Enterprise Resource Planning (ERP) systems are the most technical part of how any organization works. They act as the core, bringing together all the different parts of the organization - systems, tasks, and processes - into one connected system.
Setting up ERPs is hard. It takes a lot of resources to connect everything - from systems and devices to people, products, and processes. For big companies, it might even take up to 5 years to do it right.
But this article isn't here to scare you. It's to help you understand the challenges ahead if you're thinking about getting an ERP. That way, you can plan to cut down on costs, time, and risks when setting it up.
The Evolution of ERP from Data Reservoir to Real-time Decisions
As we enter 2024, about half of the money made from enterprise software comes from systems that help businesses manage resources and supply chains. These systems are important for the companies that use them. They store lots of data and are changing a lot because of new tech like AI and cloud computing. The goal is to add more analysis, machine learning, and automation to these systems to make them work better and handle complicated tasks like predicting trends and making quick decisions.
Also, because people care more about the environment now, these systems are starting to think about how to be eco-friendly. Another big thing is that more companies are choosing cloud-based systems when they're setting up new software.
Generative AI is becoming more common in ERP systems. It helps with things like transactions, money management, and making products. For example, AI can spot trends in finances and predict future money situations accurately. It also helps keep track of how much stock a company has and when to order more. AI can even predict when machines need fixing, reducing the time they're not working.
In HR, AI can look through job applications and pick the best people for a job. It can also guess when employees might leave and suggest ways to keep them happy.
AI also helps with customer service. It powers chatbots and virtual helpers that deal with customer questions and orders. While ERP systems mostly use AI for inside jobs, like managing data, customer service software uses it to make customers happier. For example, AI can use data from ERP systems to guess how much of a product a customer will want, and then use that to plan marketing campaigns.
Making sure AI works well in both parts of a business means having good plans and making sure data can move between them easily.
Hurdles Faced During Initial ERP Implementation
Project Planning Flaws
Bad planning during ERP implementation causes big problems like delays, spending too much money, and not knowing what to do. If you don't estimate time and money right, you might end up paying more than you thought. Also, a badly planned project might grow bigger than expected, have problems coordinating, and not be clear, making the ERP system less effective.
To fix bad planning, organizations should:
Make a detailed plan for the project.
Set clear goals.
Make a timeline that makes sense.
Give enough people and money to the project.
Issues with ERP Selection
Choosing the right software for an ERP system is important. If you don't do enough research and pick the wrong one at the start, it can cause problems later on. One big issue is that it might take longer than expected to set everything up because you have to go back and choose a different software.
There's also a risk that the software won't work well for your organization's needs, which can hurt how well everything runs.
To avoid these problems, organizations should carefully figure out what they need from the software, get advice from experts, and maybe try out small versions of the software before going all in.
Technical Challenges
Problems with setting up ERP systems can be tough. They include big tasks like updating your computer systems, thinking about how your network works, making sure everything works on mobile devices, and moving all your data to the new system. If you don't plan well, your system might crash, work slower, have trouble connecting, be hard to use, mess up your data, or even be less secure.
To avoid these issues, it's important for companies to check what tech stuff they'll need early on, think about using cloud services to make things easier and pick an ERP system that can grow with their tech needs.
Difficulties in Customizing
Customizing your ERP system can affect how well it works in the long run. If you make too many changes, it might be harder to update the system later on. This could cause delays and problems with compatibility. Plus, it might cost more to keep the system running smoothly. Making things too complicated could confuse your employees and make it harder for them to use the system effectively.
To avoid these issues, focus on customizing only what your organization needs. Make sure the ERP system you choose can adapt when necessary. And it's a good idea to get advice from experts to find the right balance between standard features and customization.
Automation Dilemma
Getting the right amount of automation is super important for ERP success. If you automate too much, it might cause problems because some things still need manual work. But if you don't automate enough, it can make things harder and more complex for people.
To avoid these problems, you should:
Look closely at how things are done now to see where automation could help.
Introduce automation bit by bit so people can get used to it.
Talk to the people who will be using the system to make sure the changes fit with how they work.
Data Migration Pitfalls
Moving data, especially from different ERP systems, can be complicated. Problems with data quality, like mistakes and differences, often pop up during this. If data gets moved wrongly, it could mess up the whole system, making it not work right or trustworthy.
Before moving data, check it all out to find any possible problems. Fix mistakes and differences in the data with cleaning processes. After moving, test everything well to make sure the data is right and the system works as it should.
Hiring and Training Dilemmas
When a business implements ERP for the first time, it needs to hire and train staff who know how to use it well. If they can't do this, they might end up using the system inefficiently, losing data, or having trouble with operations.
One solution is to choose an ERP that the existing workforce already knows or is easy to learn. Also, it's important to provide thorough training to help employees get used to the new system. Digital Adoption Platforms (DAPs) can also help get users comfortable with the ERP and provide ongoing support.