Realizing the Potential of Your ERP
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:
- 31% use their ERP system in half or less of the company
- 64% utilize their ERP system’s core functions
- 19% have actually completely integrated their ERP system with consumer systems
- 50% bought ERP systems that where they just required half of the systems’ capabilities
- 20% don’t utilize all functionality due to lack of training
There are many ERP horror stories out there about taking off costs, the frustrations of change, and losing control of business. Sometimes the trouble of an ERP can end up being so terrific that a business might throw it in the garbage and cut their losses. The reasons why things go awry here are plentiful. This short article will talk about 8 common mistakes services make that prevent them from fully recognizing the potential of their financial investment and how you can repair or prevent those risks.
1. Utilizing the wrong consultant to assist select an ERP system
With numerous ERP systems available, it can be hard for an organization with no competence in the field to choose the ideal one for their company. These services will typically turn to a consultant who can help them decide. Sadly, these consultants often represent a particular ERP, or at the minimum, constantly advise the system that they are most knowledgeable about whether it is right for the business. They may talk just about the advantages of an ERP and skip any talk about the negative effects of implementing their system. Or, they may have a strong background in the ERP they represent, but not a strong background in business operations.
Repair: Organizations should only use consultants who are not linked to any ERP system. They need to be helping entrepreneur make decisions about the best ERP system for their specific business. An excellent consultant has a strong background in business operations and takes time to comprehend your distinct company. They likewise make you knowledgeable about potential pitfalls upfront regarding application headaches and other foreseeable problems. You can help your consultant make the best decision by being vocal about your budget, timeline and requirements. Then, find a vendor who can provide on these considerations.
2. Choosing an ERP that is too big
There is such a thing as too much of a good thing. Picking an ERP system that offers excessive functionality not only is an unnecessary waste of money, it develops more inconveniences and frustrations in the application and training procedures. Robust ERP solutions supplied by companies like SAP and Microsoft are not only exceptionally costly, but also supply a large number of modules that are not helpful to all markets. Around 50% of organizations surveyed stated they do not require all their abilities offered by their ERP and find their ERP solution troublesome.
Fix: When approaching an ERP service, businesses must look at not what it is, but instead what it can do for their organization. How can implementing the ERP service mesh with their existing business operations? Many organizations will require a custom-made ERP service that is customized to meet just the specific requirements of their service, rather than acquire a more pricey system that is overruning with unneeded features.
3. Poorly implementing the ERP service
Sadly, the problems with ERP application are not promoted in the sales process and poor execution can be even more pricey than the ERP option itself. Typically, issues engulf a business after the sale since they have actually not properly planned out how the option can be executed. They stop working to have a main contact for ERP implementation that is familiar with the software application.
Repair: Talk about with your vendor or consultant the expectations, both excellent and bad, that arise throughout the execution process. Ensure the lines of communication will remain open after the sale is last and there are ERP application managers to assist with release. Ideally, the implementation manager will be an experienced worker with a strong grasp of the budgeting needs of the company. Have a strategy prepared for the ERP that specifies where you want to migrate your information, which resources will be allotted to which departments, and who will supervise of preserving each aspect of the ERP system
4. Misunderstanding the function of an ERP system
Often unrealistic beliefs and miscommunications can keep an ERP from realizing its full potential. Often companies incorrectly believe that an ERP solution is simply 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 interested in. These exact same executives grumble that the ERP solution fell far except the assured results. With beliefs like this, it is no wonder that 31% of businesses state they utilize ERP in half or less of their company.
Fix: A business resource preparation system uses the word “business” for a reason, it is planned to extend throughout all elements of an organization and business departments and keep them collaborating. When all parts of the business are using the system, the business will be balanced and the departments will be integrated.
5. Not providing sufficient training for the ERP system.
After the expense of purchase and execution, companies are often hesitant to spend more cash on training their staff to use the ERP system. However by cutting corners on training, they may end up investing more in the long run than they would on proper training. 20% of organizations surveyed stated they don’t use all the functionality of an ERP system due to lack of time to discover how to use the features. Not just will poor training stop working to fully recognize the potential of an ERP solution, it may trigger the service to become more cumbersome than beneficial. When even just one staff member does not know how to use the system, it can toss a wrench in the entire solution.
Fix: When all workers understand how to work the system, whatever will flow more efficiently. Do not assume workers can just wing it, and make the effort and expenditure to train them effectively. Program them how to establish and ideal competency in a particular system. This will assist optimize the potential of the ERP system.
6. Failing to incorporate the ERP system with client systems
An ERP doesn’t just facilitate the flow of info between all business functions inside the limits of an organization; it can also be used to connect to outside customers. Yet just 19% of services have ERP systems that totally integrate with customer systems and 37% of UK and 27% of NA companies have little or no information sharing with customers whatsoever.
Repair: Make the effort to understand how and why your ERP system can incorporate with client systems to share data. Identify the potential advantages that will help you take full advantage of the potential of your ERP option.
7. Failing to utilize ERP as an objective-setter
The majority of companies use an ERP system mainly for tracking accounting data. However, one of the best benefits of an ERP is the ability to improve business performance by keeping track of staff members’ crucial performance indicators. Utilizing an ERP system as an objective setter needs that businesses use both monetary and non-financial metrics to set objectives. Nevertheless, only 11% of organizations thought their ERP system recorded all or most of the non-financial information required to determine these goals.
Repair: Identify what your essential efficiency signs are for your employees and ensure they are recorded through the ERP solution. By keeping an eye on staff member efficiency, you can set measurable objectives and determine strengths and weaknesses.
8. Not knowing when it’s time to update an ERP system
An ERP service is a huge financial investment, so there is a temptation to keep an outdated system around instead of spare the expense to purchase, implement, and train workers on a brand-new service. However, the longer an organization waits the harder it is to shift to a new ERP option.
Repair: Remain in contact with reliable consultants and suppliers who comprehend your service development and can best recommend when it is time to upgrade to a new system.
Benefits of a Completely Working ERP
By assisting in the flow of details to each organization function, carrying out best practices into the ERP systems, and integrating company procedures, an effective ERP service will save time and expense. Centralized organization data removes the requirement to synchronize changes through numerous systems, a comprehensive view of the enterprise enables better and much faster decision-making, and finest practices make sure redundancy is gotten rid of from processes.
- Increased efficiency, less redundancy
- Better management and decision making
- More accurate procedure with fewer mistakes
- Market forecasting and pattern spotting
The Secret to ERP is Simplicity
In general, the best thing a service can keep in mind is that an ERP system need to be easy and classy. Businesses require to identify what their requirements are and choose an ERP system that best satisfies only these requirements without extraneous features that slow down the user and contribute to the expense. Such an option is much easier to implement and it is much easier to train workers on utilizing the system when they can understand how each part works and the advantage it produces.
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