A summary of 8 common challenges businesses face when implementing ERP systems.

ERP implementation is not simply about putting new software into operation; it's a comprehensive transformation of processes, data, and management methods within a business. Throughout this process, businesses may encounter various challenges at each stage, from needs assessment and data standardization to system deployment, user training, and practical operation.

Below are eight common ERP implementation challenges that businesses often encounter at different stages, along with corresponding solutions.

7-Step ERP Implementation Process in Businesses

Although each vendor may employ different implementation methods, most ERP projects go through the following basic phases.

• Step 1: Needs Survey and Analysis: The business and the implementation unit will jointly assess the current operational status, identify the problems that need to be solved, and develop a suitable implementation scope.
• Step 2: Design the solution and standardize the process: The project team will review existing business processes and build an operational model on the ERP system to ensure consistency across departments.
• Step 3: Data Preparation and Conversion: Businesses need to collect, clean, and standardize data from various sources before integrating it into the new system.
• Step 4: System Installation and Configuration: The implementation team will set up the modules, configure the functions, and make the necessary customizations to meet the business's management needs.
• Step 5: Testing and user training: Departments will participate in testing the system and receive training to familiarize themselves with the new processes and working methods.
• Step 6: Go-live and official operation: Businesses begin using the ERP system in practice and closely monitor any issues that arise during the initial implementation period.
• Step 7: Evaluation and Optimization: Once the system is stable, the business will continue to improve processes and expand necessary features to maximize the value of the ERP.

8 common challenges encountered when implementing ERP in businesses.

In reality, many businesses face challenges related to people, data, processes, and project management, directly impacting the progress and effectiveness of ERP investments. Below are eight common difficulties encountered when implementing ERP.

Resistance to change comes from personnel within the organization.

This is one of the most common challenges in ERP implementation and also the reason why many projects fail to achieve the expected results. This challenge often arises right from the preparation phase and extends through the trial operation and user training (UAT, Go-live) phases.

Essentially, ERP not only changes work tools but also changes how employees perform their daily tasks. Processes that were previously handled manually using Excel, email, or paper documents must now be strictly adhered to on a centralized system. This can easily create apprehension and resistance from users.

• Employees lose control of data when all information is shared on a common system.
• Work performance is measured more transparently through KPIs and real-time reporting.
• The workload increased in the initial phase due to the need to learn how to use the new system and perform complete data entry.
• Unspoken processes or familiar ways of working are no longer suitable.
• Concerns about being judged on competence arise when the system helps detect errors or bottlenecks in the work process.

If left unaddressed, this resistance can lead to various consequences such as inaccurate data entry, the use of ERP systems for illustrative purposes, neglecting standard procedures, or reverting to outdated tools like Excel. In such cases, businesses struggle to unlock the true value of their ERP systems, despite significant investment in time and resources.

Suggested solutions for businesses

ERP should be viewed as an organizational transformation project, not just a technology project. Leadership needs to lead the change, clearly communicating the project's goals and benefits to each department. In addition, businesses should:

• Organize training tailored to specific user groups and business processes.
• Build a core team of personnel to act as a bridge between the implementation unit and internal staff.
• Regular communication regarding the project's progress, results, and benefits.
• Implement a recognition and reward system for individuals and departments actively participating in the transformation.
• Support users during the go-live phase to reduce pressure and increase system readiness.

When the human element is well-prepared, businesses can significantly reduce risks during implementation and increase the success rate of ERP projects.

The data is fragmented and lacks a systematic approach.

This difficulty often arises right from the initial stages of surveying the current situation and preparing data before ERP implementation. This is also one of the common reasons why projects take longer than initially planned.

Many businesses have long operated using Excel, standalone software, or separate management tools for each department. This leads to fragmented, inconsistent, and unstandardized data. For example, the same customer might be stored under different names in the sales and accounting departments; material codes might be duplicated or not follow a unified coding system; and production quotas might be updated manually and lack accuracy.

When implementing ERP, all data from various departments needs to be centralized on a single platform. If the input data is not standardized, the system will be unable to generate reliable reports. This is the principle of "Garbage In, Garbage Out" —incorrect input data will lead to incorrect output.

