According to Alexis Leon, “Implementing the ERP system and realizing the promised benefits are two different ball games.”
According to 2023 statistics, 50% of ERP projects failed during the implementation phase. Implementation costs also exceeded the initial budget by 3 or 4x. In the construction sector, the latest ERP statistics are no different:
- 21% of ERP implementations failed to deliver any major business benefits.
- 41% of construction firms could not achieve over half of their expected benefits from the ERP solution.
But this does not have to be so for you.
It’s true that ERP implementation in the construction sector has its share of challenges. But the right partner with a deep understanding of ERP technology, domain workflows and processes, and project management skills can help deliver the right impact.
The first step to achieving success is to know what could go wrong. Here are some of the common mistakes that could impact your ERP implementation:
1. Lack of integration
Typically, construction firms use a host of third-party solutions to manage their daily operations. Some of these solutions include:
- Inventory and procurement
- Supplier contract management
- Bill of Quantity (BOQ) management
- Project material requests
Among the most common implementation mistakes, ERP solutions may not be compatible with the existing systems, thus leading to disruptions in the daily workflow. Here are some Oracle ERP integration-related pitfalls:
- Running a single schedule job for a long, thus impacting other jobs (which may get terminated).
- Updating an IAR file externally and importing it into the Oracle environment.
- Implementing synchronous integrations with a high number of iterations.
2. Change resistance
One of the people-related mistakes that construction companies is to not involve their employees in the decision-making process. This leads to employees resisting the change to a new ERP system or technology. Experienced users may also disapprove of this transition as they are comfortable working with existing systems.
With effective change management, construction firms can mitigate this resistance. Here are some best practices:
- Keep employees and users in the loop from the start of the ERP implementation.
- Empower employees to share their concerns about the new ERP systems – and address each of these concerns.
- Allocate ample time and resources to training employees on the features and benefits of the new ERP system.
3. Insufficient planning
A mere 28% of companies were able to implement ERP successfully within the planned budget and time.
Being an enterprise solution, an ERP system impacts every business operation and is not simply an IT function. Hence, construction firms need to plan their business transition to the new ERP system.
Here are some effective planning steps for construction firms to implement ERP successfully:
- Understand deeply how your ERP system can address your business problems or requirements.
- Involve both business and technical stakeholders in the ERP implementation phase.
- Set a realistic time and budget for your ERP implementation.
- Partner with an experienced ERP solutions company for both ERP planning and implementation.
4. Data migration
Any ERP implementation process involves migrating data from its existing sources to the new ERP database. However, according to Oracle, 80% of data migration exceeds their project time and budget. While cost overruns average around 30%, time escalation averages around 41%.
As a best practice, evaluate the existing data that you need after the migration. Here are some other best practices:
- Discard outdated data or systems that you are not planning to use in the future.
- Avoid data migration for existing tools or systems that you are planning to discard.
- Evaluate your data migration roadmap and encourage teams to avoid any obsolete tasks.
5. Lack of data security
90% of cybersecurity professionals expect an increase in attacks on ERP systems. In recent years, there has been an increase in data breaches on ERP solutions like SAP and Oracle.
Construction companies also manage a lot of sensitive data in the form of:
- Financial data
- Employee and customer records
- Construction project-related data
Among the top concerns, construction companies fail to secure their data during ERP implementation. This includes failure on their part to implement security practices like:
- Secure access management
- Secure ERP configuration
- Regular security audits
- Advanced data encryption
6. Excessive customization
Over half of companies plan to customize their ERP system to suit their business requirements. Companies that customize ERP improve their operational efficiency by up to 30%. Additionally, a personalized ERP improves customer satisfaction by 20%.
While customization ensures business success, excessive customization can delay the ERP implementation. Besides, too much customization can cause incompatibility issues and increase the cost and complexity of the ERP system.
Here’s what construction companies can do to avoid the “pitfalls” of excessive ERP customization:
- Check for any compatibility issues in the chosen ERP solution.
- Evaluate if your current business processes are adaptable to the new ERP system.
- Limit the volume of customization to only critical business requirements.
In summary
In the growing Middle Eastern economies, construction companies need an efficient ERP system to streamline their sales and other operations. However, without proper planning and execution, ERP projects often fail, thus consuming a lot of money and resources.
Among the leading ERP solutions, Oracle ERP has proved to be beneficial to the global construction and engineering domain. As an Oracle partner, Shahgaron has successfully implemented ERP projects in the Middle East. Our ERP-related services include:
- ERP implementation and integration services
- Oracle ERP upgrades
- ERP-related application development
With our consultation, you can avoid making critical mistakes in your next ERP project. If interested, contact us now.