businesses implement this ERP software. We, in this article, aim to go through some of the common ERP problems and provide tips on how to avoid them.

Though an ERP might be the best thing that can happen to a business, statistics show that nearly 50% of ERP implementations fail the first time around. This is concerning because businesses spend a considerable amount of money and time on the development and implementation of an ERP system. 

When we talk about ERP, at first, it seems that a business needs all the features and functionalities in their custom ERP. They get overwhelmed trying to determine which features and functions are the most important.

 So, we decided, leveraging our 8+ years of experience in enterprise software development, we will provide tips that will help navigate this complex landscape. We are going to tell you about the most common mistakes of ERP development and implementation and will also provide suggestions on how organizations can avoid these mistakes. 

ERP implementation problems

[1] Problems with requirement gathering

You know how when you build a house, you need a blueprint to make sure everything is in place and visualize all the components and elements. Same thing with developing an enterprise application. 

Before you hire a software development company, you need to have a plan. It is very tempting to add all the processes and automate everything with an ERP. But, it is crucial that you carry a complete audit of all your business processes to identify both efficient and inefficient processes and redesign the inefficient ones. 

Once you figure out the various processes that the ERP needs to automate, make sure you document them. Also, document the end-to-end process flow. This document doesn’t need to be a masterpiece but it should have an overview of what you need your system to be and how you envision your ERP system to work. 

Later on, the Enterprise software development company you choose to develop your ERP can work on this document and modify things according to user logic and user flow. 

On an average, ERP implementations take 30% longer than expected and cost 3-4 times the initial budget.

Source: Solutions Review

Both parties should treat this document as the holy bible and wrap the time and cost estimates around this document. Any major swaying away from the document will cost extra bucks and take extra time. Remember: Weakly defined scope of the ERP system is one of the biggest reasons behind ERP implementation problems. 

[2] Choosing the wrong software development company 

This decision makes or breaks your software. There are various ways ERP software can be developed - 

[a] You either hire in-house software developers

[b] You outsource to a local company

[c] You outsource to an offshore country like India 

Any road you take will require comprehensive research. If you outsource software development, then make sure to keep these things in mind : 

[a] Run preliminary research to take a look at their website, experience, tech stack, testimonials and client reviews on other independent sites. You will need to know every aspect of your potential vendor to establish its commercial potential. 

[b] Talk to them about your requirements and then ask for a budget. See, I know it’s tempting to ask a company “How much will my ERP cost” on the very first discussion but STOP. In simple terms, they don’t know how much it will cost because they don’t have a complete idea of what you are looking to build. 

Anyone would give you a cost estimate without the requirements in place and this is exactly what you need to avoid. Those who do this will have hidden costs that you’ll discover eventually. 

Also, it’s preferred to keep away from freelancers and software companies that charge too little. An ERP cannot be developed in $3000. The hassles with them will account for much higher costs in the long run. So, weigh your options and decide carefully where you should invest your time. 

[c] Take a look at their experience. See if they have done something similar and by similar, I don’t mean a ditto copy of what you have. They should be well accustomed to the modules and have experience in developing them. So, if you need a full fledged ERP and your software company has no experience in developing one but they have developed components of the ERP like PO management, inventory management software, booking and scheduling, data analysis etc, they are good enough to go ahead with. 

[d] Talk to their past and present clients. This will help you get an idea of their quality of work, their schedule and cost overruns, their inquisitiveness and commitment. This will form a more impartial outlook for you and result in better judgment. 

We have a detailed article on the steps to follow in order to choose the best software development companies. Click the link to read more. The development company that you hire should be experts in their fields. They should very well know what they are doing and they can do it much better compared to others. 

[3] Deciding between Off-the shelf and custom ERP

No two organizations are the same and no two organizations have the same business processes. Off-the-shelf ERPs offer very generalized features and functionalities which serves the basic requirements for the companies, leaving your business with little to no scope of customizing to your unique business processes. This is a major disadvantage of off-the-shelf ERP where you can’t implement your market differentiating processes. 

On the other hand a custom made ERP means having an ERP that is tailored to meet your specific business needs, nothing less, nothing more. The biggest advantage with custom ERP development is you have a competitive edge over your competitors as the system is uniquely built for you and no other organization can use that same software to render your specialized service a commodity.

Now, you might ask why can’t I just choose an Off-the-shelf ERP and customize it according to my requirements? Well, this would be pretty heavy on your pockets. This is because the ERP customization company that you hire will need to go through the entire code base of a different company and then customize on top of that and moreover there are quite a few legal roadblocks there.

Before choosing either one, make sure you know your business processes well. If you have a pretty straightforward process that every other Off-the-shelf ERP offers and your are comfortable using it, then go ahead and buy it.

But, if your processes are complex and your employees are struggling with them and competitive advantage is what you are looking for, opt for a custom-built ERP. So, weigh your requirements against the pros and cons of these two systems and decide on the best. 

Read more : What To Keep In mind Before Custom Enterprise Software Development?

[4] Not testing the ERP system enough

Testing is a pivotal part of software development. Testing is carried out to make sure every module  and every component has been installed correctly and runs exactly how it is supposed to. 

Start testing from the very beginning. This is one mistake that a lot of businesses tend to make - they keep testing for the last day. Approaching testing from the first day helps in detecting bugs earlier and makes it easier to deal with.

 Source : Software Testing Help

Testing once the complete development is over and discovering bugs means having to re-do a significant part of the work and also subsequent processes that depend on that. Bugs can creep in at any stage but regular testing will make it cost-effective to fix them in the earlier stage than at later stages. 

An enterprise software should never go live without comprehensive testing in order to ensure there are no nasty surprises after production deployment. Investing in quality assurance testing ensures your software works well and avoid ERP failure. 

[5] Ignoring maintenance 

ERP development is not a one-time phenomenon. It’s not like your development is over and the system would run smoothly for ever. You need to maintain the system.  

Over time, your existing processes would improve, employees would be added, new processes would be introduced, so, there would be changes and upgrades that the ERP would require. This will be iterative. So, you need to have your software company around. 

Binaryfolks provide 90 days free support after finishing any project that includes bug fixing. We also regularly help with enhancements and optimization that includes priority bug fixing, server maintenance and adding features and expanding capability. 

Before we go 

ERP implementation can be challenging but  ERP software is an indispensable tool in the modern business landscape. Make sure you know what is best for your enterprise business. Include features that are absolutely crucial in the initial stages. Choose a software company that has some experience with ERP development and make sure they are the best in what they do. Last and not least, test your software thoroughly to avoid nasty surprises.