ERP System Implementation: Pitfalls and Hidden Costs to Avoid
October 10, 2021 
When the old spreadsheet or software system doesn’t cut it anymore, the time may be right to think about investing in an Enterprise Resource Planning (ERP) system to organize your day-to-day business activities.
In the past, ERP systems were clunky at best and didn’t integrate well with other systems. But times have changed. Today’s systems bring several different processes, such as financials, operations, human resources, supply chain, and sales and marketing together in one automated, interconnected system. Best of all, when set up correctly, ERP systems can help enhance grower insight, aid with decision-making, and improve operational consistency. However, it is important you do intensive research ahead of purchasing an ERP system to avoid some of the pitfalls and hidden costs of implementation.
Are ERP Systems Right for Everyone?
According to SoftwareAdvice.com, you could be ready for an ERP system if your company is experiencing the following pain points with your current system:
- Outgrown existing software
- Can’t track data across systems
- Current process is inefficient
- Unorganized system
- Lack of automation
- Lack of system integration
ERP systems can be complex with all the options they offer. While that complexity lends itself well to customization, it can also be off-putting to companies looking for something a little simpler. Additionally, companies are not always able to hire teams of high-end software users that can utilize back-office product, according to Aaron Allison, Co-Founder of SBI Software, who says all software must move to a simpler game-like interface that can be managed more easily.
“All software will move to a mini-app, any-device model where field teams can interface with the software and much smaller qualified teams can manage the back office,” Allison says. “All data must be captured in the field moving forward, and there can no longer be a layer of cost to have back-office staff data-entry all the inventory changes or activity.”
Know What Your Real Investment Is in ERP
A major software and systems overhaul is daunting to any company, no matter the size. And perhaps the most deterring prospect of the whole business is the cost to implement a new system. And, there’s nothing worse than finding out something you have invested in is going to cost twice as much as you thought to implement it. Better to understand the hidden costs you could encounter along the way and be prepared for them.
According to John Beauford, President and CTO of Advanced Grower Solutions, these are some hidden costs you may encounter when implementing an ERP system.
- Creating and modifying reports and data analysis in the new system
- Misalignment of system needs with ERP capability causing additional custom development after implementation
- Lack of testing of customizations from provider
- Lack of training material, and additional training and re-training of end users post implementation
- Lack of third-party integrations or integration capability
- Updates to new versions
- Technical support post implementation
- Underestimating the amount of manual data entry
- Local internet access issues, greenhouse Wifi capability
- Understanding the impacts of going to a true perpetual inventory methodology (Many model ERPS implement)
- Account for the “customer” meta data like SKU, etc.
- Data interfacing with older or existing grower systems not being replaced
- Loading necessary historical data
- Amount of work it takes to clean or normalize data needed in the ERP
Practice Makes Perfect
While cleaning and normalizing data takes time, Allison says don’t be in a rush to clean up data and change how data gets loaded into a new system.
“Don’t finalize your data conversion or go live without piloting out key functionality to be sure you can pull and ship efficiently,” he says.
Allison adds that the biggest cost for growing operations is for management not be involved during the ERP process. Lack of engagement by management during implementation of an ERP package is the #1 reason for failure or cost over-runs, he says.
“True go-live priorities must be chosen versus swallowing the elephant,” Allison says. “Don’t be unrealistic, get the basics right first before implementing additional automation on top of the foundation.”
When going through the ERP process, practice is how you avoid surprises, which is why Allison recommends piloting out your entire process in a sandbox, before going live.
“Once you go live, you are in a go-live lockdown. That limits changes from there forward without risking disruptions,” he says. “Pilot new roll-outs each year and roll out phases of the software every summer. By year three, you will have cut labor and improved profit.”
Eight Ways to Protect Yourself Against Cyberthreats
The risk of someone trying to steal your digital data and holding it for ransom is a very real threat nowadays. It’s prudent to take what precautions you can now to avoid disastrous problems that could halt business operations later. Beauford recommends eight things you can do now to protect yourself.
- Network access considerations: Make sure the implementation is as secure for network access as possible.
- Proper role assignment to employees: Only give them access to what they need.
- Put proper password policies in place.
- Terminate user access when employees leave.
- Regularly monitor access and security elements.
- Backup/recovery off-site.
- Educate users (especially accounting staff) to techniques such as phishing and social engineering where hackers try to use people to gain unauthorized access to a system.
- Designate competent system administrators with proper access, virus, malware, and other security monitoring tools who review logs and take proactive actions
There is one other safety consideration: Most on-premise systems are not secure.
“Ransomeware attacks are most common on servers hosted by the customer,” says Aaron Allison of SBI Software. “It costs a lot to be properly protected and takes setting up systems in unpredictable ways. On-premise is no longer a great option.”
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