6 Common ERP Challenges and How to Overcome Them

Most common ERP challenges: 1. Lack of Vision 2. Resistance to Change 3. Integrating Systems & Processes 4. Skills Shortages 5. Data...

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    Whether you know anything about ERP implementations or not, chances are, you’ve heard that they’re pretty hard to pull off. 

    Big brands like Hershey, Nike, and National Grid have lost hundreds of millions of dollars because of failed ERP projects, so it’s easy to assume there’s little hope for the rest of us. 

    That said, most failures – famous or not – are the result of poor planning, as well as something a bit more… existential.   

    According to Velosio Sales Director Ben Bolte, a lot of ERP problems are rooted in fear. 

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    Fear of change. Fear of the unknown. Fear of staying the same. Fear of taking on too much risk. And, it’s that fear that prevents companies from breaking up with legacy systems that are no longer working or committing to cultural change. 

    The first step toward overcoming ERP fear is understanding what you’re up against. So, in this piece, we’ll look at six common ERP challenges and what you can do to get ahead of them.

    6 Benefits of ERP

    1. Lack of Vision

    If you don’t know why you need a new system or have a clear picture of what you hope to achieve, your ERP project is doomed from the start. 

    Ben says that, many times, people simply decide they need a new ERP, but struggle to come up with any definitive reason why they need one. 

    Prospective clients often tell him their old system is “outdated,” but can’t explain exactly why that’s a problem, let alone justification for an investment of this magnitude. Yes, legacy systems often do represent barriers that prevent businesses from achieving critical goals.  

    But, he adds, no one WANTS to invest in a new ERP unless they absolutely have to. They’re incredibly expensive, high-risk projects with some of the worst fail rates on the planet (it is worth noting that it’s hard to find recent stats on this). 

    Numbers aside, the best way to prevent ERP failure is probing clients for more information. 

    Ben says he kicks off the process by channeling his “inner five-year-old” — responding to each answer by asking “why” until he finally gets to the real root of the problem. Though, in most cases, it boils down to two main concerns: risk and fear. 

    From there, those concerns can be used to define clear goals and set priorities, giving orgs a starting point for their ERP journey.  

    Ultimately, this will prevent you from investing in poor fit solutions, running out of funds, and hitting roadblocks midway through your project. 

    2. Resistance to Change

    It’s common knowledge that people are the biggest barrier to change. 

    People feel threatened when they find out familiar systems and processes are being replaced – there’s a real fear that they, too, may be replaced, either by AI or younger colleagues who grew up online. 

    It is worth pointing out that many Gen Z-ers are struggling with workplace tech themselves and workers of all ages might be better off banding together and learning from one another, but you know how it is. 

    Overcoming resistance is all about transparency, training, and basic respect for fellow humans.

    While some resistance is inevitable, the problem becomes much worse if your team doesn’t understand why you’re implementing a new ERP, how it impacts them personally, and why this change is worth the effort. 

    It’s critical that business leaders help everyone understand why replacing the ERP is so important. And – that they give everyone the support they need to navigate the big change and succeed in the context of their role and the bigger picture. 

    3. Integrating Systems & Processes

    Okay, so there are two key issues here. First, there’s the matter of figuring out which legacy apps, processes, and workflows are worth porting to the new system – and which ones need to be replaced. 

    Second, it’s about building a cohesive ecosystem that works for everyone, delivers the right outcomes, and gives you enough flexibility to grow, change, and abruptly switch gears when something unexpected happens. 

    Figuring out what to keep vs. replace points back to the “why” question. A few questions you might ask yourself:

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    • Do existing systems and processes achieve the desired outcomes? 
    • Where do they fall short? 
    • If legacy solutions are still working, are they still the best option? Or is there something else that can do X or Y better or cheaper?
    • Have you tried exploring other solutions such as redesigning processes or replacing problematic features or modules?

    Tackling the ecosystem challenge is a different story. For example, a lot of orgs struggle to overcome data silos because they’re approaching the problem with an all-or-nothing mentality. 

    While many ERP providers might say otherwise, eliminating silos shouldn’t be the sole focus. Silos are definitely a problem — for data accuracy, security, efficiency, productivity, etc.

    However, Ben says, silos will always exist on some level. “We live in an app-driven culture. If people don’t like the tools their company provides, they’ll just download something that works for them.” 

    Obviously, this is a problem for all sorts of reasons – security, data integrity, and so on. But, really, business leaders should focus on finding a compromise that works for everyone. Sometimes, you do need to rely on 3rd-party apps because they’re the best tool for the job or because your employees prefer them over the corporate-sanctioned alternative. 

