A new ERP system can be a fantastic opportunity to transform your business digitally. You can get rid of your legacy ERP system's outdated technology and limited functionality and use modern ERP system capabilities to help create new business opportunities.
However, not all ERP implementations are successful. How can your company prepare for a successful ERP implementation? How can you avoid costly errors and unnecessary risks? These ERP best will help you avoid common pitfalls and improve the effectiveness of your ERP system.
What is Enterprise Resource Planning Software?
Enterprise Resource Planning (ERP) is business management software that enables organizations to manage their business processes with a single piece of software. It is accounting-oriented and relies on a single database as your business's primary source of information. Businesses use ERP software to plan and identify their resource requirements.
ERP systems have a plethora of useful features. ERP software can help you streamline your company's operations. It automates and improves manual processes to make them more efficient. ERP software addresses business processes through modules. They enable users to carry out tasks such as:
- Financials
- Management of projects
- Manufacturing
- Management of the supply chain
- Inventory management
- Logistics
- HR
- Payroll
- Processing of orders
- Forecasting and budgeting
ERP provides two significant advantages: increased efficiency and a single source of truth for business objectives data. Modules like the ones mentioned above can assist users in tracking their resources, viewing their workflows, increasing data security, and communicating with one another. These enhancements lead to greater clarity, a more strategic direction for the company, higher customer satisfaction, and overall company performance.
ERP software may be right for you, but which ERP software? The next step is to choose the best solution.
Why Does ERP Implementation Fail So Often?
Let's start with what you should avoid regarding ERP implementation. Many common mistakes are made by medium businesses when implementing new ERP software.
According to a study, 55% and 75% of ERP projects fail. This is shocking given the potential consequences of a failed ERP rollout for an organization, such as lost revenue, shareholder lawsuits, business disruptions, and so on.
To avoid falling victim to the sad majority of cases, learn from the mistakes of others and do not repeat them.
Here are some of the reasons why an ERP implementation project might fail:
- Failure to define clear and achievable ERP requirements. You won't be able to achieve your objectives unless you know what they are.
- They are not willing to make changes. You will have to convince your employees that a new system is necessary.
- Communication is lacking. Communication problems can be caused by employees being unable to answer questions or address concerns. Feedback is not provided and taken into consideration.
- Inadequate support and training. As with all other projects, ERP implementation requires the right knowledge and skills to get things moving. Employees won't be able to optimize their processes and use new functionality without proper training.
- The project is being hurried. ERP software implementation typically takes six months to two years. Poor planning and staff training will result in poor implementation and additional issues.
- Underestimating the importance of data migration. An ERP solution will not improve poorly maintained or unmaintained data. To improve ERP efficiency, midsize businesses should first clear all data.
- ERP system validation and testing are insufficient. Without proper testing, determining whether an ERP system functions properly is difficult.
Which Place Should You Start Your Erp Project?
People often think about the desired features when considering system implementations. However, technology and new features are only part of the problem. A modern business process is what a company needs to grow. You can improve your competitiveness by having efficient processes that allow you to be responsive and agile.
Many times, existing processes do not work well and are not flexible enough to meet the company's needs. Even if processes have been in place for a long time and are cost-effective, they may need to be updated or improved to meet changing needs. Keeping these processes at the forefront of your implementation strategy is critical.
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What is The Most Important Success Factor? Your Project Group
The same story is told about ERP implementations repeatedly: the implementation team makes or breaks an ERP implementation. Great software requires a strong team. People lacking the skills, time, or resources to complete the strategic tasks successfully will fail. The project will face delays, additional cost savings, and software that does not meet the company's needs.
The implementation team makes or breaks an ERP implementation, according to every case study about ERP implementations. Many ERP failures and setbacks have been experienced by Midsize companies that assigned employees with the "time" to work on the project.
To be successful, you must find individuals who can collaborate with others, comprehend the business process, and respect the executive team. These people should be able to dedicate 40 hours or more per week to the project.
No key project team member can devote less than 25% (minimum 10 hours) of their weekly time to the project. If team members devote less than 25% of their time to the project, they will only be able to catch up on activities and will not be able to add any value to it.
It is critical to provide your team with executive support. Every major project necessitates decisions about priorities and resource trade-offs. Even the most qualified teams can fail without strong support and commitment.
Implementing an ERP system quickly is one of the most important things a company can do. Investing in your top performers and laying the groundwork for success is worthwhile.
