ERP Implementation Challenges: How to Overcome Them and Avoid Failure

erp implementation challenges

Whether you’re the CEO scoping your ERP project now or you’re the CIO in the process of selecting ERP software, it’s a good time to failure-proof your ERP project. 

Done right, implementing an ERP will eradicate silos, immensely improve efficiency, help you grow and earn your business a lot of money. But unfortunately, that’s not the end of the story. Challenges like user adoption, blown budgets and timelines and overly demanding ERP projects will drain money, time and resources, and in the worst case scenario cost you your company.

In this article, we’re going to uncover the major issues that sabotage your ERP implementation efforts, the real reason they happen and how to prevent them.

Download our free 2021 Software Buyer’s Guide for Professional Services Businesses

Which problems and challenges do services firms face in ERP projects?

Over the decades, we’ve watched professional services organizations run into the same issues again and again, sometimes with disastrous results. 

1. The ERP project goes over time and budget

This can happen for a lot of reasons. It may be the case that the scope of their ERP project was underestimated due to lack of experience.

Implementing ERP software is a highly involved process of melding team workflows and the software together into an effective final result. You’ll constantly be making decisions about how to map workflows to the software, all the while taking stock of whether those decisions still align with your business goals. This is a challenging process, and many companies fail to reserve enough time and resources for it.

2. People are having trouble working with the new software

At the end of the day, ERP for professional services is a collection of best practices that make your company’s operations as efficient as possible through automation.

But many companies falsely expect the ERP to facilitate all of these best practices automatically, and so they’re not prepared to convert their workflows to the new ERP software.

As your company struggles to adopt the software’s best practices, they’ll get stuck in their old ways of working and automation won’t make a difference.

3. Progress is halted by decision stalemates

Members of the ERP project team disagree. There are too many competing opinions. Everyone is focused on their own stake in the process and getting lost in details that do not contribute to a big-picture solution. 

In some cases, team members are hesitant to make judgment calls and don’t know how to move forward. Or, things can’t move forward because they lack the appropriate authority to make the final calls.

4. Old habits die hard

Getting all team members to shift gears gracefully and adopt the new ERP system is not automatic. People are not convinced by the software itself, and typically, you’ll have team members who are apprehensive about learning and using the new software. 

Given that ERP does change the way work is done in order to make it more efficient, these apprehensions are understandable. But the danger is that they can negate your ERP’s benefits and functionality if they cause end users to cling to old work habits.

5. The ERP implementation becomes too demanding

Frequently, inexperienced ERP project teams end up realizing somewhere in the middle of the onboarding process that they’re in over their heads. The ERP project gets too difficult, it doesn’t meet expectations and still unclear is what teams will get out of the software. After sinking money and time into a half-done job, the organization determines the ERP system is not right for them.

Worse, they continue with the ERP system and get suboptimal results until they decide to implement another ERP solution. At which point they’re liable to repeat the same mistakes.

As it turns out, there is an underlying reason as to why these problems keep coming up.

So, what is the connector between these issues?

The root cause of ERP implementation failure

Even shrewd business leaders can miss that the root issue spoiling the whole crop is a psychological one.

Most times, ERP implementation fails due to the clash between our desire for things to get better and our natural inclination to keep working the way we’re used to.

Often, people champion progress with a new ERP system, but they don’t realize the shifts in work dynamics it requires to get the improvements in their workflows. Not uncommonly, ERP is seen as a largely back-office function with no immediate relationship to the day-to-day work and processes. But of course, ERP doesn’t solve problems in and of itself. It streamlines business processes and improves the efficiency with which you perform them.

It can be difficult to get everyone on board if they don’t understand how the new ERP changes their work and what it means for their personal futures within the company. ERP automates a lot of manual tasks. And while that makes employees’ lives easier, the word “automation” can spark fears of redundancy or an inability to learn and acclimate to the software.

Sometimes, too-rigid thinking can cause members of management to unintentionally block necessary changes from taking place. Especially if they don’t have a clear view of the larger goals of the project, or if they don’t have leadership’s blessing to make decisions, they can box themselves in with unnecessary rules and hold onto old work patterns that neither fit into the way the ERP works nor serve the organization’s goals.

Altogether, you can easily end up with a perfect storm of a lack of urgency, misunderstanding of the software’s purpose and functionality and underestimation of ERP implementation requirements. This situation will almost certainly prevent everyone from working together and kill your implementation efforts from the start.

How do you overcome the challenges of ERP implementation?

What makes a successful ERP project? How do you fashion the right mindset, get ahead of the challenges and make sure your ERP implementation goes off without a hitch?

Organize first, then automate later

Bill Gates famously proclaimed that “the first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.” Which is, of course, what businesses expect from ERP.

But as Gates points out, the inverse is also true, which provides the basis for his second rule that “automation applied to an inefficient operation will magnify the inefficiency.”

Applying this concept to ERP implementation, it’s imperative to move away from the idea that the software will do all of the work by itself. To achieve the results you want—and do so within budget and the allotted time frame—you’ll need to organize first, then automate later. In other words: Smooth out major kinks in your company’s workflows now, then add ERP. Otherwise, your ERP will end up automating preexisting inefficiencies. 

