Critical success factors for ERP implementation

The implementation of an ERP system changes the entire structure of the company, since the technical procedures even the organization’s own culture. Thus it is appropriate before its implementation, examine in every possible aspect, the factors that lead to success and failure in an attempt to better plan its adoption.

The curiosity by the ERP system and the advantages that are offered, awaken in business interest on your purchase. Such interest is related directly to the cost / benefit system, which is not restricted only to the price of the software and the necessary infrastructure for its use. Several analyzes consider that it should be made an estimate of the operating cost of the current system and the proposed system, also including all costs of the following phases of the project. Other factors mentioned by the author can be analyzed by describing the intangible benefits of forecasting the costs and benefits will behave over time and the identification of risks of system implementation.

Another important aspect to be considered refers to the expected return of the system. In many cases, business owners do not adopt a realistic approach, which implies not achieve all the goals envisioned before implementation. This point is difficult to measure, since much of the return is intangible, such as the productivity aspects, flexibility and efficiency.

In the planning period, the concern about data migration is an essential aspect. Companies that wish to deploy the ERP system are used one or several information systems that assist in the management process, and by deciding to implement the integrated management tool, have to perform data transfer of the System(s) old for ERP. The transfer is not so simple and should be analyzed so that unavailable in the old system information is registered in due time. The possibilities of information extraction of package are directly linked to the quality of the data held on the system base.

The failure rate in implementing ERP system is quite high. Studies indicate that 40% to 60% of implementations fail. The factors that lead to project failure are diverse, whether internal or external to the organization. Internal factors include human and technical failures, while external factors independent of the organization.

Human factors here so appointed, refer to failures arising from incorrect activity or even the lack of human attitude during the process of planning, implementation and use of the ERP system. As examples we have:

Feeling no need for the system: the fact that occurs when employees of the organization do not believe in the system’s potential, but believe that the ERP is inefficient or incapable of assisting the management of the company. This attitude is common among most conservative officials, those who twist the old system remain.
Wish that the new system is not successful: is for fear of people losing their jobs or fail when using the new system. Very common in companies where the compensation system for the employee is not set, this factor may be one of the major reasons of failure in trying to ERP implementation.
Lack of knowledge of the basic concepts involving the system: due to their complexity, the ERP requires for its good operation, knowledge of new concepts such as MRP and the ABC curve method. Users need to understand how business processes work and should be considered the learning curve during which difficulties and errors are constant, demonstrating the need for constant training.
Incorrect data: the system is reference in the integrated management of companies, but it works according to the information released in the program. Therefore, erroneous or incomplete information may not provide correct or complete reports, which makes the success in decision making.
Error in the definition of requirements: ERP is a general system, making it unlikely that it meets the company’s requirements exactly, generating discrepancy between the package and the company.
Inexperience in project management: in addition to technical knowledge of the system, it is necessary that the company makes available the best people in the organization to work the issue of culture change, minimizing resistance and facilitating the use by new users.

Other factors, here named as technical factors, refer to those whose failures do not result from human action but inherent to the system aspects, among which are:

unused system use: information technology launches new tools all the time in the market. To remain competitive, companies must be alert on every innovation, seeking to make them competitive advantage, which will hardly be possible by the use of systems in disuse.
Use of improper system: at the customization phase, there is an attempt to change the ERP system so that it can adapt to a particular business situation impossible to be played by pre-existing parameters. At this stage, it can meet any business need. However, the more extensive is the customization, plus the system used departs from the proposed ERP system.
Use of non-affordable system: the ERP system, for promising integration of company information must be accessible to most of the employees at any time and effective time. Employees need to necessarily be well trained in the use of a base of information common to the entire company.
Software parameterization Weaknesses: due to the failure in the process of adaptation of an ERP system by defining parameter values already provided by the system itself.
System does not remain in operation: business, before deciding your provider, need to know other projects already implemented by checking factors such as the commitment of this to the company and the uptime guarantee of your system.

There can also be many problems arising from the use of technology untested or old, the lack of internal capacity to deal with new technology and fear of changes in technology. Other risks are: the inability to future developments, the bad design of the database, the complexity of the user/machine interface, delays in the delivery of software and/or hardware and interfaces that do not work well. Backups, change versions and maintenance machines need consensus among all areas using the system, since they are a potential source of conflict between the operational areas and IT.

Some factors are external to the organization, environmental elapsing in which they operate companies, and initially, the ERP system cannot predict; for example, there are the changes in legislation and changes in accounting and tax standards aspects, these are unexpected changes, that make many strategies being changed so that it manages the expected competitive advantage.

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