12 Jul ERP Implementation: What it is and keys to success
Find out what’s involved in ERP implementations and how to avoid ERP failure.
What is ERP Implementation?
Enterprise Resource Planning (ERP) is a software businesses use to manage accounting, goods and services procurement, project management, risk management & compliance, and supply chain processes.
ERP implementation is the installation of ERP software across the business. ERP system implementation is a complex process that includes configuring, customizing and integrating the software with other business systems. It also includes onboarding and training users.
Because ERP implementations are expensive, complex and require specialized knowledge, an ERP consultant or consulting firm is generally hired by the user business to ensure the success of the project.
No two ERP implementations are the same as they require customizations to meet the specific demands of the user’s industry, niche market, existing IT infrastructure and proprietary processes.
ERP Implementation Steps
There is no standardized process or steps set in stone for ERP implementation. However, there are common steps that most businesses are likely to take.
Because ERP is used across multiple departments, businesses often build cross-functional teams to be involved throughout the implementation process to assure needs are met and specific department pain points are addressed.
Once a project team is chosen, they will meet to identify specific problems the solution will solve and to list goals and objectives of the project. In this step teams will discuss the analytics, functions and processes that are most important to organizational success.
Once the project team is aligned on the goals and priorities for the ERP implementation they will begin to shop for software that best suits their needs. This may include shortlisting several ERP packages that will then be tested through product demos and trials. Things to consider in this step include:
- Pricing and budget
- How the solution fits existing processes
- How the solution can improve processes
- Scalability of the solution
- Consultant’s implementation methodology
- Consultant’s training process
- Consultant’s post-implementation services
Once a business has chosen the software they need, they will install on their servers (unless they have selected a SaaS solution). Then it is time to configure and customize the solution to meet their specific needs.
Before beginning an implementation a business will want to clean up its existing data for migration into the new system. This can be a tedious and detailed process and requires a data migration strategy up front. It is completed by removing any unnecessary data, establishing standard naming conventions and formatting data to fit the database format of the new software. Once data is ready, it will be loaded into the software.
Once the system has been installed and the data is migrated, organizations will go through a rigorous testing phase to assure all the data points line up properly, workflows are running and integrations are working.
When a business has thoroughly tested the system to make sure interfaces, workflows, reporting and accounting transactions are functioning properly it is time to go live. Some businesses roll out the software in a phased approach, with departments onboarding to the system one at a time or piece-by-piece. In most cases, businesses will maintain their legacy systems for a fairly long period of time as a safety net to assure the new system is getting the job done.
Training & Support
While training on the software may begin earlier in the process, it is ongoing as the wider organization begins to adopt the solution. Businesses should also expect ongoing hiccups and problems that may require support of their consultant or software service provider. Additionally, upgrades, updates, patches and fixes are usually an ongoing requirement post implementation.
Common Mistakes to Avoid During ERP Implementations
We rarely hear stories about successful ERP implementations because they go live and that’s the end of the story. But there are countless horror stories about ERP implementation failures. Here are some of the common mistakes that can end in disaster, but they can also be avoided.
Unnecessarily Buying a Whole New System
Businesses often become disenchanted with their current systems and decide it’s time to invest in a brand-new ERP system. However, often the pain points can be addressed with software updates, new configurations, new integrations or even cloud migration.
While new ERP systems are often SaaS native solutions and cloud-ready, a business doesn’t need to risk investing time and money into implementing a new solution to increase mobility and agility of their current software. The right hosting provider can migrate aging ERP to the cloud.
Learn more about Cloud Migration for ERP and other business systems
With any big, cross-functional implementation like ERP implementations, there are different ideas about what is and isn’t priority. Often there are competing objectives from one department to another. This is why steps one and two above are so important.
Having clearly mapped out goals, benchmarks, timetables, budgets and scope before beginning the implementation will help align the company on a unified set of success metrics.
Lack of Planning
ERP implementations require high-level strategy, meticulous planning and a change management gameplan. This will help ensure the technical side of the project is successful along with the human side, which includes wide adoption of the new system.
Lack of Resources and Commitment
This goes back to proper planning and building a solid project team. Assigning the right resources to the job and ensuring the team is invested in the success of the project is critical to see it is carried out properly.
Again with myriad and often competing goals across departments, customization requests can often get out of control and create scope and budget creep that leads the entire project right off a cliff. A consultant isn’t always going to caution against customizations so project governance planning and scoping ahead of time is critical. The customizability of ERP is part of what makes the software so powerful, but it is important to minimize customizations, especially in early phases. A business can always build new customizations and add integrations after the initial success of the project.
ERP Implementation Best Practices
Here are few questions a business should ask itself to ensure they are sticking to best practices during ERP implementations:
- Do we really need a whole new ERP system?
- Do we really need a new ERP vendor?
- How will the new software actually improve business processes?
- What are criteria for success organizationally?
- What are criteria for success within each department?
- What do we want to achieve and what can we realistically expect to achieve?
- Who is the best ERP vendor for the industry niche and market of the business?
- Do we hire an independent ERP consultant?
Costs of ERP implementations
How much does an ERP system implementation cost? There is no set cost metric for ERP implementations. The cost will depend on licensing model (subscription or upfront purchase), number of users, customization requirements, service fees of vendors and consultants and the varying costs from one ERP product to another. Accurately scoping the project is critical to getting an accurate cost estimate. Of course cost is an important metric, but it is also important to consider return on investment and estimated time to value.
Need help selecting an ERP vendor or consultant? CyberlinkASP has partnerships with dozens of vendors, consultants and independent software vendors. We can help put you in touch with the right implementation provider.