Understanding the ERP Implementation Process

Choosing an ERP system software is a crucial decision that requires thorough research and careful consideration. While the ERP implementation process may seem daunting, rest assured that it can be managed effectively with the right guidance. Our team is here to provide the assistance you need.

In this blog, we will explore the following topics:

• What exactly is an ERP Solution?
• How does an ERP Implementation work?
• What are the key steps in the ERP Implementation Process?
• Best practices for successful ERP Implementations
• The potential risks of not implementing an ERP Solution

What exactly is an ERP Solution?

An ERP solution serves as a central hub for all departments within an organisation, enabling seamless access to company information from anywhere, at any time. With its powerful and intelligent features, modern ERP solutions can automate manual tasks, streamline inventory, product, manufacturing, distribution, and project-related information, and position businesses for success in the digital economy. However, to fully benefit from this "single source of truth," it is essential for your business to successfully complete the ERP implementation process.

How does an ERP Implementation work?

Implementing an ERP system involves various stages such as installing the chosen ERP software, transferring business data to the new system, configuring user information and customised processes, and training employees to use the software. While this might seem like a lot, it is important to note that these steps are carried out gradually and logically throughout the ERP implementation life cycle.

What are the key steps in the ERP Implementation Process?

Just like any other large project, an ERP implementation requires a step-by-step approach. While the implementation process may vary slightly for each company, it generally consists of eight standard stages that are crucial to the success of the project. The timeframe for completing these stages may differ depending on your company's decisions and how quickly you want to proceed. However, on average, most ERP implementations are completed within three to six months, from the planning phase to having a fully operational system.

In the following sections, we will discuss the phases of the ERP implementation life cycle in detail. It is important to fully complete each step before moving on to the next to ensure a solid foundation for the entire process.

Step 1: Planning & Organisation

This step, which begins before you have even chosen the ERP system that best suits your business requirements, involves several sub-steps. During this stage, you will:

• Obtain buy-in from leadership and the IT department for the project. It is crucial to have support from your executive team and IT department as the rest of the organisation looks to them for guidance and security. Here are some essential steps to gain leadership support:
  • Clearly explain the importance of a modern cloud ERP solution. Clearly communicate the benefits of a modern ERP system, including real-time data for better decision-making, in-depth analysis capabilities, and seamless integration with third-party applications.
  • Highlight the return on investment (ROI). Justifying a significant expenditure requires estimating the cost of the investment, including licensing, implementation, user training, and system maintenance. This cost is then compared to the benefits of the new system. Cloud ERP systems generally provide benefits such as reduced expenses, improved customer satisfaction, increased data analysis, and enhanced employee efficiency. These factors affect the return on investment over time.
  • Keep the leadership team informed and involved. Regular meetings between the leadership team and the organisation during the ERP implementation process keep everyone informed, prepared, and able to resolve any challenges that arise.

Once you have obtained support from leadership and the implementation process begins, it is important to involve the entire company. Here's what you can do:

• Communicate the plan to implement a modern cloud ERP as soon as possible. By giving employees advanced notice of a new cloud-based ERP system, they can adjust to the change, ask questions, and provide feedback on desired features. This communication allows for a smoother transition and encourages support for the implementation.
• Clearly communicate the features and benefits. By communicating the features and resulting benefits before and during the ERP implementation, you can ease the transition. Cloud ERP systems are designed to be intuitive to learn, and the benefits include increased efficiency, scalability, and profitability. These benefits provide job security and new opportunities as the business expands.
• Communicate leadership support. To gain organisational buy-in and minimise pushback, communicate the system change in advance and emphasise executive support. Demonstrating that the entire organisation will be using the same system can foster confidence and acceptance during the ERP implementation.
• Assemble your ERP implementation team. These team members should be drawn from different departments and each will be assigned a specific role on the implementation team. (More on this later.)
• Choose your deployment option (cloud-based SaaS, private-cloud based, or hybrid).

By following these steps, which include obtaining support, involving the entire company, and assembling a cross-functional project team, you are well on your way to a successful ERP implementation. However, there are still potential pitfalls to watch out for.