When tackling organizational change, keep in mind that it takes a combined bottom-up and top-down approach. Just as teams need leadership to organize the company, leaders will make more practical and useful changes with the feedback of team members on the ground. The two perspectives enhance each other to create optimal workflows for the entire company that your ERP will then be able to automate and augment.

Get the right project team

Every company, no matter its size, should have a core ERP project team that includes leadership, administrators and one representative from each department that will use or be affected by the ERP software. 

If you’re engaging ERP for multiple business units or geographies, you may consider additional task forces, a steering committee and internal communication experts. However, keeping the core team at one head per department can provide the agility for swift decision-making and help you avoid a situation where there are too many competing opinions and conflicts between team members with overlapping responsibilities and interests.

For your core team, leadership will need to make tough calls and break decision stalemates. Administrators will provide software testing and technical support, and department representatives should be able to speak to the needs of their teams and make decisions on their behalf. This latter part is key—imagine the retrogression and confusion if top management were to annul all the big decisions. 

For everyone to play by the rules, the rules need to be set first. When putting together the core project team, determine what the role of leadership will be respective to the other project team members. What does leadership need to decide on the project, and what decisions should the department heads take charge of? This can encourage more surefooted action and less balking and prevent decisions from being reversed.

Secure leadership commitment and guidance

So much of the project’s success comes down to adequate planning and flexible decision-making, which means you’ll need to secure leadership’s commitment to support the ERP project up front.

ERP implementation will need leadership’s insight to define the project goals. This is a fundamental part of scoping and delimiting the project as well as allocating the right amount of time, money and resources. Not to mention, it’s also a crucial step in determining which functional areas and departments will be included, information you need to help you pick the right project team. 

Furthermore, it’s up to leadership to keep the ERP project’s goals in sight for the project team at all times to help ward off scope creep.

Communicate the ERP vision and goals

One of the critical pieces of ERP implementation success is getting everyone to work together toward the ERP project goals.

Without question, making this happen requires top-down messaging; leaders play a big role not just in setting the goals, but also in ensuring the whole organization understands them, why they’re important and how to act on them. 

Leadership needs to bring everyone together under a common business vision, which will foster a sense of community and shared value around the ERP.

Moreover, leadership is in a unique position to alleviate anxieties about learning new skills and redundancy. Trust and encouragement can be built by leadership explaining what the ERP will mean for all users and exactly how it will affect their workflows. 

But leadership is not the only mouthpiece for the ERP project. Realistically, communication is a coordinated effort between leadership and department heads. While leadership can provide the bigger picture, department heads are integral to reinforcing the messaging and getting their teams energized and enthusiastic.

Institute a support organizational structure

User support must be prioritized. Each department should have a support organizational structure with the purpose of getting all end users to use the ERP comfortably and correctly after rollout. Because of course, your ERP implementation can’t be considered a success if users don’t adopt the software.

Pick super users who can help provide on-the-ground training and educate teams on the ins and outs and routine usage of the ERP. They will be important touchpoints for team members to ask questions, receive feedback and gain confidence in their new workflows.

Choose a user-friendly ERP that’s easy to implement

Despite your good communication and training efforts, user adoption can be poor if the ERP system is difficult. Usefulness and ease of use of features and functionality, interface design and integrations are all part of user experience. For best results, the software should be simple, easy to learn and use and, ideally, attractive enough for your staff to want to use it.

Here are some questions to guide ERP selection for user-friendliness:

  • Does the software interface look easy and fun to use in terms of graphics, layout and style?
  • Does the software make sense fairly quickly when you start using it? Is there a logical organization to it?
  • Are there graphs, charts or other visual reporting features that provide data without having to dig?
  • Does the ERP support integrations with other softwares your teams use, including financial accounting software and CRM?
  • If it’s cloud ERP, is the platform the software is built on the right fit for your teams? For example, will they benefit more from having Google Workspace apps like Gmail, Drive, Docs and Sheets built into their workflows with an ERP on the Google Cloud? Or is native integration with a CRM like SalesForce more important for your organization?
  • Are the features of the ERP software easy or hard to navigate, and do they fulfill teams’ needs?
  • Is it easy to find everything you need in the software, including data, files, assigned tasks and resource availability?

Budget in expert advice

In the budgeting phase, you should count on onboarding and possibly consultation costs. Even if you’ve implemented ERP successfully in the past, you’ll help your team this round by engaging the onboarding services of a trustworthy and experienced ERP provider. Which, if you’ve done your homework, you will have lined up when it comes time to execute the ERP project. Your ERP vendor’s onboarding experts will be able to guide your team through the functionality of the software, help you work with it and squeeze the most value out of it.

If you lack the experience with ERP implementation, however, you may choose to work with an independent ERP consultant. An ERP consultant can show you how to select the right goals, automate first and organize later, set up the project and determine the kinds of decisions you’ll need to make along the way.

Whether you’re employing an ERP consultant or not, you’ll want to make sure you’re adopting the right software solution that will be easy to implement. For professional services firms, that’s Professional Services Automation (PSA) software, a type of ERP designed to streamline and optimize the services lifecycle.

Download our free 2021 PSA Buyer’s Guide and learn which questions to ask, what features to look for and make-or-break factors that can mean the difference between ERP success and failure.

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