Planning Your ERP Implementation
Plan the implementation process realistically. Consider the availability of your leadership team, managers, and any other in-house experts who can assist.
Prioritize your requirements so that you can concentrate on the important wins and build a technology foundation that can grow with your business goals.
We will tailor your detailed plan and key performance indicators to meet your needs. The following activities are essential for successful implementations.
These are the primary steps in ERP implementation preparation.
Choose a Software and Services Partner for Help with Implementation
The project team may not have the necessary experience to implement ERP software. Select an ERP consultant with extensive knowledge and experience in the ERP software you plan to install. You should confirm that they are familiar with the functionality of the new software. Ask for references to confirm this.
Software and service partners' employees must be familiar with your industry and available at your location. If you have international customers or suppliers, your partners should be able to translate and speak foreign languages and have currency skills.
Finally, ensure that any project management software the company uses is compatible with your internal planning, scheduling, and tracking systems.
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All Tasks in The Project
The implementation partner will assist you in creating a detailed task list of all the tasks that need to be completed. The task list will be long. For example, training can include many tasks.
- Project Team Training: To be able to adapt your business processes to the software, your team must learn about it.
- Training for IT Staff: The IT team must learn how to install and maintain the system properly.
- Training for Business Users: Anyone who uses the software should learn how it works.
- Ongoing Training: As new users join your company, they will require training. Therefore, you will need to have a long-term plan.
It is critical to divide the tasks into phases. The conference room pilot, customization, integration of other applications and data sources, infrastructure implementation, data cleansing, and user acceptance should all be finished within the time frame specified.
The implementation partner should be able to provide a comprehensive list of all phases and steps.
Calculate Your Work Hours
Each task requires time. This is accomplished by first comprehending the task and the work required and then allocating the necessary "work hours." While it may take several hours, it must be precise. Determine the person in charge by adding the hours worked for each phase.
This cannot be very comforting. This is why you need a well-versed implementation partner in the software solution. This step will assist you in accurately calculating your timeline, identifying if you require outside assistance, and limiting scope creep.
Read More: Best Practices of ERP Implementation for Successful Deployment
Make Your Realistic Schedule
Once you have compiled the required and available work hours, you can create a manageable schedule. The first pass often uncovers a problem with the capacity compared to what was initially presented to executives.
This example calculates the possibility of discrepancies.
- The time frame for target go-live = 12 months or one year
- The total hours worked in 12 months = 540/week or 28,080/year.
- Implementation time required = 42,000 hours
- Divide the hours required by the number of hours per year to get 1.496 years.
What is the final result? The project is not ready for go-live. These are some solutions:
- Limit the scope, even though everyone agrees that these are vital tasks
- Increase the date to be realistic
- Increase the number of available work hours and add more resources, both internal and external.
- Divide the project into phases.
This decision will have to be made by the executive management team. This is only one of the many reasons they should be involved in the software selection and implementation process.
Construct a Conference Room Pilot
Before launching the project, conduct a pilot or test run in a conference room. The conference room pilot will help ensure that your company has the right business processes to meet its current and future needs. Understanding the options available in your ERP system fully and validating your process with stakeholders and the project team is critical.
Your partner will install pilot software during this multi-week phase. This allows you to test your processes and ensure everything works properly. Best practices can often save you time, especially if you have the tools to make cost-effective changes as you improve your operations.
Cleanse your Data
Although it sounds easy, data cleansing can be very time-consuming. Because it requires a lot of work to do this correctly, it is best to assess your data accuracy as soon as possible. There will be changes in business processes during the project. Be prepared to take additional steps in data management.
Keep Everyone Informed
Staff members should communicate with all key stakeholders weekly to discuss the project's progress. It's bad when people don't keep up with the latest information and are caught off guard. Most project management systems include visual representations of project progress.
Get Started With the Processes That Matter Most
Different businesses may have different problems. It's important to assess your core business processes and decide which areas to focus on first. Here are some high-value areas you should consider:
- Management Alerts and Dashboards Are Examples of Business Intelligence: Your business team needs quick updates on business growth issues. They also need the ability to quickly drill down to the details to resolve problems - at work, at home, or on the go. Business intelligence is essential. Data must be stored in one database.
- Customer Relations Management (Crm): CRM processes now affect almost every aspect of a business operation. Order management, purchasing, engineering, accounts receivable, and shipping all share customer data with distributors, retailers, e-commerce, and customer service.
