8 Reasons Why Businesses are Failing to Fully Utilize Their ERP Systems and How to Fix Them
Companies are investing a great deal in adopting new ERP solutions, sometimes tens of millions of dollars, hoping to achieve the promised results of increased productivity, better decision-making, and more accurate processes. However, recent surveys are showing that many companies are under utilizing their ERP solutions, failing to maximize the potential to create a positive return on their investment. A recent Accenture survey of 300 senior IT professionals at the largest 2,000 companies in North America and the United Kingdom revealed these startling figures:
There are lots of ERP scary stories out there about taking off costs, the frustrations of change, and losing control of business. Often the inconvenience of an ERP can become so great that a company might toss it in the garbage and cut their losses. The reasons things go awry here abound. This article will talk about 8 typical mistakes businesses make that avoid them from completely recognizing the potential of their investment and how you can fix or prevent those mistakes.
1. Utilizing the incorrect consultant to help select an ERP system
With hundreds of ERP systems offered, it can be difficult for a company with no know-how in the field to select the right one for their service. These businesses will typically turn to a consultant who can help them decide. Unfortunately, these consultants typically represent a specific ERP, or at least, constantly advise the system that they are most acquainted with whether it is right for the business. They might talk only about the advantages of an ERP and avoid any discuss the side effects of executing their system. Or, they might have a strong background in the ERP they represent, however not a strong background in service operations.
Repair: Businesses must only utilize consultants who are not connected to any ERP system. They need to be assisting business owners make decisions about the best ERP system for their specific organization. A good consultant has a strong background in business operations and requires time to understand your distinct organization. They likewise make you familiar with potential risks in advance concerning execution headaches and other foreseeable issues. You can help your consultant make the right decision by being singing about your budget plan, timeline and requirements. Then, find a vendor who can provide on these considerations.
2. Selecting an ERP that is too big
There is such a thing as too much of a great thing. Selecting an ERP system that provides excessive performance not just is an unneeded waste of money, it develops more inconveniences and aggravations in the application and training processes. Robust ERP solutions provided by companies like SAP and Microsoft are not only exceptionally costly, but also offer a great deal of modules that are not helpful to all industries. Roughly 50% of companies surveyed stated they don't need all their abilities provided by their ERP and discover their ERP service cumbersome.
Repair: When approaching an ERP option, services must look at not what it is, however rather what it can do for their service. How can carrying out the ERP service mesh with their existing company operations? A lot of businesses will require a custom ERP option that is tailored to fulfill only the specific requirements of their service, instead of buy a more expensive system that is overruning with unneeded features.
3. Poorly executing the ERP service
Unfortunately, the issues with ERP execution are not advertised in the sales process and poor execution can be far more expensive than the ERP solution itself. Typically, problems engulf an organization after the sale since they have not effectively planned how the option can be carried out. They fail to have a primary contact for ERP application that is familiar with the software.
Repair: Go over with your vendor or consultant the expectations, both great and bad, that develop during the execution procedure. Make certain the lines of communication will stay open after the sale is final and there are ERP implementation managers to assist with release. Preferably, the implementation manager will be a seasoned worker with a strong grasp of the budgeting needs of the company. Have a strategy prepared for the ERP that defines where you want to migrate your information, which resources will be set aside to which departments, and who will supervise of maintaining each element of the ERP system
4. Misconstruing the function of an ERP system
Sometimes impractical beliefs and miscommunications can keep an ERP from understanding its full potential. Frequently business mistakenly think that an ERP service is just another type of software application and is for that reason only within the domain of the IT department and not something personnels or upper level management ought to be concerned with. These exact same executives complain that the ERP solution fell far except the guaranteed outcomes. With beliefs like this, it is no surprise that 31% of services state they utilize ERP in half or less of their company.
Fix: A business resource preparation system uses the word "enterprise" for a factor, it is meant to extend across all aspects of a business and business departments and keep them interacting. When all parts of the enterprise are using the system, the business will be harmonized and the departments will be synchronized.
5. Not supplying sufficient training for the ERP system.
After the expense of purchase and implementation, companies are frequently reluctant to spend more cash on training their staff to use the ERP system. But by cutting corners on training, they may end up spending more in the long run than they would on proper training. 20% of services surveyed stated they don't use all the performance of an ERP system due to absence of time to find out how to use the functions. Not only will poor training stop working to fully realize the potential of an ERP service, it may trigger the option to become more troublesome than beneficial. When even simply one worker does not understand how to use the system, it can toss a wrench in the whole option.
Fix: When all workers understand how to work the system, everything will flow more efficiently. Don't presume workers can simply wing it, and put in the time and expense to train them properly. Show them how to establish and ideal competency in a particular system. This will assist maximize the potential of the ERP system.
6. Failing to incorporate the ERP system with customer systems
An ERP doesn't just assist in the flow of information between all company functions inside the limits of a company; it can also be utilized to link to outside customers. Yet only 19% of services have ERP systems that fully incorporate with consumer systems and 37% of UK and 27% of NA business have little or no data sharing with customers whatsoever.
Repair: Make the effort to understand how and why your ERP system can incorporate with consumer systems to share data. Recognize the potential benefits that will help you take full advantage of the potential of your ERP option.
7. Failing to use ERP as an objective-setter
The majority of organizations utilize an ERP system mainly for tracking accounting information. Nevertheless, one of the best advantages of an ERP is the capability to enhance company efficiency by monitoring employees' essential efficiency indications. Utilizing an ERP system as an objective setter needs that companies use both financial and non-financial metrics to set objectives. Nevertheless, only 11% of organizations thought their ERP system caught all or most of the non-financial info needed to determine these objectives.
Repair: Determine what your key efficiency indications are for your employees and ensure they are caught through the ERP service. By keeping an eye on employee performance, you can set measurable goals and determine strengths and weak points.
8. Not knowing when it's time to update an ERP system
An ERP service is a huge investment, so there is a temptation to keep an outdated system around rather than spare the expense to buy, implement, and train staff members on a new solution. However, the longer a service waits the more difficult it is to shift to a new ERP service.
Fix: Stay in contact with reliable consultants and vendors who comprehend your organization development and can best recommend when it is time to upgrade to a brand-new system.
Advantages of a Fully Functioning ERP
By facilitating the circulation of info to each organization function, executing finest practices into the ERP systems, and incorporating service processes, an effective ERP solution will conserve time and cost. Centralized organization information removes the need to synchronize modifications through numerous systems, an extensive view of the business allows much better and faster decision-making, and finest practices make sure redundancy is eliminated from processes.
The Secret to ERP is Simplicity
In general, the very best thing a company can keep in mind is that an ERP system need to be simple and elegant. Organizations require to recognize what their requirements are and select an ERP system that finest fulfills just these requirements without extraneous features that slow down the user and add to the expense. Such a service is simpler to execute and it is simpler to train employees on using the system when they can understand how each part works and the benefit it creates.
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