Author: CEO & Founder of Trusli, Gloria Qiao
For many of us, the mention of an “ERP” implementation brings up very bad and painful memories. I think of the time when we spent six months and millions of dollars on a “study and implementation planning”, only to be told that we achieved nothing, and we had to spend another few hundred thousand to investigate how and why we failed. Sounds absurd? By sharing war stories with my peers, we are definitely not alone.
An ERP, also known as Enterprise Resource Planning, is a software system used by businesses and organizations to manage and integrate various aspects of their operations, such as finance, supply chain, procurement, human resources, customer relationship management, and more. ERP systems provide a unified and centralized platform for managing data, workflows, and processes, enabling organizations to streamline their operations, improve efficiency, and make better-informed decisions. By automating routine tasks and providing real-time insights, ERP systems can help businesses become more agile, responsive, and competitive in their respective industries.
Most successful companies like Apple and Tesla have a robust ERP system (oftentimes homegrown). With a good system in place, a company can enjoy various benefits,
such as improved efficiency, better decision-making, enhanced collaboration, cost reduction, scalability, improved customer service, better inventory management, enhanced regulatory compliance, and security.
Sounds great, so why doesn't every fast-growing company adopt an ERP, and why is there so much headache around it? There are multiple reasons why it's so difficult and how the selection and implementation can go wrong. We'll explain the reasons and then discuss possible solutions.
There are four main reasons the selection and implementation of an ERP solution is difficult:
1. Budget and timeline constraints
Implementing an ERP system can be costly and time-consuming. Organizations may face challenges in staying within budget and meeting project deadlines, especially if unexpected issues or complexities arise. Selecting the right system and implementing it is not a trivial undertaking, considering the complexity of business operations, processes, and existing tech stacks. Balancing functionality, cost, and implementation timelines is challenging and can easily spiral out of control.
2. Resistance to change
The easy alternative to an ERP system is not to have one. Convincing upper management and employees of the need for an ERP system may not be straightforward. For many employees who haven't worked for large, efficient organizations, the benefits of an ERP system may not be evident. However, in the long run, not having a system will cost the company in wasted resources (time and money), lack of communication and coordination throughout the organization, and ultimately diminished culture and morale due to the inability to work together effectively.
3. Employees' failure to train and adopt
Even after a company overcomes the initial hurdle of implementing an ERP system, employees' failure to learn and adopt the new system could still be detrimental. Current ERP systems are often difficult and clunky to use. If people don't like it, a natural reaction would be not to use it and revert to previous methods, like making purchases on a credit card instead of going through the system and raising a proper purchase requisition.
4. Too much/too little customization/integration
Companies may desire a customized ERP system to suit their needs, only to find that vendors don't offer much customization or that it comes at a high cost. Excessive customization can also increase maintenance and update expenses. Conversely, inflexible systems that don't meet a company's specific requirements can lead to frustration and a return to using multiple spreadsheets and offline communications. Similarly, integrating too much or too little with existing processes can cause problems with system adoption.
So, all of this sounds unpromising. Are we doomed to repeated ERP failures, as I have personally experienced?
I don't think so. Instead of blaming the companies or the employees for their inability to change and adapt, we, as software providers, should take responsibility and rethink our approach.
Perhaps it's not the fault of the users that they are reluctant to buy expensive software that is hard to implement and use. As an industry, we should strive to provide a better solution—akin to the iPhone's transformative effect on the mobile phone market.
Imagine an ERP system that is easy to implement, intuitive to use, and adaptable to each organization's unique needs. Rather than spending millions of dollars on "implementation experts," we could leverage artificial intelligence and natural language processing to let users describe their current processes and requirements, allowing the system to tailor itself to their needs through an interactive conversation. Moreover, users could pick and choose modules that align with their specific requirements, which can be seamlessly integrated with their current systems and processes.
If Microsoft can revolutionize how we interact with Word and PowerPoint, there's no reason we can't do the same for ERP systems. The future of ERP should focus on simplicity, streamlined processes, and minimal manual input. The system should "just work" without unnecessary complications. Stay tuned—we're changing the way ERP is done as we speak. Our mission is to transform how users interact with their ERP systems, making them more user-friendly and accessible for organizations of all sizes.
In conclusion, ERP doesn’t have to be difficult or complicated. It is so because it’s still operating as a horse carriage in the era of self-driving cars, or a dial phone in the era of smart devices. We need to change how we think about its design and setup, and how users interact with it, along the same lines of the Microsoft Co-pilot or the Salesforce Einstein. Machines should be designed so much easier to work with humans. Stay tuned for our new product roadmap.
We are building a more user-friendly, accessible system without unnecessary complications that will transform ERP. Similar to Microsoft Co-pilot or Salesforce Einstein, its simple design, streamlined processes, and minimal manual input will be much easier to work with humans. Stay tuned for our new product roadmap.