Maximize ROI and Minimize Risk in Your Next ERP Upgrade

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ERP upgrades are critical for business success, but they're complex and risky.

Here's why most fail:

(You can read the text below or watch a video here)

1️⃣ Lack of planning and requirements gathering

Many companies jump into ERP implementations without fully understanding their needs. This often leads to misaligned expectations and costly mistakes down the line.

For example, a manufacturing company might rush into implementing a new ERP system without considering how it will integrate with their existing production management software. Halfway through the project, they realize they need extensive custom development to make the systems work together, causing delays and budget overruns.

To avoid this, start with a comprehensive requirements gathering phase. This should involve:

• Interviewing key stakeholders from all departments

• Documenting current processes and pain points

• Defining clear goals and success metrics for the new system

• Creating detailed workflow diagrams to visualize how the ERP will fit into your operations

2️⃣ Poor project management 

ERP implementations are complex, long-term projects that require skilled management. Without proper oversight, they can quickly spiral out of control.

A common scenario is when project timelines start slipping, but no one takes corrective action. For instance, data migration might take longer than expected, pushing back the testing phase. Without a proactive project manager, this delay can snowball, affecting user training and ultimately the go-live date.

To ensure smooth project management:

• Assign a dedicated project manager with ERP implementation experience

• Use project management software to track tasks, deadlines, and dependencies

• Hold regular status meetings with all key stakeholders

• Implement a change management process to handle scope changes

3️⃣ Underestimating complexity

Many businesses don't realize just how complex an ERP implementation can be. They often underestimate the time, resources, and effort required. For example, a distribution company might think they can implement a new ERP system in 3 months, when realistically it could take 9-12 months. This misalignment leads to rushed decisions, cut corners, and ultimately, a subpar implementation.

To better understand the complexity, businesses should conduct a thorough discovery phase with their implementation partner and talk to other businesses in their industry about their ERP experiences. Building in buffer time for unexpected issues and challenges is crucial, as is considering a phased approach, starting with core modules before expanding.

4️⃣ Inflexibility to adapt processes

Sometimes, businesses are reluctant to change their existing processes to fit the new ERP system. This can lead to excessive customization, which increases costs and complexity.

For instance, a wholesaler might insist on keeping their unique invoicing process, even though the new ERP has a more efficient standard method. This customization could cost tens of thousands of dollars and make future upgrades more difficult.

To strike the right balance:

• Be open to adopting industry best practices built into the ERP

• Evaluate which processes are truly unique and add value vs. those that could be standardized

• Involve end-users in process redesign discussions to gain buy-in

• Focus on configuration over customization where possible

5️⃣ Insufficient budget

ERP projects often go over budget due to unexpected costs or scope creep. Without proper financial planning, this can lead to cut corners or even project failure. A common example is underestimating the cost of data migration. Clean, accurate data is crucial for a successful ERP implementation, but many businesses don't account for the time and resources needed to cleanse and transform their existing data.

To avoid budget surprises, businesses should work with their implementation partner to create a detailed, realistic budget and include a contingency fund (typically 10-20% of the project cost). It's essential to consider all costs, including software licenses, implementation services, hardware upgrades, and training. Additionally, organizations must plan for ongoing costs like maintenance, support, and future upgrades.

6️⃣ Inadequate training and user adoption

Even the best ERP system will fail if your employees don't know how to use it effectively. Many implementations falter due to resistance from users who find the new system difficult or disruptive.

For example, a company might provide only basic training on the new ERP, leaving users struggling with more advanced features. This leads to workarounds, data entry errors, and failure to realize the full benefits of the system.

To ensure successful user adoption:

• Develop a comprehensive training plan for all user levels

• Offer multiple training formats: classroom, hands-on, video tutorials, etc.

• Identify and train "super users" who can support their colleagues

• Provide ongoing training and support after go-live

• Communicate clearly about the benefits of the new system to gain buy-in

The key to success? A comprehensive discovery process:

✅ Initial business analysis
✅ Gap analysis (current vs. future state)
✅ Stakeholder interviews and workshops
✅ TCO and ROI analysis
✅ Detailed implementation planning

Let's break down each of these crucial steps:

Initial business analysis:

This involves a deep dive into your current operations, technology stack, and business goals.

For example, we might analyze your order-to-cash process, identifying bottlenecks and inefficiencies that the new ERP could address.

Gap analysis:

Here, we compare your current state to where you want to be with the new ERP.

This might reveal that your current inventory management system is manual and error-prone, while the new ERP offers real-time tracking and automated reordering.

Stakeholder interviews and workshops:

We'll sit down with key players from every department to understand their needs and concerns.

For instance, the finance team might prioritize better reporting capabilities, while operations focus on streamlined warehouse management.

TCO and ROI analysis:

This step calculates the total cost of ownership for the new ERP and projects the return on investment. For example, we might estimate that the new system will cost $500,000 over five years but save $1.5 million through improved efficiency and reduced errors.

Detailed implementation planning:

Finally, we'll create a comprehensive roadmap for your ERP implementation.

This includes timelines, resource allocation, risk management strategies, and more. For instance, we might plan a phased rollout, starting with core financials before moving to inventory and order management.

Paid discovery is crucial. It becomes your roadmap and sets realistic expectations.

At Harris Web Works, we've helped countless supply chain partners successfully implement ERPs. Our phased approach minimizes disruption and ensures long-term scalability.

Want to learn more check out this video:

That’s all for this week,

Matt

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Whenever you're ready, here's how we can help you:

Harris Web Works is a digital transformation agency that helps supply chain partners (manufacturers, wholesalers & distributors) meet new generational buyer demands & expectations by installing streamlined e-commerce systems.

To learn more about how we can help you future-proof your business, click here.