    That said, not all apps and add-ons are compatible with all ERPs. The point is, you should be open to any solution that works for your employees and integrates with your ecosystem of choice. 

    4. Skills Shortages

    Skills shortages are another barrier to successful ERP implementation. 

    According to a recent Gartner survey, just 44% of data & analytics leaders believe their team provides value to their organization. And, one in five respondents cite skills shortages as a primary roadblock to their efforts, followed by funding and cultural issues. 

    While the Gartner research isn’t specific to ERPs, it does shine a light on some of the issues orgs are facing with all IT investments. See, it doesn’t matter whether you’re leveling up AI analytics, embracing process automation, or simply replacing on-prem ERPs with smarter, cloud based solutions. 

    All of these initiatives hinge on your ability to effectively leverage data – and create a culture where learning, problem-solving, and innovation are embedded in day-to-day ops. 

    We’ve already reached a point where recruiting top talent isn’t enough. Hard skills might land someone a job, but their real value lies in their ability to learn and adapt alongside customers, competitors, and the tech itself. 

    Tackling the skills challenge points back to some of the things we’ve already mentioned – defining ERP objectives and creating a culture that embraces change and collaboration. 

    It also requires business leaders to make the most of the resources they already have. Which, unfortunately, presents another set of complex challenges that might hinder planned ERP initiatives.   

    Pluralsight reports that tech layoffs are prompting some companies to pull back on training and upskilling initiatives, while hiring freezes are burdening remaining employees with work outside their official scope. 

    Still, researchers found that most tech leaders understand the value of strengthening upskilling programs. More than 80% of respondents say it continues to be a priority and 52% agree that learning new skills is especially important during times of uncertainty. 

    However, many tech leaders say they aren’t receiving adequate support from HR. 30% aren’t sure where to focus skills development efforts, while 25% don’t know what resources are available to them. Worse, more than half of participating tech leaders are concerned their skills training programs don’t align with their organization’s broader strategy. 

    5. Data Migration

    Data migration is easily one of the biggest ERP challenges orgs must overcome and the root of far too many failed implementations.  

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    In this context, data migration refers to the process of moving data from its original sources to the new ERP system. 

    It’s a multi-phase project that involves transferring data from disparate systems into one central location. Typically, that entails:

    • Mapping data sources
    • Verifying data integrity
    • Removing outdated, inaccurate, or redundant data
    • Converting all data into a common format
    • Addressing regulatory requirements
    • Implementing data governance and security protections

    Data migration is crucial to ERP success. Complete, accurate data is the foundation for anything you hope to gain from this investment – it doesn’t matter what your goals are. 

    Strategic decisions based on bad or incomplete information lead to major financial losses. 

    Sales reps that close deals with inaccurate estimates or incorrect inventory counts end up making promises they can’t keep. 

    Budgets and project plans are determined by guesswork and gut feelings. And – you can forget about leveraging any advanced algorithms to boost efficiency or cut costs. 

    All that in mind, data migration must be a priority from the very first stages of planning. This will help ensure that you don’t run into problems like extra costs, project delays, regulatory violations, data integrity or redundancy issues, and lack of stakeholder support. 

    It’s also a good idea to put together a dedicated team that can analyze data, put together a cohesive plan, perform the migration, and ensure everything is in working order well before the go-live. 

    6. Poor Project Planning & Management 

    ERP implementations often run into trouble because there’s no one overseeing the project. 

    In many cases, leadership offloads this responsibility on whoever is available, providing little guidance, resources, or support to ensure the project is a success. 

    This makes it harder to enforce new habits. For example, because no one is leading the charge, employees don’t receive the training they need to effectively use the new tools. 

    So, inevitably, they’re forced to either find new workarounds on their own (thus unleashing a whole host of problems related to shadow IT) or settling into familiar processes (and all the inefficiencies and waste that comes with the territory).

    In another recent post, we share some project planning best practices to help you start your ERP project on the right foot.

    Final Thoughts

    The ERP is the digital core of your organization. Done right, it unifies the entire business – bringing together finance, operations, sales, service, supply chain, and more – so everyone can share insights, develop innovative solutions, and make profitable decisions.  

    But – the cost of getting it wrong goes beyond licensing fees and IT equipment. A failed (or under-realized) implementation can lead to long-term financial and reputational damage. It can open the door to security threats, legal issues, and generate a ton of waste. 

    Ultimately, the best defense against these pitfalls is preparation and partnership. 

    Velosio’s ERP practice is designed to support the needs of a wide range of industries and business environments. Our ERP experts can help you find and implement the right solution, and continuously optimize your system as your strategy matures. Contact us today to learn more.

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