Risks of ERP

1.     Failure to Redesign Business Processes to Fit the Software:

 

There is a strong desire to fit the new ERP system to fit the current process. But this is hardly the case. In fact, the right thing is to redesign your current processes to fit to purchase an ERP system.

The reality is neither option is easy. It is very difficult in the most business to change old or existing processes and customizing the ERP system to fit to current processes is a costly and time-consuming venture. In my view, this is the biggest ERP implementation risk

2.     Lack of Senior Management Support

 

Support of top management 
is crucial for accomplishing project objectives. It is easy for senior managers to become a sponsor but very difficult to let go the crucial team member for pilot testing or superuser training.

The unfortunate fact is the people who need to be trained as “Super Users”, are the same “key” people who run the business. The lack of senior people support to give time away from the desk, as they are too afraid to miss sales, delivery to the customer is one of the most common ERP implementation risk.

3.     Insufficient Training and Reskilling of End-Users

 

A number of firms learned that 
investment in training and reskilling the employees were higher than expected. Most ERP implementation comes with deadlines that need to meet. As a result, there is hardly enough time to train most people and give them skills they need to reach a satisfactory performance state.

4.     Lack of Ability to Recruit and Retain Qualified Systems, Developers

 

Many of the organizations found it difficult to recruit and retain good ERP specialists because the market rates for these people are high. The developers of the biggest market share ERP vendors like SAP, Oracle, Microsoft Dynamics and Infor are in high demand and moves from one consultancy project to another. So not finding an in-house ERP specialist could be a significant ERP implementation risk.

5.     Inability to Obtain Full-Time Commitment of Employee to Project Management and Project Activities

 

Similar to point 2, it might be difficult to get managers and employees to commit to project management roles because they may be uncertain about what responsibilities will still be open to them once they are transferred back to their positions.

Or, in some cases, there’s no backup for their day job while busy in implementation and testing causing a backlog of work, up-set customers, and compounding stress as a result.

6.     Lack of Integration

Once ERP is implemented or about to be implemented, it is very important that key business processes cover areas related to feasibility, requirements, prototyping and implementation ERP functionalities. These areas are the source of many issues in ERP implementation.

Further, ERP implementations increasingly include technical work through enhanced configuration features and the need for extensive integration with other systems (for example financial, supply chain or quality software & tools).

Another example would be old metrics which was lifeblood to measure the business is no more available as they used, hence, process and systems functionalities must fit each other for proper integration.

7.     Lack of Change Management

 

It is very easy to take for granted that all employees will accept that implementing an ERP system is a ‘Good Thing’! It might not be the case when you talk to the employer who is using the same old system for the last 10 years and feels things he/she is doing a fine job for business and customers with the old system.

 

8.     Poor Technology Planning

 

Lack of adequate technical expertise and adequate technology infrastructure for supporting project requirements, these ERP implementation risk factors include technological newness (need for new hardware and software), application size (project scope, number of users and team diversity), application complexity and failure of technology to meet specifications.

9.     Less than Awesome Project Management

 

Let’s accept it, implementing ERP is a massive project and last anything between 18 and 24 months or more. Less than awesome project management in any business is significant ERP implementation risk.

The extent of risk of project cost and time overrun due to the lack of a measurement system for assessing and controlling project risk depends on project size, experience with the new technology and project structure.

In Summary

 

Any business is planning to implement ERP or upgrade the new one should be mindful of:

  • All the risks associated with the recruitment and retention of IT/ERP Subject Matter Expert professionals;
  • Insufficient training and reskilling;
  • Insufficient internal expertise;
  • Failure to mix internal and external expertise effectively;
  • Failure to keep to the standard specifications which the software supports;
  • Attempts to build bridges to legacy applications.
  • The risk of failure to redesign business processes and of following an enterprise-wide design that supports data integration across the organization;