ERP Implementation For Small Business: The Three Most Common Pitfalls

September 30, 2015

10:00 am

Enterprise resource planning systems (ERPs) provide small and medium-sized business owners with the processes and data required to optimize their operations, but choosing the solution that is best tailored to your industry’s requirements can mean the difference between substantial gains and crippled investments. With various white-label and custom software solutions available on the market, a well-designed implementation plan is the key to success. With this in mind, here are three common pitfalls to avoid.

Loosely defined requirements

An internal audit of your processes, preferably undertaken by a team of stakeholders with a clear understanding of your business’s day-to-day operations, is an absolute necessity in order to determine which type of ERP system you should implement. While SaaS ERP packages such as NetSuite are fully comprehensive and offer a wide range of cloud-based functionalities, many of them are impractical for smaller organizations, so make sure you work closely with your ERP vendor or consultant to develop a well-defined list of requirements.

According to ERP advisor/leader Brett Beaubouef, “there are many tactical objectives for a scope statement (defining a statement of work, supporting change control processes) but its primary strategic objective is to define focus. Without focus all other ERP implementation best practices are done in vain.”

Cultural resistance and lack of senior management buy-in

Most organizations underestimate the importance of securing support from both operational staff and senior management alike, leaving external consultants with the entire burden of steering the ERP system’s implementation. While this strategy may work in favor of the consultant, your project is likely to fail in the long run if internal communication and hands-on training are overlooked. Replacing known processes with the unknown and taking decision-making authority for routine activities away from employees are the two main causes of cultural resistance and pushback. Your ERP implementation steering committee’s duty is to ensure that all departments are involved and fully informed of any new processes going forward.

Poor budgeting and unrealistic expectations

With investment in SaaS ERP solutions expected to reach $78B by 2016, there is no shortage of stories reporting epic failures and spending nightmares. Nike’s $400M supply chain upgrade, which led to $100 million in lost sales and a 20 per cent stock dip, is one of the most sobering examples. Nevertheless, small and medium-sized businesses are in the same predicament as large corporations when it comes to spending too much time and money on ERP implementation. Carry realistic expectations with regards to consultancy fees, licensing, and training time, but also provision for short term productivity losses as your business’s IT resources will most certainly be strained while the new ERP system is being implemented.

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Chris Barry is a freelance writer based in Montreal, Canada. His product reviews and interviews with small and medium-sized business owners have appeared in hundreds of publications, both online and in print. Visit his website.

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