10 ERP Risks That Prove You Chose the Wrong Software

Choosing software that does not align with your business needs can have significant financial implications. This blog highlights the risks and costs of choosing the wrong software to help run your business and offers guidance to help you make informed decisions to avoid these costs for your organization.

Imagine investing a substantial amount in software licenses and implementation only to discover that the chosen software lacks essential features, requiring costly customizations or add-ons that were not planned for. We want to help you avoid potential costs before deciding.

Workflow disruptions

Changing your business processes to match new software disrupts daily operations, leading to inefficiencies and increased costs. For example, if your chosen ERP lacks support for your specific order-processing workflow, it could cause delays and confusion among your team until processes are redefined and rolled out.

Costs: Lost productivity due to inefficiencies, overtime pay to compensate for delays, and potential missed delivery deadlines leading to penalties.

Lost Money: Reduced sales and customer dissatisfaction.

Questions to ask:

• How confident are you that the proposed system can seamlessly integrate with our existing workflows without causing disruptions?
• What measures are in place to minimize downtime and productivity losses during implementation and system migration?

Customization and integration expenses

Choosing a system can become expensive if it requires extensive changes to function with your existing software. Customizing the system or making it work with other programs can be time-consuming and costly, increasing implementation costs and ongoing maintenance expenses, draining your resources, and potentially slowing down your business.

A recent case involved River Supply Inc. (RSI), alleging that Oracle misled them with promising software solutions that could support their complex catalog needs of 10,000+ SKUs. Despite assurances, RSI claims Oracle failed to deliver the promised functionality, leading to delays and additional expenses. RSI asserts that Oracle demanded costly change orders to meet requirements that RSI believed were already included in the contract, but Oracle said it was out of scope. RSI alleges it lost $170,000 in implementation and subscription fees and $700,000 in additional resources it dedicated to the failed project.

Costs: Custom development fees, ongoing maintenance for custom code, and potential compatibility issues with future upgrades.

Lost Money: Reduced profitability due to higher operational costs and potential delays in realizing the benefits of the software.

Questions to ask:

• Does the proposed software offer native integration capabilities with our required systems, or will custom development or additional software providers be needed?
• What are the estimated costs and timelines for any necessary customizations or integrations, and how will ongoing maintenance be handled?

Data migration challenges

Transferring data to a new system can be complex and costly, especially if errors occur during migration. Data migration errors may lead to discrepancies in customer records, inventory levels, and financial data, impacting the accuracy of your operations and potentially resulting in financial losses.

Costs: Data cleansing and correction, downtime while resolving errors, and the potential need for external consultants.

Lost Money: Lost sales due to inaccurate inventory levels or customer data and potential chargebacks due to billing errors.

Questions to ask:

• What specific measures will the software provider take to ensure accurate and complete data migration to the new system?
• What is your plan for handling potential data errors or discrepancies during migration, and who will be responsible for associated costs?

Order processing

Inefficient business management systems can significantly impact order processing, leading to customer frustration and lost sales. Clunky interfaces and manual workarounds can significantly extend the time it takes to input orders, leading to increased customer wait times, missed deadlines for next-day delivery, and canceled orders. The inefficiency translates to higher operational costs due to increased staff time managing manual processes, potential errors and rework, and the associated costs of missed deadlines and cancellations. 

Costs: Additional staff time to manage manual processes, potential errors, and rework due to inefficiencies, missed delivery deadlines leading to penalties, and canceled customer contracts.

Lost Money: Increased order fulfillment costs and lost sales due to delays and errors.

Questions to ask:

• How user-friendly is the order processing module in the proposed system, and can it accommodate my specific order types and workflows?
• What training and support are available to ensure my team can quickly adapt to the new order processing system and minimize delays?

Training and learning curve

Complex or unfamiliar systems require additional training, leading to increased expenses and productivity losses. Employees struggling with a non-intuitive interface may need more training time, impacting daily operations and customer service, ultimately resulting in lost revenue opportunities.

Costs: Employee training expenses, lost productivity during training periods and reduced employee morale due to frustration.

Lost Money: Decreased sales due to slower order processing and customer service and potential errors due to lack of understanding.

