In today’s world, ERP implementation is like navigating a minefield. Enterprise Resource Planning (ERP) systems promise the moon (or stars) – streamlined operations, better data visibility, and an end to all your business headaches (and annoying neighbors).
But, like every major decision in life (think: marriage or choosing a mobile data plan), ERP implementation comes with its fair share of challenges. For small and medium-sized businesses (SMBs), these challenges are particularly tricky. The stakes are quite high.
In this article, we will look at the top challenges SMBs face during ERP implementation, with some practical advice from the Dalai Lama (or Steven Pressfield) himself about implementing ERP systems towards the end of this post.
(Do not become this guy while implementing ERP for your business!) Image Source: Variety
But here is the spoiler: there is no magic bullet, panacea or quick fix. As an SMB owner, the ERP implementation is probably going to turn you into Homelander (or something worse). And your employees into annoying little kids. But it is still better than being bankrupt.
1. Budget Blues: The ERP Sticker Shock
Alright folks, sit tight! You’ve done your research, and you’ve found the perfect ERP system(too good to be true). It promises everything from automatic invoicing to making your coffee (or tea). But then comes the price tag – a sum that makes you wonder if you’re buying an ERP or an F35 stealth fighter jet. And that is a big challenge that small businesses face during implementation of their ERP system (the new kid on the block!)
Pitfall: Businesses often underestimate the total cost of ERP implementation. It’s not just the software license; it’s the customization, the consulting fees, the training, and the maintenance (yes, these are charges too) that add up. Budgets often quickly spiral out of control.
Solution: Plan thoroughly and budget realistically. Think beyond the initial license cost. Consider training, customization, and any potential costs that might crop up down the road. And any other costs in case there is a fire!
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2. Customization Conundrum: To customize or not to customize?
(One Size Doesn’t Fit All (And no XXL doesn’t always fit!))
ERP systems are like clothes in a mall – they’re made to fit most people, but probably not perfectly tailored for you. For SMBs, the need for customization can be a double-edged sword.
Pitfall: Excessive customization can lead to delays, increased costs, and the system becoming too complex to manage effectively. It’s easy to fall into the trap of thinking, “Let’s tweak this, and this, and… ooh, let’s add this feature too!” And before you realize, well – please read point 1.
Solution: Keep it simple. Focus on the core functionalities that your business truly needs. Avoid the temptation to over-customize and stick with standard features unless necessary. Over customization can be a traumatizing challenge to small businesses during ERP implementation. Avoid unnecessary stress and injuries.
3. Data Migration Disasters: Bad Data In, Bad Data Out!
Data migration might sound like a simple “copy-paste” operation, but it’s not. If your existing data is inaccurate, outdated, or inconsistent, migrating it to the shiny and precious new ERP system will make things worse.
Pitfall: Data migration can become a nightmare if not handled correctly. Many businesses fail to clean their data before migration, resulting in a new ERP system that’s clogged with garbage data!
Solution: Take the time to clean up your data before migration. Invest in a solid data cleansing process to ensure that what goes in your new ERP system is accurate and useful. Bad data in means bad results out.
4. Resistance to Change: The Human Factor
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“Resistance” a term that author Steven Pressfield uses quite heavily. Resistance signifies the barrier that we have to overcome when we embark on an activity such as building six pack abs, starting a business, writing the book we always wanted to and implementing ERP system crucial to our business.
No one likes change, especially when it involves learning a new system that interrupts the daily flow of work. Implementing an ERP system means employees will need to adapt, and not everyone will be thrilled about it. And then there is the steep learning curve. A challenge faced by Small businesses while implementing ERP systems – and rarely talked about.
Pitfall: Lack of buy-in from employees can make or break your ERP implementation. If the people using the system are not on board, even the best ERP system will fail. A business owner informed us that we will have to convince his employees from various departments. We thought it would be easy but we encountered some really stiff employees! Eventually, we realised that their resistance came from the inconvenience of learning something new. In this case, a new ERP system.
Solution: Involve your team early in the process. Communicate the benefits clearly and provide comprehensive training to ease the transition. Take feedback. And empower employees by showing them how the new system will make their work easier in the long run. Invest in training, not just for the IT team but for those who will be interacting and using the system daily. We had a couple of training sessions for the employees, guiding them through the process, answering their queries and often acting as tech support! And in the end, it was the heartfelt gratitude from the owner and the sense of satisfaction and smiles (no smug smiles) that we received from now trained employees that truly made us happy. (Of course, we were paid well, thank you for your concern.)
5. Choosing the Wrong Implementation partner: The ERP Love-Hate Relationship
Now you have selected your shiny ERP system. Now selecting the right ERP implementation vendor is like choosing a business partner (not romantic – never mix the two!) – you’ll be working closely with them for years, so it’s important to get it right. (Still not romantic partners!). They must have skin in the game!
Pitfall: SMBs often rush into partnerships with vendors based on flashy sales pitches or low prices. But a wrong choice can lead to poor support, limited functionality, and costly upgrades down the line. (Penny wise, pound foolish!)
Solution: Do your due diligence. Ask for references (do not ask your Uncle!), read reviews, and make sure the vendor understands your business needs. A good ERP implementation vendor will act as a solid, reliable, trustworthy partner. (Ahem – someone like us perhaps!?)
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We know what we are doing!
The classic alternative to choosing the wrong implementation partner is trying to do things all by yourself, in house.
Pitfall: We have seen this happen recently. Our client fell into the trap of trusting themselves too much (or perhaps trusting the wrong partner in the past). While learning about new ERP system, they figured they could do it themselves (too much pep talk and too many DIY videos on YouTube!). Sometimes, the duration and nature of ERP implementation causes small business owners to set up tech teams in house who will supposedly keep costs and time utilized under control. In the case with our client, the high customization cost and initial investment required threw them off balance and they decided to do everything by themselves. Not ignoring the rare exception, most bleed themselves out. And must start all over again.
Solution: Focus on your core business (if you are manufacturing and marketing OTC drugs, or a non profit with altruistic causes, then that’s your core business) and not technology. Ask for references (no, not your Uncle), recommendations and seek experts who know what they are doing.
Conclusion/ Final Thoughts/ Signing off
ERP implementation can be a daunting process for small and medium businesses. However understanding the common pitfalls and preparing for them can make all the difference. From managing budgets to handling employee resistance, each challenge is unique and requires a unique, thoughtful approach. The key lies in setting realistic expectations and selecting the right partners who understand your business needs.
At Intellore Systems, we specialize in guiding businesses through these complexities, ensuring a smooth transition and helping you maximize the value of your ERP investment. So, take a deep breath, buckle up, and remember – while the journey may be tough, the rewards are well worth the effort.
Finally, here is the quote from the Dalai Lama himself to navigate through the complicated (and possibly unnerving) process of ERP implementation:
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Okay, that is NOT what the Dalai Lama said. We are certain though that he will appreciate the humour (and the underlying wisdom!)
We at Intellore Systems, are trying to navigate the digital transformation terrain with determination and a spirit of adventure (it isn’t fun all the time, but hey – we try! One day at a time).
Keep watching this space. Let us know in the comments below what you think. Feel free to add any pointers that we missed.
Reach out to us at hello@intellore.com
