Implementing an ERP (Enterprise Resource Planning) system can completely change business operations by providing integrated management of core functions like finance, HR, and supply chain.
Today, more than 64% of small and medium businesses use ERP software to achieve their strategic goals.
Looking for ERP Software? Check out SoftwareSuggest’s list of the best ERP Software solutions.
However, the ERP implementation process can be complex and challenging for startups and small businesses with limited funds.
So, let’s start with understanding how to implement ERP process successfully with each phase.
For a smooth ERP implementation, prioritize detailed planning and clear objectives. Choose a system that fits your business needs, invest in thorough training, and prepare your data carefully. Regularly review and optimize the system to adapt to changes and improve ROI.
What Is an ERP Implementation?
The ERP implementation is a process of integrating all your functions, transferring your data from traditional systems to the ERP (both financial and transactional), and optimizing your operations.
It is important to note that the implementation of ERP is complicated and may require several months to finish. However, the importance of ERP will eventually become significant in the long term.
Additionally, ERP is used by every industry sector despite its nature and target market. Here are the top ERP software users:
What Is ERP Implementation Process?
The process of ERP implementation refers to the structured approach taken to deploy an ERP system within an organization. This involves several stages, from initial planning and system design to deployment and ongoing support.
The main goal is to integrate various business functions into a unified system to improve efficiency, data accuracy, and decision-making.
But from where do we begin?
Don’t worry; further, we’ve explained simple steps that will assist you in organizing your ERP deployment from beginning to end.
ERP Implementation Process: 6 Phases of an ERP Implementation Plan
Now that we’ve discussed what is ERP implementation, let us understand the steps for ERP implementation:
Phase 1: Discovery & Planning
The process of ERP implementation begins with discovering and planning the goals and what needs to be achieved. In this initial phase, the focus is on understanding the organization’s needs and setting project goals.
The project team will be in charge of a wide range of implementation-related tasks, such as creating the project schedules and plan, allocating sufficient resources, deciding on the design and product, and managing the project on a daily basis.
The ERP project team should typically involve
- Project manager: Their job is to make sure everything is going according to plan.
- Application analyst: To ensure efficient ERP data migration and cleansing.
- Application developer: To alter the ERP in accordance with your specifications.
- Quality analyst: To assess system performance and recommend improvements.
Apart from this core bunch of people, you will need additional employees working in different areas:
You’ll need employees such as:
- Accounting head for cash, assets, general ledger, and accounts.
- Engineers in scheduling, designs, document management, and production management.
- Shop floor staff during document management, inventory management, and warehouse management.
- Sales head for CRM, business intelligence, and forecasting tasks.
Phase 2: Design
Now that you have identified the ERP implementation plan, it’s time to draft a detailed design. People from different departments should be involved in the design phase as they have the most in-depth knowledge of the current company procedures.
Involving everyone in the design process also increases the likelihood that they will accept and utilize the system to its full potential.
Moreover, you should also focus on identifying potential solutions for gaps in your current procedures.
This will enable you to build a sustainable tool that is aligned with your goals and provides the best business management solution as per your current business processes.
Phase 3: Development
Once you have validated the design requirements, you can start the development process. It will involve setting up and customizing the program to fit the needs of your business.
Whether you are investing in an on-premise system or an ERP that runs in the cloud, the development process will be different.
For example, on-premise ERP systems are set up locally on the hardware and servers of your business, while cloud ERP is kept on the servers of your provider.
A cloud-based ERP, on the other hand, provides real-time information on organizational developments and greater adaptability. You can even use your smartphone to keep track of your business processes anywhere.
Nevertheless, at this step of ERP implementation, developers will set up the system to align with wireframes, process flows, and functionality needs. They will also need to create training materials to help non-technical employees understand and use the system efficiently.
Phase 4: Testing
Generally, development and testing take place at the same time. The project team may, for example, test particular modules and features, make corrections or modifications in response to the findings, and then test again.
A complete evaluation of the system’s whole capabilities, including allowing certain employees to try it for all of their daily tasks, should come after the initial testing of the software’s fundamental features.
It’s time to go live with the ERP setup once you feel comfortable with it. While certain companies concentrate on high-priority functions (like manufacturing and accounting) initially and add other modules gradually, others implement all the modules at once.
To minimize the risk, many organizations run both their legacy systems and the ERP in parallel until they’re completely confident. Regardless of the ERP implementation plan you choose, there are a few things to consider:
- Testing the system (pre- and post-deployment)
- Identifying metrics for project evaluation
- Creating a backup strategy in case of system downtime
- Network speed and reliability tests
- Data backup processes
Phase 5: Deployment
When implementing ERP, a crucial stage is deployment, during which the system is rolled out throughout the entire company.
Completing the system configuration and getting ready for the data migration are the first steps in this phase. Before the actual migration, extensive cleansing and validation are carried out to ensure data accuracy.
