Six Signs Your ERP May Not be Working Hard Enough for You (Clayton & McKervey)

May 16, 2022 - Clayton & McKervey PC

This is a thought leadership article looking at how to effectively implement and utilize Enterprise Resource Planning (ERP) software for the benefit of your firm from PrimeGlobal member firm Clayton & McKervey PC in United States.

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Enterprise Resource Planning (or ERP for short) is an essential software tool for monitoring all kinds of businesses. Originally developed to help manufacturing and distribution businesses keep track of critical processes, ERP technology has become indispensable to companies in all sectors.

No matter how advanced an ERP software product might be, the return on investment you can expect depends on how well it’s implemented, how carefully your team applies its features to the needs of your business, and how many of your core processes are integrated with it.

Here are 6 common factors that block ERP effectiveness:

1. Internal Resistance

People differ in their ability to tolerate change, especially if it means adapting to an unfamiliar work routine. IT departments often spend a lot of time getting the product ready for the organization, but very little getting the organization ready for the product. Helping people connect ERP benefits to their individual work success can go a long way toward boosting adoption and their shared investment in making ERP work. This includes implementing upgraded process that align with the ERP features and continued training.

2. Failure to Configure

ERP needs vary greatly between companies, even in the same industry. Architecture and engineering or industrial automation firms may focus on document control, utilization metrics, or job costing, for example, where manufacturing and distribution companies may need more robust productivity, procurement, or inventory capabilities. Successful ERP deployment demands careful early process mapping to ensure the best fit between configurable features and the way you actually keep track of your core processes.

3. Hidden Costs

Sometimes ERP platforms underperform when initial data migration needs aren’t accounted for in the budget. Controlled and tested data migration is integral to successful implementation. Further proper setup takes a resource commitment that is not always in the ERP license cost. In other cases, trying to “hotwire” a process fit using do-it-yourself code rather than taking the right software configuration or API development steps can spike your cost of ownership later with expensive rework or performance degradation. Appropriately identifying requirements that map to functionality and working with a knowledgeable implementation team will reduce this risk.

4. Avoiding or Delaying Upgrades

Software as a Service (SAAS) models, managed services contracts, and a variety of on-premise licensing configurations come with different system upgrade agreements. It takes vigilance to make sure that your organization is keeping up with critical security updates and new feature releases. It is also crucial to keep your employee community informed of these updates and the impact they have on human activity.

5. Lack of Testing

Human error can creep into even the most advanced ERP platforms during implementation including data migration, during upgrades and most often post-hypercare when the elevated level of support ends in day-to-day activity by staff. Organizations that get the best return on their ERP investment support it with rigorous data management policies and risk and control frameworks. They have controls and procedures in place to validate ERP output and ensure complete and accurate financial statements and operational performance numbers.

6. Manual Legacy Systems

Finally, processes that rely on external calculations, spreadsheets, or other kinds of offline analytics can put the reliability of your ERP platform at risk if not mapped appropriately for ERP implementation. Therefore, thorough process mapping and fully vetted data migration steps are crucial to successful ERP implementation. If manual legacy systems exist in your business that work with your ERP, it is important to control and test these systems and controls. Each time data or documents leave your system for manual intervention, you may expose your company to potential error, data corruption, or costly security breaches.

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Clayton & McKervey PC

Headquartered near the international border of the U.S. and Canada, Clayton & McKervey is a Detroit-based, full-service accounting and business advisory firm focused on global business. The firm’s clientele includes closely held, middle-market, growth-oriented companies. Since 1953, Clayton & McKervey has created a strong reputation, both domestically and internationally, with four types of clients, U.S. entities with operations in other countries, foreign entities expanding to the U.S., businesses with international growth plans and clients in need of transfer pricing service.

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