• Time: Despite careful planning and coordination, ERP implementations often exceed the expected timeline. It is crucial to include a buffer zone in your timeline to account for inevitable questions and challenges. Prepare to continue daily operations while finding answers and proactively plan for potential pitfalls. This proactive approach, even if it extends the timeline, will ultimately benefit your company in the long run.
• Pushback: It is important to keep employees informed of progress, remind them of the benefits and savings, and gather their input throughout the implementation process.

Step 2: Selecting the ERP System

Defining Requirements

To define the requirements for your cloud ERP system, you'll need to thoroughly document your current business processes and identify any areas where your existing system may have functional gaps. This process will help you and your team determine how you can improve your business processes and outline the specific functionalities you'd like your new ERP system to have.

These requirements generally fall into the following categories:

1. Essential: These are the features or functions that are crucial for your company's operations.
2. Desirable: These functions would enhance the usefulness of the new system if possible.
3. Not an immediate need: These are functions that are not required at the moment but will be necessary in the future, depending on your company's growth and technological advancements.
4. Nice to have: These are non-essential functions that would make work easier.

Once you have identified these requirements, you and your team can create a prioritised list, starting with the essential functionality and ending with additional functionalities that are affordable and fit within your timeline. By the end of this process, you should have a clear list of features and functions that you expect to have when the project is completed.

System Selection

With your cloud ERP requirements established, it's time to select the cloud ERP system that best fits your unique needs. This is a critical decision that your implementation team can assist with. The decision-making process begins by determining important details such as the pain points in your business and tech stack, your budget, and your preferred hosting option (e.g., on-premises or in the cloud).

Next, you will need to conduct research on the various ERP options available to you. Evaluate each option based on scalability, usability, functionality, and security features. Schedule demonstrations, ask ERP vendors about their technical and user support, seek advice from ERP partners, and read analyst reviews. This valuable information will help you narrow down your ERP selection to the system that aligns with your specific requirements.

Step 3: Installation and Configuration

Depending on the ERP deployment option you selected in Step 1, this step will vary. If you opted for a SaaS instance, there will be no need for software installation and minimal lead time. However, if you chose a private-cloud or hybrid model, you could expect a delivery period of several days to weeks. During this time, both hardware and software will be brought to your location and installed, along with any necessary infrastructure components.

Step 4: Data Migration

Once the ERP system you have selected is successfully installed or configured, the next step is to migrate your company's data. This process involves filtering out any incorrect or redundant data and then transferring it to the new system's database. The data migration includes important records such as customer and supplier files, item master files, bills of materials, production facilities and routing information, and general ledger charts of accounts. This step is crucial to ensure that all relevant information is accurately transferred to the new system.

It is important to note that data migration may overlap with other stages of the implementation process. In some cases, certain data migration tasks can be carried out concurrently with training, testing, and validation activities. For example, the system can be tested to verify that all legacy data has been successfully migrated and is accessible in the new software. This parallel approach helps to streamline the overall implementation process and ensures the smooth transition of data into the new ERP system.

Step 5: Training

During this phase of the ERP implementation process, it is crucial to provide specialised training to designated employees who possess expertise in specific areas such as IT or finance. By equipping them with the necessary knowledge, they can effectively train others on how to utilise the ERP software and become the reliable go-to individuals for any inquiries after the system goes live. Additionally, it is important to ensure that all other users receive comprehensive training on how to carry out their respective roles within the new system. This holistic approach guarantees a smooth and successful transition for all employees involved.

Step 6: Testing

In this crucial stage, it is essential to develop and implement a comprehensive testing plan. This plan will not only gauge the acceptance of the ERP system by users but also determine if the system meets your specific requirements out of the box. Additionally, it is important to utilise your IT resources to validate the functionality of the new software, ensuring that it performs as expected. Furthermore, this step involves a meticulous examination of the migrated company data to guarantee its completeness and accuracy, just as it was in your previous software.

Step 7: Go Live

When it's time to launch the ERP implementation throughout your organisation, you have the opportunity to choose the approach that best fits your specific needs. There are three primary options to consider:

1. Big Bang: Activate the new ERP system and exclusively use it moving forward.
2. Phased: Implement the new ERP system in stages to minimise disruptions to operations.
3. Parallel: Run both the legacy system and the new ERP system simultaneously.

These options allow you to tailor the implementation approach to your unique circumstances and ensure a smooth transition to the new ERP system.

