Enterprise Resource Planning (ERP) solutions allow companies to revolutionize their business systems by increasing customer engagement and streamlining manufacturing. A significant number of companies still need help understanding Enterprise Resource Planning systems and how they can be implemented successfully.
75% of ERP projects fail, to be more precise. Because of the time and cost of ownership involved in implementing an ERP system, it is essential that every organization thoroughly research the process and understand all aspects before they begin their ERP implementation.
Implementing an enterprise resource management (ERP) system can be complex and impact many areas of the business requirements. A well-planned implementation plan is crucial for any significant initiative. You can maximize your success by breaking your successful implementations into phases with clearly defined objectives.
However, you jump into an ERP implementation strategy without setting a clear project management direction, scope, and structure. In that case, it increases your likelihood of encountering significant problems later.
What is ERP Implementation?
ERP implementation involves analyzing business practices, training users, and managing change. This is not a one-off event but rather a continuous process. ERP systems integrate many functions within a business operations, such as financial management, sales, and manufacturing, to provide benefits such as increased productivity, efficiency, and additional cost savings.
ERP implementation is the process of configuring, configuring, and deploying an ERP. Because ERP systems support many functions, this process can take several months and is complex. To make the ERP system more functional, the organization must carefully plan its requirements and determine how to change processes.
Once the processes are redesigned, the ERP system should be configured to support them. Finally, it must test the system before releasing it to the public. It takes careful planning and a phased, structured implementation approach to ensure you can successfully navigate these steps.
What Stages of an ERP Implementation Plan are There?
An ERP implementation plan can be divided into six phases with different objectives. Each business unit is different, so that each phase may differ slightly depending on its purpose. They also overlap. Design, development, testing, and support are part of the six-part ERP implementation lifecycle.
1. Discovery and Planning
What is the first ERP implementation stage? This entails researching and selecting the best system, forming a team, and defining specific system requirements. The project team will be in charge of a wide range of implementation tasks. These include developing the project plan and deadlines, ensuring adequate resources are available, selecting products and designs, and managing day-to-day projects.
The ERP project team comprises an executive sponsor, a project manager, and representatives of the departments using the ERP system. Senior management involvement is crucial to ensure that the project receives the resources it requires and provides the support needed to implement organizational changes.
The team may hire an external consultant or ERP partner to assist with system design and configuration. Any internal specialists involved in the system's implementation should be included in the team. This could include an IT representative or a report writer who will create customized reports for all organization users.
The team will begin by thoroughly researching current issues. This includes both process inefficiencies and ERP system requirements. If an ERP business case has been developed, the team may have identified broad business leaders issues and goals. These could include a faster financial close, better operational insight, or IPO preparation. These can be used for more in-depth workflow analysis and documentation.
As the company develops precise requirements, the team might select an ERP system and purchase it. The most important decision is whether an ERP system will run on-premises or in a cloud environment. An on-premises ERP system requires purchasing and installing software and hardware in your data center. Cloud-based ERP solution, on the other hand, is usually offered as a subscription service that can be accessed via the internet. This enables faster implementation and necessitates fewer IT skills.
2. Design
The design phase begins with a comprehensive understanding of the existing workflows and detailed requirements. This gives us the ability to create a detailed design for our new ERP system. This involves creating new workflows that are more efficient and other business processes users of the system.
The best people to include in the design phase are the users. They have the most in-depth knowledge of the current business processes. Participating in the design phase increases the likelihood that they will embrace the new system and utilize it to its full potential.
Gap analysis is a tool that can identify process intricacies or unique quirks that could require customization of ERP software or changes to workflows or processes to better align with the ERP system. The team can identify gaps and present them to the supplier or implementation partner.
3. Development
The development phase can start when you have precise design requirements. This includes configuring and customizing the software to fit the new processes. Integration with other business applications may be required. The organization must install the software and hardware required to use an on-premises ERP system.
The team should also develop training materials for user experience to assist them in adjusting to the new system. The team must also begin planning data migration. This can be complicated as it involves multiple data formats and different information.
The project team should decide on this phase. It is essential to avoid blanket migrations of historical data that may prove inconvenient. (Please see below for more information on data migration.
4. Test
Development and testing may be done simultaneously. The project team might test specific modules or core features, make adjustments or fixes based on the results and then retest. It may also put an ERP module under development to the test.
After initial testing, rigorous testing should follow. Allowing employees to test the system in their daily activities is part of this. This should include both testing the migrated data and providing basic end-user training.
Many vendors will provide user training tools prior to and/or after deployment.
