Successful ERP Implementation: Best practices and strategies
- Posted by: NijaTech
- Category: ERP
With globalization exerting companies to expand with every day, companies turn towards ERP solutions to automate and streamline their business operations to create leaner, more accurate, and efficient applications with a competitive edge at a reduced cost. In 2021, the worth of the ERP global software market was estimated at over $41.69 billion, making its need for businesses in the current market pretty evident. ERP implementation enables organizations to manage, automate and streamline their business operations with great efficiency and facilitates their expansion without the addition of IT or staffing costs. The implementation of ERP allows you to synchronize all facets of your business and enhances it by providing better and improved agility, flexibility, visibility, productivity, security, faster decision making, reduced operation costs, and much more.
The ERP implementation process starts by installing the onsite ERP software and/or contacting the SaaS provider. Many enterprises seek the help of third-party vendors or specialized partners to install the software. Once the software is installed you need to migrate from previous systems to the new ERP system and train the teams to use the new systems via knowledge transfer sessions from the specialized vendors. The process typically takes months to maybe up to a year, if the organization is large.
ERP challenges and their failure risk:
Though the implementation of ERP seems simple, it can be quite complex as it affects the entire business process and operation across the organization. The ERP implementation can face quite a few obstacles but the most common ones are choosing the right vendor with the right experience who adheres to your company’s needs and getting the users, employees, and functional groups to adapt to new solutions to overcome their resistance to change. The other challenges include,
- Project planning and management: ERP implementation comprises various critical tasks, data migration, testing, deployment, launches, and updates. All critical tasks and processes need to stay on track and it requires conscientious planning and management. Many times organizations underestimate the time and costs that are required for a successful ERP implementation, leading organizations to pitfalls by facing overruns. A realistic plan with realistic time frames and milestones along with the support of executives and a committed team is very much needed to avoid pitfalls.
- Data migration, integration, and quality: The pivotal step in ERP implementation is data migration and this process can become tedious real quick, as the data could be spread across the organization. So moving the data into the ERP database can get tedious when it is not properly planned. Another key aspect here is to maintain the data quality. Multiple departments of the organizations cross paths with the same customers and products which often leads to having duplicate versions of the same data. Maintaining the quality of the data becomes a challenging process as the teams have to validate, clear duplicates, clean the data, add missing information, etc. before data migration.
- Cost overruns: When the implementation kicks off, ERP projects too often sail past the budget if don’t tread carefully. Organizations way too many times underestimate the budget and time leading to cost overruns in areas such as data migration and training. Companies should plan and consider overlooked expenses to avoid blowing the budget.
- Continuous improvement: ERP implementation must not be considered as a one-off process but rather a continuous process that requires improvement. The ERP must evolve along with the needs of the business to support its demands.
Overall with ERP implementation not managing risk properly, lack of proper planning and foresight from the leaders and executives of the team can lead to derailment and failure of ERP implementation.
Choosing the right ERP software:
Not all ERP softwares are the same and selecting the right one is quite a task that you need to be meticulous about. With many vendors available in the market, you need to choose the right one that’s tailored to fit your business needs. Before selecting the software, consider the following factors:
- Understand the reasons why you need the system and how it fits the needs of your business. Take time to make an analysis and determine the ERP system that has the best functional fit and meets your business requirements.
- Find an ERP implementation partner that you trust. Vendor viability plays a crucial role, as you must look for a vendor with solid experience, financial coverage, and a successful track record in providing viable products.
- Cost and budget are other crucial factors that need to be considered during ERP selection. Understanding the budget and your companies requirements keeps you from derailing and blowing up your budget. Look for long-term ROI, the ownership cost, price of the subscription, the cost required for implementation to make the right and informed decision.
- Choose the right product that works for your industry. Though ERP is not industry-specific, some solutions work better in specific industries. Ensure your vendor and implementation partner has a good track record in your industry before opting for them.
- Factor your project considerations as well. Analyze whether it’s a good time to take on the project. Ensure you have a good project plan and methodology and determine the people involved. Putting together the right team is very important as its needs the people and executives’ support.
- Ensure you select the best software in the market which provides a range of features covering different business functions.
- Ensure that your software can meet all your customization and scalability needs.
- Post-go-live, ensure your internal teams and external partners provide the right support to get the maximum return on your implementation.
ERP implementation stages and methodologies:
For a successful ERP implementation, it is crucial to have a sound plan and methodology to integrate the different functions of your business. The process begins with you selecting the right product and continues with sound planning, configuration, and deployment of the solution. The stages of implementation typically take about a few months and the organization has to navigate on schedule through the following 6 stages (may vary based on your company or could overlap):
- Discovery and planning: The ERP implementation stage starts with discovery and planning. A cross-functional project team gathers input about different business groups’ requirements and the issues that the ERP system needs to solve. In this stage, the team researches to select the right product based on the companies detailed requirements and lay out a plan, the schedule with targets, strategies to allocate resources and configure the system. A solid plan plays a very crucial role in a successful ERP implementation.
- Design: The design phase requires the comprehension of the current workflows and the detailed requirements that need to be met during implementation, so the team can develop a detailed design for the new ERP implementation. Flexibility is the key when it comes to the design phase and it is the responsibility of the administrators and business owners to determine the customization of the software i.e. to add modules that are critical to meet the business requirements and lead the migration of data.
- Development: With a clear and detailed picture of the design, we can develop, integrate and configure the software to match the business requirements. If you are using an on-premise ERP system, then the organization must install the necessary hardware and software as well. Simultaneously, it is required to develop and train the team to adopt new systems and take upon a sound data migration with a plan.
