Knowledge sharing

Why is ERP not suitable for many businesses?

May 17, 2021

Some businesses quickly refuse an ERP solution when mentioned because they think it is not suitable for them. But most of them don’t know the root cause and the right time to implement the ERP. Let’s follow the below article.

1. Need time to validate the efficiency of the ERP System.

For businesses that have been firmly established in the market for many years and have stable cash flow management, scaling is one of the top priorities. Thereby managing operational processes also becomes more complex with a significant amount of personnel.

effective time erp
ERP effectiveness must be measured by time

Then, an ERP System is the first choice to solve tough management problems, but a problem arises when businesses demand the effectiveness of software immediately. This indicates that ERP can’t meet business requirements, because the effectiveness of implementing management software needs time to validate, as well as detailed planning from related departments.

Therefore, businesses need a professional consultant partner to help them decide the right time to implement, choose the right person in charge, and calculate the benefit based on the investment for this ERP System.

2. Businesses are afraid of costs

We cannot deny that cost is a factor that businesses consider when deploying software, not only ERP. Because when analyzed closely, we will see the hidden costs include:

  • Training costs: when innovating the management system, businesses need to accept the expense of training employees so that they can access new software and learn how to use it. In fact, many businesses do not focus on learning how to operate the system, leading to spending a lot of time and even paying more fee for the ERP provider to re-train. This fee needs to be agreed from the beginning, so that the businesses can actively balance their budget, as well as arrange full-time personnel to support them in training and operating later.
  • Customization cost: If businesses still haven’t caught up with features needed to implement on an ERP System, or change from the original agreement, the additional cost is inevitable. This demonstrates that businesses still do not know what their requirements are, and the process of each department is still not clear.
  • Project’s personnel cost: The cost to gather human resources for the ERP digital transformation project is not small, and the success or failure also depends on this factor. Because businesses have to reduce the current workload so that they can join the project, as well as find alternative human resources to do their previous work.

These are three types of hidden costs leading to the thought that ERP deployment is not suitable for businesses. Therefore, they should calculate carefully when deploying.

3. The “fear of change” mindset prevents businesses from digital transformation

worry about the cost of erp
The “fear of change” mindset prevents businesses from digital transformation

Most businesses that are already large, and used to using an application for a long time will find it difficult to accept changes, especially from employees. Since they have to start learning from scratch, the workload will increase. In addition, fear of difficulty in editing or work being controlled leads to employee resistance. Besides, managers have not seen the benefits of ERP implementation.

This is the common mentality of long-established businesses in the market, and it takes a long time for ERP to demonstrate the effectiveness of overall corporate governance, reduce risks, optimize operating costs, and increase productivity. labor…

Above are 3 common reasons that businesses think ERP is not suitable for their internal implementation. So when should businesses implement ERP? Find out in the section below.

4. When is the right time to implement comprehensive management ERP?

For medium and large enterprises, ERP implementation should be considered early, and at the right time when seeing the following signs:

  • Asynchronous data storage: Because each department uses separate software, and of course it will not be possible to synchronize each stage. Therefore, management work is more challenging, and this is when businesses should consider.
  • Difficult to access and use data: Usually, each department stores information individually, and leads to a lack of connectivity between departments. Businesses have a hard time getting the data when they need it because they won’t know what the correct information is. In addition, the confidentiality of information can not be guaranteed, as each department is solely responsible for its security, and this is very susceptible to external information due to lack of technological expertise.
  • Lack of overall analysis of the business situation: Reports from departments are isolated when there is no common operating system, and it is difficult for business management to have an overall view of business fluctuations. through discrete reports. In the long run, it will be difficult for businesses to call for investment capital or scale up if the working process is fragmented, even loose like that.

Many factors make an ERP installation unsuitable for a business, and implementation must be carefully considered. Moreover, businesses need to clearly define the purpose of implementation, as well as the expected time to benefit from ERP. Finally, when business management processes become more complex, it is time to deploy the ERP to synchronize it all. And please contact BEMO for expert advice, service, as well as experienced guidance.