The organization should not only seek vendor assistance, but also use training materials created during the development phase. Resources tailored to your end-users needs can be a real asset.
5. Deployment
You've been working toward the date the system goes live. You should be prepared for possible problems. There could be a lot of moving parts and some confused workers. You should always be able to contact the project team for assistance in understanding the system, answering questions, and resolving issues.
If troubleshooting is required, your implementation partner should be available. To achieve the anticipated productivity gains, users may need to adjust to the system over time. Some data can be moved prior to deployment, while others, such as transactions and current transactions, should be transferred as soon as they go live.
While some organizations want to deploy all ERP system modules simultaneously, others emphasize specific high-priority processes or modules and add more later. To reduce risk, some organizations use older systems alongside the new ERP system. This, however, can raise project costs and reduce user productivity.
6. Support and Updates
After deployment, it is essential to maintain users' happiness and ensure that the ERP implementation delivers the desired results. While the project team will still manage the ERP system, the team's focus will shift to user feedback and adapting the system as a result. As new features are added, it may require additional configuration and development.
New employees will need to be trained on the system. On premises ERP System must be updated on a regular basis. You may also need to upgrade the hardware in some cases. If you use a cloud-based ERP system, your vendor may automatically update it.
13 Steps to Implement ERP - The Step-by-Step Process
1. Define The Implementation Scope
It can be described as the link between project evaluation and implementation. It includes realistic goals and is intended to be met during implementation. This section should cover all of your project's Whats and Whys. This includes the following: Why do you require it? What is your ultimate goal? What are your company's business processes? What are the issues that must be resolved?
Outlining Project Objectives:
This is done to ensure you have a thorough business case study before you start. This will allow you to focus on the most critical aspects of your project. It would be best if you did a lot more brainstorming.
Ask questions such as the potential problems, what areas of your business model need to be affected, etc. Your team should be able to clearly define the objectives and the benefits that the final product will bring to your company. Also, state what actions will be taken to realize these benefits.
Anticipating Risks:
Most organizations are concerned about the potential need for more impact from ERP implementation. Before you decide on the technology you want to use or the vendor you will partner with, clearly state your goals. If you don't plan for them, cost overheads can also be risky.
Define Roles and Assign Teams:
You will make a big mistake if you choose people who can take time off their everyday work to implement the plan. Ensure you have people with the skills and experience to lead this team. It can be easier and more efficient to simplify the entire process. For ERP implementation, find a trusted partner. Begin by motivating your partner to offer valuable suggestions to help you achieve your goals.
2. Selecting an ERP System
There are many ERP software options. It is essential to fully understand the capabilities of each software, so you can avoid ending up with the wrong one.
Custom Built ERP Systems:
This system allows you to select a partner to develop a solution from the base. As the process is more secure and relevant, you own it. This could be risky because of the high costs involved.
Industry-specific ERP Solutions:
If you compare it to the previous system, this option will suit almost all midsize businesses. It is a SaaS ERP system. This solution has many advantages, including a more straightforward implementation process and a lower cost. In most cases, the vendor is responsible for maintaining the servers. This solution has one problem: the system will follow the organization's workflow rather than the organization's.
Cloud-based Customized ERP Solutions:
This is one solution that has contributed to the industry's transformation.
This solution can be implemented quickly and is not expensive. These systems are less likely to fail ERP implementations. ERP Providers often provide updates to the system. Some customizations can be implemented according to customer requirements.
3. The Creation of a Project Plan
Failure to manage ERP implementations can be caused by poor management. It's a daunting task that can take months to see results. It is a substantial financial risk.
To highlight all details, it is essential to create a project plan. Your plan must involve the following:
- Goals that were previously established.
- Well-defined objectives and tasks are essential.
- Training plans. Start at least two months before you go live.
- All team members have individual responsibilities.
- Each member of the team will have a list of things to do.
- Case studies for your development partner.
- This checklist will help you systematically perform functional testing.
- Result case studies are available for final testing.
Read More: What Points Should be Considered Before Implementing HMS System?
4. Define The Implementation Phases
Implementing an ERP system can be a challenging task. It differs from one customer service to the next. It is crucial to identify the modules required by your business. This step is the most important. This allows you to map out all of the business processes. Analyze the current ERP system and determine what customizations are needed to adapt it to meet your company's needs.
5. Make an Urgent but Achievable Schedule
Timing is critical to success. It doesn't matter if your project meets high-quality standards. Still, you don't deliver it within the timeframe or several months later. You will not be able to call it a success.
These tips will be of help:
- Flexibility is crucial to your work schedule. If necessary, make adjustments.