As a result, businesses may encounter a range of problems such as:

• The inventory report is inaccurate.
• Discrepancies in data between departments.
• Data origin is difficult to trace.
• The production and purchasing plans lack reliability.
• The management lacked a solid basis for making decisions.

Solutions for businesses

Before uploading data to the ERP system, businesses need to spend time reviewing and standardizing the data. Some priority items include:

• Customer and supplier list.
• Codes for goods, materials, and finished products.
• Material consumption standards.
• Accounting chart of accounts.
• Personnel list and organizational structure.

Furthermore, businesses should establish consistent data governance rules from the outset to ensure accuracy and consistency throughout long-term operations. Investing in data standardization before implementation will significantly reduce risks and improve the efficiency of ERP utilization after deployment.

The actual process and the software are out of sync.

One difficulty many businesses face when implementing ERP is the mismatch between actual processes and the software. This challenge often arises during the business process survey, solution design, and system configuration phases.

In reality, not all existing business processes are optimized. Many businesses have maintained working methods for years, developing manual processes or procedures to meet immediate operational needs. When implementing ERP, these processes may not be compatible with the management standards the system is currently using.

Conversely, some businesses choose ERP solutions that are too rigid, difficult to customize, or designed for foreign markets. This results in software that does not meet the specific accounting, tax, manufacturing, or operational requirements of Vietnam.

In that situation, businesses typically find themselves in one of two scenarios:

• Attempting to force the software to run according to old processes leads to the generation of many manual operations outside the system.
• Changing processes too quickly without a proper transition plan can cause disruption to operations.

As a result, users feel that ERP systems don't truly support their work, system usage rates are low, and businesses struggle to fully leverage the value of their investment.

Solutions for businesses

Instead of trying to maintain the entire old process or customize the software in an uncontrolled manner, businesses need to reassess each business process to determine which processes should be standardized and which specific features should be retained.

Furthermore, choosing an ERP solution with a flexible architecture is crucial. ERP platforms developed with a low-code approach allow businesses to customize the interface, processes, and functions to suit their specific operations without having to deeply interfere with the core system.

This allows businesses to both inherit advanced management practices and maintain the unique characteristics of their operating model. This approach also helps ERP systems adapt better to future business changes without having to be re-implemented from scratch.

Learn more: 1C:ERP: The optimal low-code ERP platform for Vietnamese businesses

Unexpected budget overruns.

Budget overruns are unavoidable and occur throughout the project lifecycle, but are most noticeable during the implementation, testing, and commissioning phases. Many businesses believe that ERP costs only include software licenses and initial implementation fees. However, in reality, the total cost of ownership (TCO) is often significantly higher than initially estimated.

As departments begin using the system, many new specific needs are discovered, leading to additional costs for customization, functional development, or project scope changes. Furthermore, ERP budgets can increase due to various other factors that businesses often overlook during the planning phase, such as:

• Costs for cleaning, standardizing, and migrating data from the legacy system to the ERP system.
• The cost of integration with existing software such as CRM, accounting software, sales software, time attendance systems, or MES systems.
• Costs for upgrading server infrastructure, local area networks, or cloud services.
• Costs for user training and post-Go-live operational support.
• The cost includes maintenance, version upgrades, and recurring technical support.
• The opportunity cost arises when key personnel have to spend more time participating in the ERP project instead of focusing on their core professional work.

A common mistake is for businesses to underestimate the complexity of a project in the early stages, leading to budget estimates that only reflect the software deployment costs and fail to account for investments related to organizational transformation and system operation in the long term.

Solutions for businesses

From the planning stage, businesses should build an overall ERP budget rather than focusing solely on the software purchase cost. The financial plan should include all items such as implementation, data migration, system integration, training, technology infrastructure, and operating costs after Go-live.

In addition, businesses should allocate a certain budget for unforeseen requirements during implementation. Clearly defining the project scope, priority objectives, and implementation roadmap for each phase will also help control costs more effectively, preventing budget overruns.

Lack of strategy and support from leadership.

This difficulty often arises right from the project's inception and can affect the entire ERP implementation process. In fact, many businesses view ERP as a technology project and delegate all responsibility to the IT department or software vendor. This is one of the common reasons why projects fall behind schedule or fail to achieve their initial goals.