Step 8: Ongoing Improvements

The journey doesn't stop at Go Live. As your employees dive into the software and your business grows, you'll gather valuable feedback and continuously fine-tune the system. That's why it's crucial to select an ERP solution that can adapt and grow with you, catering to your ever-changing requirements.

Best Practices for Successful ERP Implementations

When embarking on the journey of upgrading your existing ERP software or implementing a new ERP system, it is crucial to follow best practices to ensure success.

Here are some key best practices to keep in mind:

• Develop a comprehensive project management plan: Project management plays a pivotal role in the success of ERP implementation. By comparing progress against the original plan and making necessary updates, you can effectively steer the project towards success.
• Build a strong project team: The implementation team should consist of individuals from across the organisation who will be most impacted by the new technology – the users. Their motivation to succeed stems from the benefits they anticipate from the transition. By assembling a team that is eagerly looking forward to the results the new system will provide, you can guide the project from start to finish.
• Establish clear requirements and KPIs: To assess the success of your implementation, it is important to establish clear, measurable, and impactful key performance indicators (KPIs). Whether your goals are to reduce operating costs, improve productivity, streamline data centralisation, or make faster decisions, outlining these requirements will allow you to gauge the success of the implementation based on real metrics.
• Foster collaboration and communication: Communication is vital throughout the ERP implementation process. It is important to engage all stakeholders, including employees, customers, and suppliers, to ensure everyone is on the same page and the implementation process runs smoothly.
• Embrace flexibility: Plans may not always go exactly as anticipated, so it is crucial to be flexible during the ERP implementation process. Be prepared to make necessary adjustments to keep the project on track and ensure its success.
• Choose a flexible and scalable ERP system: Select an ERP system that can adapt and grow with your business. This ensures that the system can meet your evolving needs as your business expands and changes.
• Monitor post-implementation performance: After implementing the ERP system, closely monitor its performance to identify any issues or areas for improvement. This will enable you to make necessary adjustments and ensure the system continues to meet your requirements.

By following these best practices, you can set yourself up for a successful ERP implementation and maximise the benefits of your new system.

The potential risks of not implementing an ERP Solution

In today's fast-paced digital economy, companies that fail to implement ERP solutions face a multitude of risks. These risks include disconnected and disjointed data, which hinders cohesive operations and prevents employees from accessing the same information. This, in turn, leads to frustration and decreased productivity. Additionally, the absence of an ERP system can make it difficult for businesses to grow and adapt to change, as expensive hardware and software purchases continue to accumulate over time. Moreover, an inflexible interface can hinder the connection between different departments and remote employees, leading to inefficiency and decreased profitability. Security and compliance issues, as well as extended downtime, can further exacerbate these challenges. Ultimately, companies without an ERP system are unable to keep up with the ever-changing demands of the industry.

However, by implementing an ERP system, businesses can address all of these concerns. With an ERP system in place, operations can be streamlined, making it easier for employees to navigate and utilise the system's functionality. Moreover, an ERP system provides a real-time view of the business, accessible anytime and anywhere on any device. This allows for better decision-making and improved efficiency. Additionally, an ERP system provides a secure platform that can easily adapt to the company's evolving needs. This flexibility ensures that the business can keep up with industry trends and remain competitive in the digital landscape.

Conclusion

Implementing an ERP system can be a complex and time-consuming process. It's important to be prepared for the challenges that lie ahead, but also recognise the numerous benefits that the right ERP solution can bring, such as increased efficiency, improved employee satisfaction, and higher customer satisfaction. Now is the perfect time to review the different stages of ERP implementation, find the ideal ERP solution for your business, and take the first step towards ERP implementation success.

An ERP solution is designed to seamlessly connect all aspects of a business, automating manual tasks and consolidating inventory, product, manufacturing, distribution, and project-related information. By embracing an ERP system, businesses can thrive in the digital economy. However, to fully enjoy these benefits, it is crucial to complete the entire ERP implementation process.

The ERP implementation process involves several steps, beginning with choosing the most suitable deployment option and culminating in the go-live phase. It is important to select an ERP vendor who will guide you through each step and provide ongoing support even after the implementation is complete.

Ultimately, you and your team must conduct thorough research on ERP solution options, make an informed decision, and fully commit to the implementation process. By doing so, you will discover that the benefits of undergoing an ERP implementation far outweigh any challenges that may arise.