ERP (Enterprise Resource Planning) implementations can be transformative for businesses, but they also come with a unique set of challenges. According to a recent study, up to 31% of ERP projects exceed their timelines and budget. Challenges ranging from misaligned business goals to underestimating the change management impact can derail projects if not addressed properly. Avec, Enterprise Applications & Transformation Director, Nick Doyle, sheds light on some of these challenges and shares insights on how organisations can navigate them effectively to ensure success.
1. Budget miscalculations
One of the most common challenges businesses implementing or upgrading their ERP face is budget miscalculations. “A lot of the time, the challenge is that organsiations just see the vendor’s price for software and services and overlook and underestimate the additional costs” says Nick. Many businesses focus solely on the upfront software price, failing to consider crucial factors such as internal resource requirements and back-fill, establishment of the ongoing support structures, and no contingency plan. In addition, activities such as Data Migration, Integration, Testing, Training and Change Management are not adequately budgeted for. To avoid budget shortfalls, it’s essential that businesses plan comprehensively, accounting not only for the initial software purchase but also for future costs, including delivery partner fees and any third-party services required during the implementation.
2. Lack of clarity on future support structure
Closely tied to budget planning is the importance of starting with a clear end in mind when it comes to the future support of the solution. “How are you going to support the solution, and how does that drive what solution you choose?” asks Nick. He emphasises that, “businesses need to define their support model early on. Will support be handled by specific business units like Finance or HR, managed centrally by ICT, or outsourced or a combination of these options?”. The answer to this question should directly influence the type of ERP solution selected. For instance, a “best-of-breed” approach, which may require support for multiple integrated systems, might not be feasible for teams with limited technical skills. In such cases, a more traditional ERP solution with fewer integrations but broader functionality across departments could be a better fit.
3. Vague approach to design and requirements
Another major challenge is a lack of clarity in the design and requirements phase. “We see customers spend a lot of time defining their requirements and processes, but then go to market and end up being sold by vendors on what’s ‘best practice’, or pre-configured solutions” Nick explains. While there are pros and cons to both all approached, a shift in approach during the project can lead to confusion and frustration later in the project, as organisations struggle to reconcile what they initially wanted, against what the vendor has delivered. Nick suggests that, “organisations need to make a clear decision upfront: will you develop comprehensive requirements and hold the vendor accountable, or will you adopt a more flexible, agile approach? Either way, defining key success scenarios early on is crucial to avoiding scope creed and ensuring the project stays on track, as well as ensuring end users who defined their requirements are not disillusioned by the final solution.”
4. Late involvement of change management, training, and testing teams
Change management, training, and testing are often brought into the process too late, which is another common pitfall. Nick points out that these teams should be stood up and embedded from the start of the project. “The cost of having these teams involved from day one will more than pay for itself. By integrating them early, organisations ensure that the people responsible for testing, training, change and communications understand the problems the ERP solution is solving. Complex change, training and testing requirements are a sign the project is impacting and transforming the entire organisation and when these teams are rushed or brought in too late, the quality of their work is often compromised, leading to poor user adoption and potential operational issues after go-live.”
5. Lack of fully resourced project plan
Finally, Nick highlights the critical need for a fully resourced project plan, “one of the biggest challenges is the absence of a detailed project plan that covers all project resources.” While vendors may provide a plan for their own resources, and the customer may focus on their internal teams, there’s often a gap in developing and managing a fully integrated project plan that covers all parties involved in the project. According to Nick, “Having a comprehensive project plan that includes vendor resources, internal staff, and other third-party resources is essential for ensuring accountability, tracking milestones, and simplifying reporting to the steering committee and stakeholders.”
So, where do we come in?
In terms of practical advice for navigating these challenges, Nick stresses the value of partnering with experienced delivery teams. “Don’t try to select vendors on your own – have someone supporting you who has done it before.” An experienced partner can use their experience, processes and tools to guide businesses through activities including budgeting, support structure planning, and change management, ensuring the right decisions are made from the outset. He also underscores the importance of planning early for resource needs and project tracking, “A fully resourced project plan, with contingency, needs to be in place from as early as possible, so key milestones and outcomes are tracked from day one, and the business can make key decisions around backfilling the project team and establishing the support structure.”
ERP implementations are undeniably complex, but with careful planning, a clear support strategy, and early involvement of change management, businesses can overcome the common pitfalls. By working with the right partners and ensuring all aspects of the project are comprehensively planned and tracked, organsiations can set themselves up for a successful ERP transformation that meets their long-term goals. Reach out to Nick and the Avec team to discuss your ERP project needs.