- Keep up-to-date about the development of the system.
- You can divide your project into phases, each with a specific timeline.
- It is better not to make everything complicated. Planned systems are less likely to fail or face problems.
- It is always better to consult an IT specialist.
6. Create a Communication Plan
- More frequent meetings are recommended with your ERP consultant or IT experts.
- It is a great idea to meet regularly at the beginning.
- Keep up-to-date with the latest developments in the system.
- You can check if things are going according to plan by doing a few mid-way demonstrations.
- It is best to communicate with the same people/team each time to ensure everything is clear.
- Plan the agendas for your future meetings in your meetings.
7. Approvals for Mid-Way
You can imagine the entire process taking place promptly. When you finally see the final results, you will be disappointed. It is essential to have mid-way approvals to check that everything is going according to plan. If you need to make any changes before implementing ERP, you can do so in time. It is essential to consult your IT partner and prepare testing cases to get the best results.
8. Plan Your Testing
Technical Test
This test will verify that the code provided by the vendor is correct. Fault codes could cause a system failure. Your IT department can perform this test.
Functional Testing
This test will allow you to verify that all functions meet your expectations. You can refer to the checklist you created during the planning phase. Ask your partner in development to give you a point-wise explanation.
User Acceptance Testing
Your project team will conduct this test. This will require critical people with a deep understanding of the business. Before you go live, take some time to make any necessary adjustments or changes in your ERP system.
9. Transfer Your Business Data
You can transfer your current business owner data to the ERP. This includes customer/supplier data, product/employee information, and account history.
10. Preparation For The Change
It is essential to realize that solid planning functionality and developing it according to the plan will only change how your organization works if you implement it internally. All employees must be familiar with the ERP system from the beginning.
These steps are possible to effect change.
- Ask your development partners to provide user guides for each module.
- In the beginning, create a sense of urgency in your employees.
- Encourage your employees to tell others about the new system's benefits.
- Prepare training videos for the testing period.
- Short-term programs can be organized to train your staff.
11. Plan your Go-Live Period
Going live is the final phase of your ERP system implementation. This is both the most crucial and the most stressful part of the entire process. This is the result of your product development.
It is essential to create a checklist for each phase.
- Hardware synchronization is also possible
- All business reports should be tested.
- All accounting modules reports can be tested from your system.
- Check out the synchronization of your email client with your ERP.
- You can test the access restriction individually for each user type.
- You can test with both static and dynamic data.
- Verify that data migrations are 100% accurate.
- Confirm the backup procedures.
12. Support and Maintenance
Talk to your partner in development about support options that will help you ensure a return on investment for your business after the transformation.
13. Assess The Success of Your ERP Implementation Project
Start with simple questions such as:
- Is your company making progress?
- Was it possible to implement ERP within your budget?
- ArCanou, about back some of the money you spent on your ERP development?
- Are you seeing fewer errors, and are you now enjoying accuracy and efficiency?
- Is the ERP implemented meeting your expectations?
- Are you satisfied with the system performance of your customers?
Reasons for ERP Implementation Failure
Even if your ERP system implementation is well-understood, there are still potential mistakes and challenges that could cause your ERP implementation to fail. These are some of the most widespread problems and their solutions.
Your Business Practices Are Broken:
There are better ways to speed up a process of average quality than automation. ERP solutions can make your business run smoothly. ERP solutions can help you reduce manual labor, increase customer satisfaction, and improve employee communication.
Senior Leadership Support:
The core team must seek support from the top leaders of the organization. It would be best if you got sponsorship as soon as possible. Also, you should be able to manage expectations throughout the entire process.
Don't Let Your Vender Take Charge:
Vendors often start by defining your needs but add unnecessary features to increase their margins. Taking control of your situation and fully understanding your requirements is better. Identify your expectations and needs during the planning phase and put in all effort to reach them.
Thinking about The Present Only:
You will reap the benefits of planning long-term success strategies. Planning for ERP implementation should include future upgrades and the software's growing scale.
Initial Investment in an On-Premise ERP Solution:
Open-source ERP or cloud ERP solutions are better options for organizations that need more funds to invest in an on-premise ERP system. This software has lower initial costs and can charge fees based on resource consumption or user count.
Don't Over-Expect:
Be realistic about your timeline and budget. You must ensure that your IT staff and employees are skilled and efficient.
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Conclusion
ERP Implementation can be a lengthy and challenging process for any company. However, with a well-planned strategy and mythology, any company can see dramatic improvements in its processes following the implementation of ERP system.