Once the data is migrated, the focus shifts to setting up the system in the live environment. This involves configuring user roles, permissions, and workflows to match the organization’s operational requirements.
During deployment, it’s essential to check the ERP security issues and data integrity to ensure you are safe from data breaches. A detailed cutover plan helps minimize disruptions, outlining the steps to switch from the old system to the new ERP system seamlessly.
Phase 6: Support & Updates
After deployment, support and updates are essential to an ERP system’s durability and efficacy.
This stage ensures that the system runs efficiently and keeps up with changing business requirements. Here’s how to efficiently handle updates and support:
- Ongoing Technical Support: Provide a dedicated support team to handle user queries, troubleshoot issues, and resolve technical problems promptly.
- Regular System Updates: Implement updates to improve functionality, fix bugs, and ensure compatibility with new technologies.
- User Training: Conduct continuous training sessions to keep users proficient with the ERP system, especially when new features or updates are introduced.
- Performance Monitoring: Regularly monitor system performance to identify and address any inefficiencies or issues.
10 Best Practices for a Successful ERP Implementation Process
As mentioned above, ERP implementation failure is common. However, it can be avoided by planning and following the best practices.
1. Assess Current ERP Systems
Before implementing a new ERP system, evaluate existing systems to identify strengths and weaknesses. This involves a comprehensive evaluation of the existing system’s capabilities, performance, and alignment with business goals.
| Here’s How to Conduct a Thorough Assessment | ||
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By thoroughly assessing the current ERP system, organizations can make informed decisions about whether to improve, replace, or completely overhaul their ERP solutions.
2. Define Clear Project Objectives
The next stage is to specify the objectives and scope of your ERP implementation project once you’ve evaluated your present systems and found areas that need improvement.
This involves figuring out what precise duties and procedures the ERP system will have to do, what data integration is required, and what particular business goals the system must meet.
To define the scope of your project, consider the following:
- Determine which functions and processes will be automated by the ERP system.
- Identify the specific data requirements for the ERP system.
- Define the KPIs that need to be tracked and reported on to measure the success and impact of the ERP implementation.
- Identify the stakeholders involved and understand their specific needs and requirements.
Identifying the scope and objectives of your ERP implementation plan will help you formulate a clear implementation strategy and make sure that all stakeholders are aware of the project’s aims and expected results.
3. Select the Right ERP Solution
The next stage is to choose an appropriate ERP software system after establishing the objectives and scope of your ERP integration project. This step involves researching and assessing various ERP software options to ascertain which one most closely matches your company’s goals and needs.
When choosing an ERP system, consider the following:
- Ensure the ERP system meets your specific business needs and processes.
- Select a system that can grow with your business and adapt to changing requirements.
- Assess the level of customization available to tailor the system to your unique workflows.
- Ensure that the ERP system can integrate seamlessly with existing software and tools.
- Research the vendor’s reputation, support services, and track record in the industry.
- Consider the total cost of ownership, including implementation, training, and ongoing maintenance.
- Ensure the ERP system meets industry standards for compliance and data security.
You May Also Read: Top 12 ERP Software Selection Criteria to Consider
4. Set Up Your ERP Program
After selecting the ideal ERP software, you must now set it up to satisfy the particular needs of your company. This involves customizing and refining the system to your unique set of business processes, requirements, and workflows. Here’s how to set it up completely:
- Firstly, clearly outline the goals you aim to achieve with the ERP system.
- Assemble a dedicated project team, including stakeholders from various departments.
- Customize the ERP system to match your business requirements.
- Integrate the ERP system into other platforms, inventory management software, and accounting software, among other systems and data sources.
5. Data Preparation for Migration
You must clean and format the data in your current system to make it compatible with the new system before migrating it to your ERP system. This involves evaluating, getting ready, and converting all current data into a format that works with your ERP program. Put it into the new system after that.
It’s important to plan and prepare the data in advance because data transfer can be a difficult and time-consuming operation. This comprises:
- Performing a thorough data audit on all current applications and systems.
- Verifying and cleaning the data to ensure accuracy.
- Recognizing and classifying the different kinds of data that need to be migrated.
- Defining a technique for data transfer.
- Auditing the procedure for data migration.
- Creating a backup and recovery strategy in case something goes wrong or data is lost.
- Create procedures and policies for data governance.
Since data migration can be a challenging procedure, it's critical to have a team with experience and familiarity with the particular needs of your company.
6. Training and Building Change Management Strategy
Training and building a change management strategy are essential for the successful adoption of an ERP system.
