ERP implementation projects are complex undertakings. Companies often focus on factors such as budget overruns and schedule delays, but the effects of a weak project plan or faulty execution can reach far beyond the project’s primary scope.
If your team is preparing to launch an ERP project, consider some risks that come from a poorly managed effort.
1 – Negative impacts to other core business systems
Because ERP implementations typically involve numerous software platforms within the organization, any hiccups have the potential to interrupt other systems. Delays, incorrect or missing data flows, and improperly configured integration points are just a few of the problems that could arise if your project isn’t skillfully planned and executed.
2 – Lost revenue
Any ERP project that hinders your company’s ability to make sales, deliver goods or services, procure raw materials for production, or collect payments from buyers is likely to harm the bottom line. If you can’t get products to market, your customers can’t buy them. If you aren’t able to complete sales transactions, the amount of money coming into your business drops.
3 – Reduced productivity
It isn’t just IT that must set aside time to deal with ERP implementation problems. Depending on the other systems that are affected, your manufacturing line might not be able to operate at full capacity. Sales reps may need to create time-consuming, manual processes as a workaround. Employees could waste time tracking down information that should be available at the touch of a button. Nearly every department is at risk of losing productivity if your ERP implementation project goes awry.
4 – Bad customer experience
From hearing fast busy signals when calling your company’s support center to being charged the wrong amount for an item on your website, your customers’ experience can be seriously hurt by a failing ERP project. You’ll be hard-pressed to repair the damage in the near term if your implementation problems continue to affect your operations, and eventually you may lose market share because you can’t win those customers back.
5 – Bad employee experience
If your HR systems are tied into the ERP project, you run the risk of incorrect or even delayed paychecks. Employees who can’t login to reserve vacation time or approve the promotion of a direct report will not be happy about the situation, and your human resources team could be left making a lot of apologies and working late hours to put things right.
6 – Regulatory actions
Companies sometimes run afoul of compliance mandates when an ERP implementation falls behind schedule. Integration problems might tie up data you need for an audit. A badly designed test environment can expose sensitive data covered under consumer or health privacy laws. Missed deadlines for quality control activities may also bring regulatory scrutiny.
7 – Litigation
When ERP implementation projects go off track, the implications can be severe and wide-reaching. Companies have sued their ERP vendors and the reverse is also true. Investors and other business collaborators may take legal action against you if the project’s failings hurt their financial or competitive positions. Implementation mishaps that put personal data at risk can result in class action lawsuits initiated by those affected by the breach.
8 – Embarrassing PR
Being on the receiving end of disciplinary action from a regulator is likely something you need to disclose to shareholders or business partners. Investigations launched to uncover the root factors behind an ERP project’s schedule problems or poor results usually get some attention. Even if you have a good damage control campaign, your vendors might worry about your organization’s long-term viability and customers may be unwilling to buy from you.