ERP is not simply about implementing a new system, but rather a process of restructuring how a business operates and manages itself. This process involves numerous decisions related to processes, access control, data structure, and coordination between departments. These are all managerial issues that go beyond the expertise of the IT department.

When leadership is not involved, projects often encounter situations such as:

• The departments pursued their own goals, lacking unity in implementation direction.
• Process conflicts were not resolved in a timely manner.
• The project scope is constantly changing due to a lack of a final decision-maker.
• Employees do not view ERP as a strategic priority and lack commitment to its implementation.
• The implementation process has been delayed due to the need to wait for approvals or agreements between multiple departments.

Solutions for businesses

For ERP to be effective, the CEO, the Digital Transformation Team, or the C-level team need to act as patrons of the project. The leadership team doesn't necessarily need to be involved in day-to-day technical tasks, but they need to be present at key milestones and responsible for making strategic decisions.

Businesses should:

• Clearly define the business objectives to be achieved through ERP.
• Establish a project steering committee with the participation of key leaders.
• Regularly monitor progress and address inter-departmental issues.
• Make decisions about process standardization and change management.
• Strong communication to build consensus throughout the organization.

With leadership guidance, ERP will no longer be a project solely for the IT department, but will become a strategic transformation program for the entire enterprise.

Failure to conduct thorough pre-operation testing (UAT)

This issue typically arises in the final stages of a project, just before the Go-live phase. This is when businesses conduct User Acceptance Testing (UAT) to verify that the system meets real-world business requirements.

However, due to deadline pressures or the desire to bring the system into use early, many businesses tend to shorten testing time or perform UAT (Universal Testing Assessment) in a perfunctory manner. Users only test individual functions instead of simulating the entire real-world operational process from start to finish.

Meanwhile, the value of UAT lies not in verifying that each screen or function is working normally, but in checking the interconnectedness of business processes throughout the enterprise. For example, a complete purchasing process may include many consecutive steps such as purchase request, approval, warehousing, accounts receivable recording, and accounting entries. If only individual parts are tested, logical errors or data discrepancies between departments are easily overlooked.

These problems only began to surface when the system officially went into operation, such as:

• Discrepancies in inventory figures between departments.
• The documents were not circulated according to the correct procedure.
• Accounting and production data are inconsistent.
• The management report yielded inaccurate results.
• Departments were unable to continue processing orders due to system errors.

A more serious consequence is that the entire production and business operation may be disrupted during the initial operational phase. At the same time, users may easily lose confidence in the new ERP system and tend to revert to old management methods such as Excel or manual processing outside the system.

Solutions for businesses

Businesses should view UAT as a mandatory phase rather than a mere acceptance procedure. Test scenarios should be built based on the actual operational processes of each department and interdepartmental business flows.

To improve the effectiveness of UAT, businesses should:

• It fully simulates the entire process from start to finish (end-to-end).
• Use real-world data instead of simple sample data.
• This involves the participation of Key Users and personnel who directly use the system.
• Identify, address, and retest all bugs before going live.
• Only put the system into operation when the core business processes have been confirmed to be stable.

A well-executed UAT (Universal Assessment Test) phase will help businesses identify and address most risks before official launch, thereby minimizing disruption and improving the success rate of the ERP project.

Support faults in the post-operation phase

Many businesses believe their ERP project is complete when the system officially goes live. However, in reality, this is just the beginning of the system's operation and optimization process. The first few weeks or months after ERP implementation are often the period when the most problems arise.

When starting to work on a new system, users will constantly encounter real-world situations that were not present during training or testing. Requirements for process adjustments, report changes, additional permissions, or exception handling will also gradually arise as the business operates at a real-world scale.

If the deployment partner fails to maintain post-Go-live support or the internal IT team lacks the capacity to take over the system, problems will accumulate. Some common signs of support breakdown include:

• Users encounter errors but don't know who to contact for assistance.
• Requests for business adjustments have been pending for a long time.
• The system has not been updated to reflect changes in the business.
• Operational knowledge is concentrated in the hands of a few key individuals.
• Internal IT departments lack the capacity to manage or develop systems independently.