- Testing: Always test the system before they go live. Comprehensive assessment of all aspects of the system, from specific modules to full capabilities of the system has to be fine-tuned and fix the bugs in the implementation process.
- Deployment: Once you have configured, migrated the data, and tested the systems, Go live! Be prepared for potential issues and ensure your team is available to fix any issue that arises. It may take a while for users and employees to adapt to the new systems, but you will see the return on the investment when the employees use the system for day-to-day activities.
- Support: Ensure that the users have the support they need and continuously upgrade the ERP system to keep the users happy. Ensure to upgrade and fix problems as they are raised to achieve the maximum benefit of your implementation investment. If you have selected an on-premise ERP system then you need IT resources dedicated to security, patching, and troubleshooting.
ERP implementation strategies
Though there are several strategies for successful ERP implementation, how do we know which strategy is perfect for your company and how to select the strategy. The selection of implementation strategies is based on factors such as organizational size, risk tolerance, cost, etc.
Some of the most common ERP implementation strategies are:
- Big Bang: This approach is referred to as the “single-step method” as all the users move to the new system at the same time allowing you to achieve the benefits of ERP faster such as higher productivity and low operating costs. The risk of this method is that it puts pressure on getting everything right as an error or glitch can cause a significant impact. This strategy works best for small and medium-size organizations as it’s easier to manage the transition of the entire organization and when you don’t have an extensive budget.
- Phased rollout: The strategy of phased rolled out to roll out deployment in phases which typically takes weeks or months. The risk is quite low in this strategy as it rolls out the facets that reap quick benefits and core functions first and learn from this deployment to move to the rest of the phases. The drawback is, it takes time to reap the benefits of the ERP implementation and your company must be able to support you in this process. The rollouts can be done in three ways: First, the company rolls out one module, fix errors in the module, then roll out the next module and so on. Second, Expand from the core functions. Third, geographical rollout.
- Parallel adoption: In this strategy, the companies keep the legacy system alive in parallel to the new ERP systems for a certain amount of time. This strategy possesses the least risk as you can always revert to your legacy system when you meet with a bottleneck or an issue. But it is quite extensive and expensive as you have to keep two systems up in parallel which requires resources and staff to support. This approach works best for businesses with critical operations and those who are reliant on systems all the time, then this strategy would be the best.
- Hybrid: Hybrid approach is the combination of implementation strategies that are customized based on the need of your company.
Best practices and tips for successful ERP implementation:
ERP implementation is quite a detailed process and you have to consider some of the best practices and tips through each phase to fast-track a successful ERP implementation.
- Establish a strong project team. A strong team is crucial as they are responsible for establishing the requirements, goals, allocating resources, and achieving the targets on time without blowing the budget. They must also resolve conflicts and issues that arise during implementation and between groups within the organizations and make sound and informed decisions. So it is wise to select the right team members for implementation.
- Select the right ERP software and the right vendor that suits your business needs. Select the software that provides you with a range of features and a vendor with good experience and track record.
- Establish clear requirements. It is crucial to establish the key requirements in detail by understanding the needs of the company. Analyze the current workflow of the systems to understand business processes (accounting, human resources, customer relationship management, inventory management, etc.) and their requirements in detail. Understanding the requirements lets you understand why you need the system and lets you come up with a better system, instead of implementing a non-competent system for the sake of automation.
- Identify the specific KPI’s. KPIs represent the target measure of success for your ERP implementation. With a better understanding of the key requirements, identify the specific KPI which helps you to monitor and visualize the metrics of your business.
- Don’t underestimate planning. Don’t rush the planning. Though it might be alluring to dive right into design and development, take your time and create a firm, clear and sound plan to lay a strong foundation for your ERP implementation.
- Have realistic expectations, as every project will have its own hurdles while implementing ERP solutions.
- Obtain the senior-management buy-in, because without their backing the implementation may falter.
- Ensure you have a good project management framework. A good project management framework is vital as the implementation takes quite some time and you need a framework that helps you to keep the focus on the business needs and keep the project on track. The inclination to add more modules and functionalities as the project progresses is a common problem, a good project management framework helps you to prioritize the needs for adding functionalities on the go. The project management framework must also cover the technical aspects of the ERP implementation efficiently.
- Data Migration is a crucial step and requires meticulous preparation and planning. The transition from legacy systems to new ERP is an opportunity to weed out historical and obsolete data that is no longer needed, validate and fix data inaccuracies when transferring.
- Don’t underestimate training and support. You cannot expect employees to immediately adapt to the new systems. Ensure you train the employees with customized content and tutorials to help them transition to the newer systems and gain maximum benefit. Once the system is live, the team should provide technical support for users, and must ensure they continuously update and fix the system when it faces a potential issue. End users and employees must be comfortable and familiar with the system to reap the maximum benefits of the ERP implementation.
- Testing is integral to ensure your system is performing properly.
- Communication is the key. Communication is a vital component through all the phases of the implementation. It’s crucial for everyone involved from the CEOs to the users to be in sync. Clear communication and collaboration form the basic building block that brings everyone together to understand the needs and benefits of the ERP implementation.
- Pay attention to the end-user feedback. End-user feedback provides you with the insights to guide your ERP implementation so it addresses the users’ needs.
The need for ERP implementation is on the rise and we hope this article provided a good view on how to select the right solution, vendor, and strategies to fast-track your implementation into a successful one.