How to know if your ERP system is failing

Businesses need to pay attention to the compatibility, reliability, and agility of ERP systems.
27 December 2019

ERP systems can optimize business operations. Source: Shutterstock.

When enterprise resource planning (ERP) systems first emerged in the market, manufacturers were one of the first to adopt the technology. Since manufacturers are on the lookout for technologies to streamline processes, ERP ticks all the boxes and is regarded as the backbone for many operations.

ERP comprises hardware and software that works hand in hand to monitor the design and production of products and services, all the way to delivery to end-users and transactions. In addition to that, ERP is deployed in other sectors of an organization as well, including human resources, procurement, finance, and management.

The versatility of ERP has made it popular across industries and the global ERP software market is estimated to reach US$78.40 billion by 2026.

Therefore, early adopters and matured players of the ERP market are already leveraging the technology to enhance the company’s performance and more are following suit.

However, the integrated nature of ERP software makes it challenging to maintain and it has become common for ERP systems to fail. In some cases, hardware or software failure, outages or theft may cause ERP systems to shut down.

Even so, the potentials and benefits of ERP system outweighs the challenges of implementing it. Hence, for organizations with ERP systems or planning to implement it soon, there are several signs which determine if an ERP system needs a ‘checkup’.

# 1 | Incompatible with existing systems

If an ERP system is unable to integrate with existing business applications, it may lead to a snowball effect of inconvenience and inefficiency. When data is locked up in ERP systems and difficult to access, it may slow down operations. Employees unable to access directly will lose out on the benefits of real-time or up-to-date data that will influence business decisions. 

This lack of integration inevitably builds up silos of information and inhibits the comparison between streams of data. Companies will lose out on spotting valuable correlations and patterns that reveal significant insights. Moreover, data duplication becomes a necessary part of the process which most likely creates different versions of the truth and compromise data quality in the end. 

#2 | Unreliable delivery times

Secondly, ERP systems are prized for their capability of streamlining resource planning across an enterprise and ensure customers receive goods on time. If an ERP system is unable to deliver products to customers in a reliable and predictable manner, there may be underlying business process issues that need to be rectified before it can achieve the desired service level.

As an example, an ERP system relies on clearly defined and thoroughly documented processes to operate effectively. Since process modeling is complex, processes may not be properly implemented and lead to ERP systems performing inefficiently.

#3 | Poor system agility

Similar to other tools, ERP needs to be upgraded and maintained consistently to ensure it runs smoothly. With enterprise technology changing at rapid speed, various industries are struggling to keep up and some are left in an awkward period of change that will only accelerate after some years. The key is for organizations to embrace new technology advances with minimal disruption to existing operations and maintain a smooth transition.

With that said, ERP systems which fail to integrate or utilize the latest technologies will bring more disadvantages than benefit to organizations. Hence, leaving room and flexibility for ERP systems to accommodate technological changes can be a real game-changer for businesses.