Recent financial problems for aerospace and energy system manufacturer Woodward have once again brought attention to the magnitude of the problems that can arise from ERP system blunders. In mid July, Woodward warned investors that profits would be lower than expected after the company suffered "ERP system related issues."
Although Woodward did not reveal the exact nature of the ERP system related issues or the brand of the ERP system it uses, problems of this nature have become commonplace across multiple brands and numerous industries, and it is almost always related to implementation failures.
In a single fiscal year, Woodward managed to rack up $13.5 million in ERP costs alone. When software that is supposed to make accounting and business processes smoother and more productive costs the company tens of millions of dollars, something is definitely wrong. It is no wonder that many large ERP vendors have been the subject of lawsuits. In some cases, the vendors were clearly at fault, but in almost all cases, better implementation could have saved those companies from ERP disaster.
One of the major problems with ERP implementations is that many companies tend to underestimate them. If you consider that your ERP system will be an integral part of your business process, from planning to manufacturing to shipping (or whatever your business process might be), you should definitely recognize it as a major business investment rather than simply a typical software purchase. A new ERP system means that the dynamics of your business may fundamentally change. That is not something a company should take lightly.
Do you know what costs should be budgeted for in an ERP Software Implementation? Download this helpful white paper: Beyond Software: How to Estimate the Cost of ERP Implementation Services from the ERP Software Blog. In this white paper a panel of 18 ERP experts nationwide reveal how to look beyond software costs and evaluate the 4 costs involved in ERP software projects
ERP implementation is never easy. Once you realize that, you can prepare for it, evaluate every step of the project, hold vendors and consultants accountable, and stay focused on the true goal, which is making your business better, not simply making your software work.
Source: ERP Software Woes Ding Aerospace Company's Profits
By Guest Author: Anya Ciecierski, ERP Software Blog Editor, www.erpsoftwareblog.com