ERPs (enterprise resource planning) are one of the largest IT investments an organization will ever make. Unfortunately, major misconceptions and myths about ERPs have led to very costly and damaging mistakes for even the biggest corporations. Here are a few famous fails that garnered the biggest headlines:
- Hershey’s failed ERP implementation prevented them from delivering $100 million worth of chocolate before Halloween, causing the stock to dip 8% in 1999.
- University of Massachusetts failed their 27,000 students back in 2004 when a poor ERP implementation left students unable to register for classes or collect financial aid checks.
- HP tried to centralize their disparate ERP systems with less than stellar results. The final cost of the project ended up being $160 million, more than 5 times the initial estimate.
- Nike lost $100 million in sales in 2000 when an ERP project went south. Their stock dipped 20% and led to a series of lawsuits.
This vital business technology has many strengths and advantages, but it’s time to shed light on some of the challenges and limitations. Let’s explore the truth about ERPs and debunk the myths.
1 - ERPs are easy to implement, maintain and upgrade.
False. One of the biggest complaints that organizations have about enterprise resource planning (ERP) projects is the time it takes to get a new system up and running. In fact, 75% of ERP projects fail according to analyst estimates. The average time for an ERP project, from start to completion is 14 months, but it can take anywhere from a few months to 5 years. A recent study showed that more than 57% of them take longer than the projected timeline. The main reasons cited are the expensive costs, the disruption to the organization, inefficiency issues, and limited IT resources.
2 - ERPs can solve any business challenge.
False. Most businesses don’t have employees with the expertise to maximize enterprise resource planning (ERP) success. On top of that, few hire outside help to train employees and customize the system to meet their own needs. It’s no wonder that 37% of companies find it difficult for their staff to adapt to processes using a new ERP.
The truth is that most ERPs require customization to meet each organization's’ unique business needs. They may require further integration with POS, accounting, CRM, and other solutions already in use, and will continue to need IT support on a regular basis.
3 - An ERP is the only solution I need to solve any business challenge.
False. While you need an ERP to act as the backbone of your company, it plays a very specific role within your back-end management. If you use it to accomplish every task, such as sending an invoice and collecting payments, you’ll discover that it is inefficient for most departments within your organization. ERPs don’t usually have a simple interface, and lack flexibility and nuance to handle tasks easily.
Let’s not forget that more than 54% of enterprise resource planning (ERP) projects go over budget. Most organizations will spend 6.4% of their annual revenue on an ERP project. It can take years to realize the ROI for your ERP, while your team members will be stuck using manual methods for tracking data. There are better solutions which integrate with your ERP, and are designed to handle specific functions better than you can imagine.
4 - ERPs give you access to all of your data whenever you need it.
False. Unless you're an ERP expert and a data analyst, it can be difficult to get access to the metrics and analysis that helps you make smarter business decisions. Over 60% of organizations suffer from poor visibility of data and poor integration in their enterprise resource planning (ERP) systems. If it’s too complex to get the information you need when you need it, you’ll waste time and money, and you may not be able to identify and resolve inconsistencies in many of your processes. and many That delay will lead to wasteful spending and delayed action.
Want to stay ahead of the competition? Use solutions with robust dashboards and up-to-the-minute reporting tools that integrate with your ERP to help you see the big picture.
5 - An ERP is a one-time investment.
False. The average lifespan of an ERP is about 7 to 10 years before it’s outdated, obsolete, or just can’t keep up with the functions and pace of your business. An ERP is a long-term data management solution, but it’s not designed to handle the day-to-day tasks that keep your business moving forwards and your customers happy.
So what’s the solution?
Connect with Billtrust to find out how adaptive integrated solutions can enhance your ERP and make your business competitive.