ERP implementation in any organization has become essential in the current market space. It is needed to stay in the competition.
Statistics of all past implementations derive only 25% of them are successful.
This post is for increasing the ERP implementation success rate.
Let us first define what ERP implementation is.
ERP implementation is the process of making an organization run business operations with ERP. That includes understanding needs, installing software, migrating data & techniques, and training people.
We provide you with the ERP implementation life cycle steps and action items for each step to make it happen.
Steps of ERP Implementation
The following are the eight steps involved in ERP implementation.
- Requirement definition.
- Building the team.
- Selection and installation.
- Process and data migration.
- Validate with real-life data.
- Training the end-users.
- Taking it to the live production.
1. Requirement definition
The first thing to do is the requirement definition.
Tip: Define clear expectations before selecting an ERP solution. Be flexible with your timelines.
- Understand and make a note of the existing processes of the business. Find problems in the existing system. Learn about bottlenecks, inefficiencies, and things that can be made better.
- Make software requirement definition documentation. Let this include technical and functional requirements.
- Make a plan with timelines and resources needed.
- Identify key performance parameters and define your desired results.
- Decide which process needs to be manual and which process needs to be automated.
2. Building the team
An implementation team needs to build before implementing it. The team needs to have the following roles,
- Executive sponsor: Responsible for guaranteeing a project’s goals are aligned with the company strategy. Communicating and collaborating with both the management and implementation team.
- Project manager: Managing implementation team.
- End Users: Help in requirement definition and also provide feedback on the new implementation.
- Application analyst: Cleans and migrates data from the previous system to the new ERP system
- Software developer: Software features customization and installing the software.
- QA test engineer: Testing the system for accuracy in data and functionality.
- Build a team with the roles mentioned above.
- Hire consultants who can understand organizations’ needs and who can communicate with clarity.
3. Selection and installation
- Shortlist and select software vendors based on requirement definition.
- Design flowcharts to show the business process between different departments.
- Build networking facilities, data collection, and display screens hardware.
- Install the required software and do the customizations needed.
4. Process and data migration
Organizations store their data in different formats and databases(DBMS). Sametime, each team may be following its processes.
Standardizing and centralizing the data and the processes need migration of the existing.
- Define clearly if there is any change in the process and who all will be impacted by this change.
- Validate existing data for accuracy and consistency. Remove unwanted data.
- Establish mapping between old database tables and fields and migrate the data.
5. Validate with real-life data
You must thoroughly test the system before going to production. Hence thorough testing of the system is needed.
- Test all use-cases, features, and reports with real-life data.
- Verify communication processes between different roles and departments of the organization.
6. Training the end-users
Inadequate training may hinder the adoption of the system. Training with a proper feedback mechanism also helps in validating and optimizing the implementation.
- Develop a well-defined training program, let professional trainers guide end-users.
- Let there be a feedback communication mechanism between
- end-users and trainers
- trainer and implementation team
- End users and implementation team
7. Taking it to the live production
Before making it live, test the whole system thoroughly. Have a backup plan in case of adversities.
- Choose the approach for taking it to live
- Complete deployment
- Phase wise deployment
- Use the existing system and new deployment parallelly
- Ready for a possible change in deployment date. Make sure you have people who can handle adversities.
- In case of system downtime, have an alert system to let all users know about it.
- Verify the performance and accuracy of the system again after taking it to live.
- Expect process change during initial days and have IT people who can support it.
8. Maintainance after ERP implementation
After going live, the client will need support. Performance tuning is also required based on end-user feedback.
Always keep auditing system against defined performance expectations. If the system does not stand up to the expectation, tuning is needed.
- Support system issues and end-user issues.
- Keep on evaluating the key performance matrix. Optimize the process based on the evaluation.
The time required for implementing ERP systems across the organization is dependent on, size of the organization, type of the business, and type of deployment.
It takes less time for small organizations. However, it may take 6 to 12 months for big enterprises. Therefore, cloud deployment may reduce total effort, cost, and time taken drastically.
Additional tips for successful ERP implementation
- While implementing keep prospects of the business too. Customizing the system later may take more effort than doing it at the beginning.
- Get a clear idea about the total cost of the project. Don’t forget to consider training and future support costs. The vendor may charge an additional cost for additional features if you ask for them later.
- On-premises deployments usually cost more, and even the maintenance cost is high. Keep your options open for open source ERP and Cloud ERP solutions too.
- Since the new system involves a learning curve for its end users, people continue to do how they have always been doing. Emphasis on change management is essential.
- Don’t buy functionalities that are not needed for your business. It makes training difficult and increases the price.
ERP implementation costs
If you think that cost of ERP implementation is a one-time payment, that is not true. After implementing the software, again, you need to spend money on some ongoing expenses.
So the cost of the ERP implementation consists of both initial and ongoing expenses. Expenses are as follows.
- Software installation charges, ERP infrastructure improving, customizing, and maintenance charges.
- Fees of the installation team, consultant, and trainers.
- Charges depend on the license you want to have, like on-premise or cloud.
- Charges are based on the scope of applications, number of subscriptions, and customization level.
- Data storage and backup charges
- Support charges like hardware and networking supports, bug fixing, etc.
ERP implementation strategy
Below are a few proven strategies to implement an ERP system. Of course, all methods have their pros and cons.
1. Single-step strategy
In this method, all the users of the company will proceed to the new ERP system simultaneously.
The important thing is you have to finish all the arrangements and testing of the new system with proper training to the users before the actual date of using the new system.
The pros are that you will experience the new system’s benefits immediately, such as increased productivity, reduction in operating costs, etc.
The cons are any minor errors that occur, impact employees, customers, and business partners.
2. Phased rollouts strategy
Here, deployment of tools, components, and features will occur in one or two weeks or a month. In this approach, the risk is less compared to the single-step method.
The disadvantage of this method is you will get the benefits of the new ERP system a little late.
3. Parallel adoption strategy
In this approach, the company uses its inheritance system in parallel with the new ERP system for some specified time.
In this method, the risk is significantly less because the company can return to its inheritance system if any problem occurs in the new system.
It also helps the employees to get adjust to the new system gradually. However, this strategy’s drawback is that it is costly because it requires more human resources and resources to run two systems parallelly.
4. Hybrid strategy
This strategy is a combination of all the above methods. That means a company can implement an ERP system with the single-step approach and then launch other modules with phase strategy to its departments.
Following the above steps will ensure the success of your ERP implementation. However, it is not a one-time process. You will have to follow the above process periodically.
The good news is, the success rate of ERP implementation has been increasing in recent times. It is due to advancements in technology and the advanced expertise of ERP vendors.
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