Top Reasons Why ERP Integrations Fail

Wed, 30 Jun 2021 14:36:18 -0400

ERP systems integrate all business processes. However, companies choosing ERP have their share of doubts and questions. While ERP systems can streamline your business process, these projects do not come without challenges. Nearly 11% of ERP implementations fail to go live in the allotted time. A few of these failures are due to the software itself. But a majority of them are due to other avoidable reasons.

You can prevent these failures by taking the required steps. If you are considering ERP integration for your business, this article can help you identify the risks and also prevent them.

Common causes for ERP integration failure

Inadequate testing

Inadequate testing was one of the two significant problems noted during integration. Testing ensures that all data is accurate. While off-shelf ERPs are tested, customized ERPs usually lack rigorous testing.

And most testing is done under ideal conditions, which leads to ERP failure during stressful situations. A commonly known example is National Grid’s ERP implementation failure due to the lack of disaster testing.

What You Can Do: Test your software under various conditions, such as high volumes of data input and prolonged running.

Poor project planning and management

ERP integration projects contain several steps. Whether it is design, testing, or deployment, each step has some crucial tasks which need to be unified. To handle all these steps, you need an organized approach. Even if each step works individually, it may fail as a unified process. ERP projects can also fail due to lack of planning, inadequate management, or lack of coordination among various departments.

What You Can Do: Plan your integrations at the start and stick to the plan. Involve testing in each step and make sure you test the final project adequately.

Incorrect data import methods

If you are newly implementing ERP, you need to transfer all the old data into the new system. Often, migrating data from an outdated system has many challenges. For example, the older system might contain insufficient or bad data. Feeding this without proper conversion can lead to ERP failure. Therefore, every system requires specific procedures and lots of testing before data conversion is complete.

What You Can Do: Eliminate bad data from older systems. Change your data according to how it is utilized in the new system.

Not changing business processes

ERP integration is not just about the software. As a company, you need to adjust your business processes to include the new technology. Whether it is a different data entry method or a new procedure for managing finances, every employee should be aware of it. By resisting technology change, you won’t be able to reap all the benefits of the integration.

What You Can Do: Accommodate the software by changing certain business processes. Get the most out of your integration by building a business strategy around it.

Improper customization

ERP customizations require the right expertise. Many companies want customized software but are skeptical due to the risks involved. Improper customization can lead to data loss and software failure. You need to start with minor customizations and test them to look for errors. Customizing many things at once can break down your ERP systems.

What You Can Do: Hire professionals who can handle ERP customizations. A standard ERP may not have the required features. You need to be specific about your requirements so experts can plan the new features.

Lack of training

New software requires new skill sets. If you do not train your staff on using the integration, your integration will not achieve any results. From designers to deployers, you need to prepare everyone involved in the process. If inexperienced staff handle the software, it can make the integration appear “failed.”

What You Can Do: Involve your staff during software implementations. Make sure all of them understand how the software functions and how they can use it. Organize training sessions, so your employees get hands-on experience with the ERP software.

Impact of ERP failure

A single software failure can have irreparable consequences. We have seen top companies losing millions because of a faulty ERP integration. For your business, ERP failure can mean:

Loss of clients

Most companies use ERP software to deal with client data. Some companies also make digital products that they sell to clients. Your clients rely on you to provide them quality products or services. A single failure in such a product can cause a considerable loss to you and your client.

Cost of rectification

Rectifying ERP failures can cost much more than your decided budget. Determining the cause, remaking the strategy, and implementing the software again will also take a lot of time. This means more downtime and lesser revenue. Depending on the cause, you might also require restarting the whole implementation process.

Company reputation

A failed integration is a burden not just to you but also to your staff and clients. Rectifying the errors can take a while, so clients won’t be able to use your services. In addition, it can taint your company’s reputation due to inconvenience caused by the failure.

Despite all the risks, 95% of companies who opted for ERP implementation have seen business improvement. If done the right way, ERP implementations can be highly beneficial to your business.

A company specializing in software integration can help you avoid ERP failures by avoiding everyday challenges. They have the expertise and experience to build the right software integration for you.

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