- Finance & Accounting: Any business relies on accurate, real-time financial transactions and KPIs. They must be accessible throughout all departments and locations. Budgeting, forecasting, costing, projects management, asset management, compliance, and cash management must all be integrated.
- Supply Chain Management (SCM) and Manufacturing: Companies face difficulties such as tight deadlines, low margins, and supply chain disruptions. They necessitate a collaborative effort. Working with suppliers, carriers, and banks is part of this.
- Human Resources: Today's workforce management is more difficult than ever. Your team requires immediate and secure access to information about employees for payroll, benefits, and scheduling. Employee recruitment, development, retention, and budgeting are all important aspects of evaluating business plans.
- Languages, Currencies, and Multilingual Locations: When you grow your business, especially if you are moving into new countries or regions, you will need to be able to expand and open new operations quickly and consistently. Each location necessitates advanced software capabilities and consistent services from your software provider.
- Mobility: It is vital to work and access information remotely, as shown by the COVID-19 pandemic. Companies that can adapt quickly and have the ability to innovate will be able to gain an advantage in disruptive times.
Implementation Risk Mitigation Tips
Every project has some risk, but here are five tips to increase your chances of completing your project on time and within budget.
- Select software, business processes, and industry and local knowledge partners. Always check references from similar companies.
- Do not push outdated technology past its limits. Get rid of outdated and inefficient standalone systems. Consolidate all data into one database. This will give you a single version of the truth. It can also provide business intelligence that can be used to improve multinational performance.
- To thrive in the digital economy, businesses must integrate systems across business units, suppliers, and customers. Check that you know cloud integration and have the necessary skills to work with suppliers.
- Prevent project scope creep. During ERP implementation, it is common to discover gaps and opportunities. As a result, managing change orders is critical to avoid delays or cost overruns.
- You must ensure that your knowledge is consistent across all of your locations. Training, implementation, and support are all required and frequently provided by local management, software distributors, and consulting firms, as well as your software partner.
Tips to Avoid Extra Erp Implementation Charges
An ERP system investment will include your company's time, business process and implementation consulting, software, and cloud services. It is critical to keep track of the project's costs.
These are the key areas you should be following:
- Keep your focus on the Total Cost Of Ownership (TCO): Manage all costs and benefits to reduce expenses while increasing returns. ERP system implementations can have a big impact on your company.
- Do Not Impose Unnecessary Process Changes, and Align with The Business's Direction: Companies are often forced to adapt their processes to suit their software. This can increase both implementation and operational costs.
- The Importance is Placed on Routine Business Processes That Add Significant Value to the Company: These routine business processes include customer order management, price updates, adding new products or services, changing manufacturing details, and onboarding new employees.
- Don't Customize and Take Advantage of a Configurable User Interface, Alerts, Dashboards, Workflows, and Business Intelligence: With these capabilities, you can simply work across all departments and make quick, cost-effective adjustments when needed.
- Data Breaches and System Hacks are Costly: Use secure cloud ERP solutions when possible. Make sure that your service providers and software support multiple software deployment options.
Is Your Implementation Complete?
After the initial implementation, you will still be able to add capabilities to your business. Many changes, such as new locations, product or service lines, and acquisitions, can drive these opportunities.
You can also collaborate with suppliers and customers to change how your industry operates. These projects frequently include new technologies such as machine learning, artificial intelligence (AI), and Internet of Things (IoT) integration with vehicles and equipment (IoT). This increases efficiency and speed.
Are You Ready to Take the Next Step?
Unexpected issues are a part of every ERP project. So be prepared for them. To manage risks and reduce costs, follow best practices to implement ERP successfully.
Conclusion
Choosing the right ERP software and then properly implementing it is difficult for organizations. This necessitates careful planning and dedication on the part of all parties.
It is the best way to implement any ERP system, regardless of its type.
- Determining the best way to improve each business process and defining KPIs.
- Establishing a project team to manage the implementation.
- Develop a solid, systematic approach to data transfer to a new ERP system.
- Facilitating collaboration and receiving feedback in a trusting environment is key.
- Assist employees in continuing training and support.
- Collecting feedback and adapting the implementation strategy accordingly.
- A project management plan is necessary to ensure the ERP system meets business requirements.
ERP systems excel at gathering and analyzing data from across an organization. Suppose your company has problems with missing invoices, late payments, high PO processing fees, and poor spending transparency. In that case, looking for a new solution may be time.
