4 Mistakes Business Stakeholders Must Avoid While Choosing an ERP System

Over the last few decades, Enterprise resource planning (ERP) systems have gradually evolved from supporting a single dedicated process to connecting and improving an entire organization’s complicated processes. They have become transformation enablers for many businesses across different industries. Despite the scale at which the ERP systems can operate and the flexibility they offer, organizations tend to make mistakes when choosing an ERP tool due to which they do not derive the intended business value. Let us delve deep into the common mistakes business stakeholders must avoid at all costs while selecting the right ERP solution for growth and transformation.

1. Rushing into on-premise vs the cloud decision

A business with access to good internet connectivity, remote-working options for employees and the need for payment flexibility can benefit from a cloud-based ERP system. While more businesses continue to look for cloud-based SaaS offerings that offer online support, they will have to weigh the integration capabilities with their existing systems. Legacy systems are not easy to integrate. Despite the flexibility of a cloud ERP system, excessive reliance on legacy systems will render the implementation counter-productive. If rushed into choosing a solution without clearly considering such factors, the business will be forced to either abandon the new ERP or overhaul the entire system for the new tool proving expensive either way.

On the other hand, on-premise ERP requires dedicated staff, and the business stakeholders must shell up full fees upfront. The need to have dedicated servers in place and continuous maintenance will require additional resources and a monitoring process in place. While the interest in on-premise systems continues to decline, it fits best for businesses that operate in remote locations where they don’t have to depend on internet connectivity at all times. Further, on-premise offers an extra layer of security from malware by simply remaining disconnected from insecure connections.

The on-premise vs cloud debate is ever-relevant and either side has clear pros and cons. Business owners must therefore not make this decision based on the trending business practices alone. Analyzing the advantages and disadvantages of either deployment against one’s business limitations will prove beneficial in the long run.

2. Not evaluating business needs

Before setting up a new ERP, business owners must understand the current position of the organization. A full-length internal audit can reveal the evolving needs of an organization. Here are a few questions that businesses must include in their audit.

• What is the industry in which the business operates?
• How many employees do they have?
• Which deployment suits the business best? 
• Which processes need ERP support to improve efficiency? 
• What are the current business challenges? 
• Will a new ERP address their challenges and help them align with growth priorities?

Depending on the industry and the size, the business may also need a thorough audit and extensive gap assessment consulting from an expert. However, considering this discussion’s limits, let’s consider it as a simple business with fewer factors. The answers to these questions will give business owners the necessary perspective while evaluating the business needs. They can then plan the due transformation process and choose the right ERP. An ERP implemented without understanding these needs will not only limit the growth but also make them miss time-sensitive market opportunities such as a new e-commerce trend or manufacturing a generic variant of an effective drug whose patent protection recently expired. Business owners must therefore take the necessary time to clearly understand their targets and evaluate the time and resource limits. It will allow them to choose a solid ERP system that aligns with industry best practices and can be tailored to suit the business needs to catapult processes to improve process efficiencies, employee effectiveness, and business profitability.

3. Implementing everything at once

A simple yet effective business mantra is to not do everything at once. This will allow business owners to avoid confusion in setting priorities and the resulting mismanagement. It must not be confused with the focused and planned ERP implementation. As discussed above, it is best for the business to start once they’ve understood all changes. Once they’ve identified the right features and departments which will need these features, it is sensible to create a clear transformation map and then head for the implementation. This will allow individual departments to minimize or avoid any impact on the business process during the implementation period.

4. Not factoring in change management and training

A new ERP is a disruption for business. Business stakeholders must also factor in how their employees that are used to legacy systems perceive this disruption. As part of the audit, the stakeholders must define the change management and training needs. Businesses that do not factor in these needs will often fail despite setting up the best ERP in the market. It is therefore important to set up the right ERP with an experienced and professional implementation partner.

By including change management and training in the implementation planning, the business owners can avoid untoward resistance from employees and communicate the change effectively. This will help them adapt to the change and upskill if necessary.

Active load testing environment, resource planning, and maintenance strategy are a few of many other needs that must all be factored in while making the ERP choice. Organizations need an experienced implementation transformation partner that has a keen understanding of business variables that ultimately affect their success.

Exalogic Consulting is a customer-centric and data-driven technology consultant with a history of delivering transformational success for many organizations in the Middle East and parts of Europe, and Africa. Our experts have worked for various public and private sector organizations ranging from large. to small and medium enterprises to plan and implement their transformation with an ERP. We have done gap assessments and identified effective change management strategies along with transition planning. Know your ERP needs and work with a partner that can customize the solution to your specific needs to maximize the chances of success.