ERP Risk Mitigation During Implementation
Updated: Aug 1, 2022
Implementing an Enterprise Resource Planning (ERP) system is a complex and intricate process with predictable and unforeseeable risks. There are various risks affecting the entire project lifecycle that you need to consider before you begin. Most companies overlook ERP risk mitigation, which can lead to cost overruns.
Risks are factors, actions, or events that can negatively affect the success of ERP implementation. Some are foreseeable, like bad data from a legacy database. Others are unpredictable, such as losing a key project team member when they fall ill or find better opportunities.
Although Enterprise Resource Planning (ERP) systems offer multiple benefits to organizations, implementing and maintaining these solutions require substantial resources and effort. ERP implementation bottlenecks often cause delays and disruption of business operations.
Read on to explore the top ERP implementation risks and risk mitigation tips.
Delays during ERP implementation occur due to different factors, including incompetent project assessment and project team unavailability. Project delays can significantly throw off your overall targets, making some resources unavailable. Rushing the implementation process only leads to chaos.
Work with your implementation partner to develop a schedule that accounts for the challenges expected in each step. When creating the program, consider multiple scenarios for every stage. Ensure to account for resource and project team availability. Avoid shortcuts and align responsiveness with the timeline. For large projects, having a dedicated onsite manager boosts your chances of access.
Poor planning during ERP implementation can dramatically increase the estimated project costs. Cost overruns usually result from failure to thoroughly assess the technical and human resource requirements from the beginning.
Another top reason for cost overruns is scope creep: adding additional non-essential features to the project. Failing to scope properly or constrain scope during the project lifecycle can cause unnecessary costs. Besides the extra expenses, the budget change can lead to delays and project scope reduction.
Map out core business processes and align your scope to the project goals. Request your implementation partner to provide a technical validation and an explanation of how the ERP solution matched your needs. Also, decide which customizations and integrations you'll need.
Sudden customizations and additions in the middle of implementation are the primary causes of cost overruns. During implementation planning, break down the undertaking into phases and empower your internal ERP project governance to decline unnecessary customization requests.
Customization helps tailor your ERP solution to your unique business needs. Multiple customizations to your ERP system increase your risk of instability, especially during software updates. They may optimize the initial implementations but lead to disruptive technical issues in the future.
Since modern cloud-based ERPs need multiple updates each year, the updates may break the customizations. Consider configuration rather than customization. You can also change business processes to adapt to your new ERP.
An experienced ERP implementation partner will enable you to learn the customizations that may affect long-term system stability. Test each customization after an ERP update to ensure they run optimally.
Data Hygiene and Missing Data
Failing to transfer clean data from your old system into your ERP solution causes severe implications for users. It will limit users from working in the system or reduce user adoption once users learn the data is inaccurate.
When migrating data, identify the data that will optimize future operations. After locating the data, clean and format it appropriately before introducing it to the new ERP.
Poor Adoption and Lack of Training
Even with one of the top ERP systems, poor ERP training and adoption can limit its efficiency. If your employees are unequipped or unwilling to use the system consistently, your company will fail to achieve the potential ERP benefits.
Prepare your business for digital transformation early. Expose employees to the potential challenges the changes may bring and keep them updated through the lifecycle. Consider creating a team of early adopters to assist other team members with the transition.
Lack of adequate testing usually causes broken or incomplete system functionality. Companies can catch functionality problems through proper testing. Signs that your testing process is incomplete include:
Your employees or internal users did not test the system.
Testing covers only some core business processes.
Failure to test end-to-end processes.
Lack of testing protocols after each update.
Consulting an ERP implementation partner will help identify and seal testing oversights.
Boost Your Chances for Success
Companies initiate digital transformation processes to achieve the desired result, and with change comes risks and uncertainty. This enhances the need for risk management during project implementation. With proper planning and expert guidance, your ERP project will be a success.
Connect with us for more insight into ERP risk mitigation during implementation.