Navigating ERPâ€™s â€œBermuda Triangleâ€

8/11/2010 at 2:00 am by The Sage ERP Team

It’s an unfortunate but well-established truth that many attempts at ERP implementation fail. Usually, these projects go over budget, take months longer than expected or fail to deliver the desired results – sometimes all three. It can be devastating to a business when an investment as significant as choosing an ERP system goes haywire, but in most cases, the problem is avoidable.

Panorama Consulting’s ERP 360 blog describes these three possible challenges – high implementation cost and risk, long implementation duration and low return on investments – as the “Bermuda Triangle” of ERP implementation. These problems have claimed many a business, especially when owners try to find ways around them.

When businesses equip themselves with knowledge about ERP and manage their ERP implementations carefully, they can avoid falling prey to these hazards.

So how can you successfully navigate the difficult quagmire of cost, time and expectation that has claimed so many other businesses?

In order to address the high risk and high cost of implementing an ERP system, businesses must make sure that they have realistic expectations.

When constructing an ERP budget, be certain to remember to include the cost of some project activities, which – if left unaccounted for – can rapidly send costs skyrocketing. It’s easy to think that these project activities are expendable, but actually, investing in some extras is a good way to make sure ERP projects succeed. Cutting corners might seem like it will make ERP implementation less expensive, but it will end up costing a business sorely in the long run.

Although it may be possible to accelerate ERP implementation, doing so comes with considerable risk.

Many ERP systems can implemented in a very short time – a matter of days – if all a business expects from implementation is some software and maybe a little configuration. Most businesses are better off taking extra time to ensure that ERP becomes more than a software. Done right, ERP can transform a business to be more profitable and more efficient. While it may cost the company some efficiency in the short run while the ERP system gets up and running, the payoff will be handsome.

Businesses should know what benefits they expect to see from an ERP system before they begin the implementation process.

Knowing your goals in advance will help ensure that you can reach them. When all you hope to achieve is some nebulous concept – like “increased productivity” – you’ll never feel quite satisfied. However, if you have specific numbers and figures in your mind, you’ll be better prepared to assess how well your ERP system is meeting your business needs. Be careful not to create expectations simply to justify costs. Wishful thinking won’t improve your ERP system, and you’ll end up disappointed. Have realistic, intelligent expectations, make sure that the costs are reasonable for the results you expect and proceed with caution and care.

As with anything that has the potential for great rewards, ERP implementation carries a fair amount of risk. It is certainly hard to part with a lot of money, especially when the rewards are uncertain. This worry has caused many business owners to work hard at finding ways around the myriad costs associated with ERP implementation – usually to their demise. But when you’re prepared to invest up front for big returns later on, you can minimize the problems that some people run into with ERP implementation.