In the long run, businesses risk reverting to familiar tools like Excel, email, or other separate software programs to handle daily tasks. This leads to scattered data, a loss of process synchronization, and billions of dong invested in ERP systems no longer delivering the expected value.

Solutions for businesses

From the outset when choosing an ERP solution, businesses need to assess the long-term support capabilities of their implementation partner, rather than focusing solely on the initial implementation phase. Simultaneously, a clear technology transfer roadmap should be developed to ensure that internal IT teams and key users gradually master the system.

In addition, businesses should establish post-Go-live support mechanisms, regular training, and improvement request processes to ensure that the ERP system is always maintained, updated, and developed in line with changes in business operations.

Choosing the wrong solution or implementation partner.

Even with good budget, data, and internal resources, an ERP project can still be at risk if the wrong solution or implementation partner is chosen. This is considered the decision with the biggest impact on the cost, schedule, and effectiveness of the entire project.

In reality, not every ERP system is suitable for every business. Some solutions only meet current management needs but lack scalability as the business grows. Conversely, some systems have too many complex features, leading to lengthy implementation times and unexpected customization costs.

Some signs that a business may be making the wrong choice include:

• The solution only meets current needs and lacks the ability to scale in the future.
• The software requires too much customization to meet basic business requirements.
• The partners focused on software features but didn't understand the business's management challenges.
• Lack of implementation experience in manufacturing, trade, or similar industries.
• There are no long-term plans to support and develop the system.

As a result, businesses face increased deployment costs, extended deployment times, or even the need to replace systems after only a few years of use. This not only wastes resources but also creates significant disruptions in operations and digital transformation.

Solutions for businesses

When choosing an ERP system, businesses need to evaluate the solution based on both current needs and long-term development strategies. A suitable system should not only address immediate management challenges but also be scalable as the business grows.

Furthermore, businesses should prioritize platforms with flexible architectures that allow for customization and the development of additional functionality as needs change without affecting the core system. This is especially important in the context of an increasingly dynamic business environment and management requirements.

At the same time, choosing an implementation partner with practical experience in the industry, a thorough understanding of accounting and tax regulations in Vietnam, and the capacity for long-term partnership will significantly help businesses minimize risks during ERP implementation and operation.

1C:ERP - The solution to ERP implementation challenges in Vietnamese businesses.

1C Vietnam is a consulting and implementation unit for ERP solutions, trusted by over 5000 Vietnamese businesses. 1C ERP is an enterprise resource management system designed to help businesses manage all activities from finance and accounting, purchasing, sales, warehousing, and production on a unified platform.

One of the distinguishing features of 1C:ERP lies in its implementation approach. Instead of strictly adhering to standard processes or excessively customizing to meet specific business requirements, 1C aims for a balance between these two elements. Specifically:

• The solution inherits proven operational processes and best practices from numerous businesses in various sectors, helping to shorten deployment time and minimize potential risks.
• At the same time, the platform still allows for flexible scalability and customization to meet the specific business characteristics of each enterprise.

This approach helps businesses standardize their management practices while ensuring adaptability as scale and operational needs change in the future, and minimizing the risks of long-term upgrade, maintenance, and system modification costs.

Besides its flexible deployment methods, 1C:ERP also boasts a low-code platform that allows customization to meet specific business needs without affecting the core system. The solution helps connect data between departments on a unified platform, updates information in real time, and supports businesses in scaling their operations in the future.

The 1C Vietnam team provides ongoing support throughout the entire process, from surveying and data standardization to testing and actual operation, helping businesses minimize risks during implementation. After Go-live, businesses continue to receive training, technology transfer, and long-term support to maximize the value of the ERP system.

If your business is looking for a flexible ERP solution that suits the specific operational characteristics of Vietnam and has a team of experienced partners, contact 1C Vietnam for advice on a suitable implementation roadmap to meet your actual needs.

Conclude

ERP implementation is a comprehensive transformation journey, requiring thorough preparation in terms of people, data, processes, and management strategies. Early identification of potential challenges during ERP implementation will help businesses proactively develop appropriate plans, minimize risks, and optimize investment efficiency. Hopefully, the above insights will provide businesses with a better foundation for preparing for their ERP projects, thereby increasing success rates and maximizing the value the system offers.