Question to ask:

• What ongoing support resources will be available to address user questions and troubleshoot issues beyond the initial training period?
• Is training offered remotely and onsite?

Inventory management issues

Inaccurate inventory data in business software can result in customer backorders and missed revenue opportunities, ultimately impacting profitability.

Costs: Manual workarounds requiring additional staff time and additional software solutions to fill the gaps.

Lost Money: Missed sales opportunities due to stockouts.

Question to ask:

• How does the proposed system facilitate robust inventory management, including features like stockout prevention and reorder point automation?

Customer dissatisfaction

Software-related errors or delays can damage your reputation with customers. Late or incorrect shipments caused by software issues can result in customer complaints and damage your brand image.

Costs: Potential loss of customers, customer acquisition costs to replace lost customers, and damage to brand reputation.

Lost Money: Reduced sales, profitability, and potential legal fees if customer dissatisfaction leads to lawsuits.

Questions to ask:

• Does the system offer features like self-service portals or order-tracking capabilities to enhance customer experience?
• How will the software provider ensure smooth data migration and system uptime to minimize potential disruptions leading to customer frustration?

Supplier relations

Problems on your end, such as delayed or incorrect payments due to software errors, can strain supplier relationships. Late payments caused by invoice processing errors may lead to suppliers reconsidering their terms with your company.

Costs: Potential loss of supplier discounts, difficulty securing inventory due to strained relationships, and potential legal fees if supplier relationships deteriorate.

Lost Money: Increased procurement costs, reduced access to essential products, and potential damage to brand reputation.

Questions to ask:

• Does the software offer functionalities like automated purchase orders and integrated vendor communication to ensure timely payments and avoid supplier issues?

Scalability constraints

Software that can't scale with business growth put you at a competitive disadvantage, limiting your ability to capture market share. For example, if your ERP cannot handle increased transaction volumes as your business expands, you risk losing customers to competitors with more adaptable systems, impacting your revenue and market position.

Costs: Potential need to switch to a new system as your business grows, additional implementation and training costs.

Lost Money: Lost market share to competitors who can adapt to changing market demands more efficiently.

Questions to ask:

• How can the proposed system accommodate your anticipated increase in business volume and data complexity?
• What upgrade options and futureproofing features does the ERP offer to ensure it remains scalable with my changing needs?

Innovation lag

A red flag should be raised if a software provider lacks a well-defined three to five-year strategic roadmap. You don't want to get stuck with a minimally viable product solution that is rushed to market and neglected. Competitors using software with advanced features, like advanced analytics and AI-driven insights, gain an edge in decision-making and customer satisfaction, potentially leading to lost market share and revenue for you.

Costs: Potential need to purchase additional software or services to access missing features and reduced ability to leverage automation and data insights.

Lost Money: Decreased efficiency and profitability compared to competitors using more advanced tools.

Questions to ask:

• How does the software provider demonstrate its commitment to continuous innovation and updates to keep the system current?  
• What is on the product roadmap, and how far out does the roadmap go?
• How is market research performed, and do I have the opportunity to influence the roadmap?

Making the right choice

To avoid these costly pitfalls, follow these steps when selecting software for your dealership:

1. Assessing business needs: Clearly define your business requirements and objectives.
2. Involving key stakeholders: Engage relevant departments and employees in the selection process.
3. Demo evaluation: Attend product demonstrations to assess how well the software aligns with your needs.
4. Seeking references: Talk to other dealers who have successfully implemented the software you're considering.

Investing in software to run your business is a strategic decision with long-term implications. By carefully considering the potential risks and costs of choosing the wrong software, you can make informed decisions that sets you up for success and avoids costly pitfalls. Remember, partnering with a reliable software provider that is committed to innovation and customer support can ensure your chosen solution adapts and grows alongside your business.

• 2024 B2B Ecommerce Trends
• Diversifying Beyond the Desk: The Case For New Market Exploration
• 6 Characteristics of the 2024 B2B Buyer
• 10 Ways Sales Reps Can Use Ecommerce to Grow Sales
• Leverage Ecommerce for Personalizing Account Engagement