Comprehensive training ensures that all users are proficient with the new system, while a well-structured change management strategy addresses resistance and facilitates a smooth transition. It includes:
| Training | Change Management Strategy |
|---|---|
| Comprehensive Sessions | Communication Plan |
| Hands-On Practice | Stakeholder Engagement |
| Refresher Courses and Advanced Modules | Support System |
7. Provide Ongoing Support
After the complete implementation of your ERP system, you need to set up a procedure for system support and maintenance.
This includes carrying out routine maintenance tests, updating software as required, and resolving any emerging problems.
It might also be helpful to create standard operating procedures (SOP) for utilizing the system and resolving typical problems. Furthermore, to make sure the ERP deployment is still operating well, it can be helpful to arrange for regular check-ins with users and clients.
Note: Establish a dedicated team to offer technical assistance, resolve issues, and answer user queries promptly. This team should be easily accessible to all users.
8. Test System and Validate Thoroughly
Testing the ERP system and validating it thoroughly are crucial steps to ensure its functionality, reliability, and alignment with business requirements before full deployment. The testing stage can be of different types, such as:
- Unit Testing: Verifies that individual components of the ERP system function correctly.
- Integration Testing: Ensures different modules and systems work seamlessly together.
- User Acceptance Testing (UAT): Validates the system against real-world scenarios and workflows.
- Performance Testing: Assess the system’s performance under various conditions.
- Security Testing: Protects against vulnerabilities and ensures data integrity.
- Regression Testing: Ensures new updates or changes do not adversely affect existing functionalities.
Thorough testing and validation build confidence in the ERP system’s performance, minimize risks, and ensure a smooth transition to the new system.
9. Implement the Process Smoothly
Develop a comprehensive implementation plan that outlines each step, timeline, and responsible parties. This plan should address all aspects of the transition.
Implementing the ERP process smoothly is crucial to minimize disruptions and ensure a successful transition.
Consider a phased deployment approach to gradually transition different departments or functions, allowing for adjustments and learning along the way.
Note: Conduct a pilot test in a controlled environment to identify and address any issues before a full-scale rollout.
10. Optimize and Improve Continuously
The ERP system must be optimized and improved regularly to remain relevant and effective. To find areas that need improvement, examine user feedback and system performance on a regular basis.
Establish a continuous improvement team to monitor system usage, troubleshoot issues, and propose optimizations.
Organizations can guarantee that their ERP system continues to be a reliable instrument that stimulates output by developing a culture of continuous improvement.
How To Evaluate the Success of an ERP Implementation Process?
Organizations must evaluate the effectiveness of ERP installation in order to ascertain whether the system is delivering the promised benefits and to find areas in need of improvement.
These are some important indicators that businesses can monitor to assess how well their ERP deployment is doing.
- ROI: Return on investment, or the bottom line, is a critical indicator for any business. Verify whether the money you spent on the ERP produced a sizable return on investment.
- Reduced human error: By automating time-consuming procedures, ERP frees up employees to concentrate on more important work. A well-configured ERP tends to reduce human mistake rates.
- Productivity Gain: Has productivity increased as a result of automation and process integration? If not, it’s time to review your plans for implementing ERP.
- Increase in customer satisfaction: At the end of the day, it all comes down to how satisfied your clients are. Verify whether you are fulfilling orders promptly and whether your CSAT score and turnaround time have decreased.
You May Also Read: BPM vs ERP: Which is Best for Your Business?
Conclusion
The ERP implementation process is a critical undertaking that requires careful planning, execution, and ongoing support.
By understanding the phases of implementation and adhering to best practices, organizations can achieve a successful deployment and reap the benefits of an integrated ERP system.
Whether you are upgrading an existing system or implementing a new one, following a structured approach and focusing on key success factors can help ensure a smooth and effective transition.
ERP implementation typically takes between 6 to 18 months. The duration depends on factors such as the system's complexity, organizational size, and customization needs.
Key stages include planning, configuration, testing, and training, each impacting the overall timeline and project success.
The best time to implement ERP software is when your organization is prepared for change and can allocate sufficient resources. Avoid peak business periods to minimize disruptions. Ideally, implement during a quieter season to ensure smooth transition, training, and support.
To avoid ERP implementation delays, ensure thorough planning, set realistic timelines, and allocate adequate resources.
Engage all stakeholders early, provide comprehensive training, and conduct rigorous testing. Address potential issues proactively and maintain clear communication to keep the project on track and minimize disruptions.
ERP implementation costs vary widely, typically ranging from $150,000 to over $1 million, depending on system complexity, organization size, and customization needs.
Costs include software, hardware, consulting, training, and ongoing maintenance. It's crucial to budget for all phases to ensure a successful deployment.
Dharmik Joshi is an ardent learner of business management and channels his passion for articulating ideas into writing. With a wealth of experience spanning 2 years in content creation, he remains committed to staying abreast of industry trends and evolving content strategies. He thrives on the dynamic nature of digital marketing, constantly looking for fresh approaches to captivate audiences and deliver measurable results.
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