Why is enterprise ERP unsuitable? When should ERP be implemented?
In terms of ERP for businesses, there are still many medium and large companies that dismiss this solution as unsuitable for their organizations. However, most businesses are unaware of the root cause, as well as how to begin properly implementing ERP.
1. Need time to validate the efficiency of the ERP System.
Scaling is a priority for businesses that have been firmly established in the market for many years and are stable in cash flow management. As the scale grows, so does the management of operational processes, which requires a significant amount of human resources.
At this stage of development, the ERP system is the first choice for solving the difficult management problem; however, the issue arises when most businesses that require immediate efficiency when implementing ERP believe ERP will not meet their needs. The effectiveness of ERP, on the other hand, requires time to verify and the smooth coordination of related departments.
Finding a professional consulting partner is thus the first step in determining the project’s success. The partner will plan and schedule the implementation, appoint the appropriate person in charge, and calculate the return on investment in the ERP system.
2. Businesses are afraid of costs
We cannot deny that cost is the primary motivator for businesses to delay deploying software, not just ERP. Because if we look closely, we will notice hidden fees such as:
- Training costs: Businesses must accept the expense of training employees to learn how to use new software when innovating the management system. In fact, many businesses do not focus on learning how to operate the system during implementation, resulting in the need to spend a significant amount of time and even pay more for the company providing ERP for retraining. This fee must be agreed upon from the start so that the enterprise can actively balance the budget and later arrange full-time personnel to assist the enterprise in training and operation.
- Cost of customization: If businesses continue to be unclear about the features that must be implemented on the ERP system, or if they deviate from the original agreement, the additional costs are obvious. This demonstrates that businesses still do not understand the needs of the business, and the processes of each department have not been closely and clearly unified.
- Project personnel expenses: The cost of gathering human resources for the ERP digital transformation project is not insignificant, and it plays a role in the project’s success or failure. To explain this issue, enterprises must reduce current workloads in order for personnel to participate in the project, as well as find human resources to replace employee work.
These are the three types of potential costs that cause businesses to delay implementing ERP. Businesses, on the other hand, can carefully calculate the costs and weigh the benefits before taking action with the help of project partners.
You can also learn some other tips that ERP should be applied and mandatory in the management system of businesses here.
3. The “fear of change” mindset prevents businesses from digital transformation
Most large companies that are familiar with an application will find it difficult to accept change. Particularly from the staff, who are forced to learn how to use it from the ground up, increasing the workload. Furthermore, the fear of making mistakes and having their work controlled will make employees psychologically resistant.
This is the common mindset of market leaders, and it takes a long time for ERP to demonstrate the effectiveness of overall corporate governance, reduce risks, optimize operating costs, and increase productivity and labor efficiency. To be confident in digital transformation, leaders, in particular, must see the benefits of ERP implementation.
ERP with businesses is always a difficult problem because it necessitates cooperation, perseverance, and trust on both sides. The three reasons listed above are common reasons why businesses believe ERP is unsuitable for internal implementation. So, when should a company implement ERP?
4. When is the right time to implement comprehensive management ERP?
ERP implementation should be considered early for medium and large enterprises, and the best time to begin is when you notice the following signs:
- Asynchronous data storage: Because each department uses separate software, and of course it will not be possible to synchronize each stage. Therefore, management work is more challenging, and this is when businesses should consider.
- Difficult to access and use data: Frequently, each department will store information separately, resulting in a lack of connectivity between departments. Businesses struggle to obtain data when they need it because they don’t know what the right information is, where it is, or how to obtain it. Furthermore, the confidentiality of information will not be guaranteed in this manner. Because each department is solely responsible for security, it is simple to obtain information from outside sources due to a lack of technology.
- Lack of overall analysis of the business situation: Without a unified operating system, departmental reports will be fragmented and difficult to locate. Furthermore, discrete reports make it difficult for management to gain an overview of business fluctuations. If the working process lacks consistency and laxity, it will be difficult for businesses to raise capital or scale in the long run.
There are numerous factors that cause businesses to believe that ERP installation is unsuitable and to reconsider implementing the ERP system. Before beginning, businesses must clearly define the purpose of the implementation as well as the expected time to reap the benefits of ERP. Finally, as business management processes become more complicated, it is time to rely on ERP to synchronize everything. Please contact BEMO if you require expert advice, services, or experience guidance.