What are the Risks When Adding an ERP System?

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Understanding the risks of ERP implementation could help you avoid them.
Understanding the risks of ERP implementation could help you avoid them. (Image: business people image by jaddingt from <a href='http://www.fotolia.com'>Fotolia.com</a>)

ERP, Enterprise Resource Planning, is a merger of business management and operations with modern technology. While ERP offers numerous benefits and can launch a company into the 21st century, there are many risks associated with ERP implementation. To properly implement ERP takes a lot of time, resources, training and patience, which is why understanding these risks is important to any business considering using ERP.

Inadequate Training

One of the biggest risks of using ERP is users who are inadequately trained in the use of the system. When the users (employees) don't know how to properly use the ERP software, two things may happen. First, they may reject it out of a lack of understanding. The other possibility is that the employees accept the system but use it incorrectly. This will lead to the entire ERP system not working nearly as effectively as it should.

Software Stability

Much like any other computer software, ERP software is subject to stability issues. A large portion of this risk can be avoided by properly researching and choosing a reputable ERP software developer with experience in developing solutions for companies in your field. This is precisely why an ERP system should go through rigorous testing before making the final decision to go with said software. This, unfortunately, is a continual risk that could manifest years down the road when new, incompatible software or hardware is added.

Commitment

ERP solutions, when implemented properly, take a long time to get off the ground. ERP has to be properly selected, evaluated and tested, implemented and then used for a period of time before any clear positive results may be seen. It can become a very risky situation if the company isn't fully committed to seeing the entire process through.

Software Selection

Unfortunately, ERP solutions aren't one-size-fits-all. Good ERP software will be specifically designed for the industry or field it will be used in. This is crucial because if you have software incompatible with your business, you risk having a completely useless and even hindering ERP solution. Clearly defining what your company needs in an ERP system will greatly reduce the chance of your company running into this risk.

Approach

IT.Toolbox.com teaches that there are two common approaches taken when implementing ERP. The first is referred to as "The Big Bang" approach. This is where a company tries to implement an ERP solution quickly. Making so many changes to your company in such a short amount of time, though, leads to greater risk of something going wrong. Instead, consider phasing-in your ERP system. Implementation in phases allows you to pay close attention to one aspect of ERP implementation instead of trying to pay attention to many of them at once.

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