One of the most complex software systems in an organization is ERP software. It is also the most valuable. A successful ERP implementation integrates applications that enable a company to automate and streamline processes. This integrated system is a central source of information regarding the performance of an organization.
ERP implementation has many downsides, including inadequate end-user training and poor data migration.
We shall cover how an organisation can successfully implement an ERP by using a methodology to mitigate the most common risks.
Table of Contents
What does ERP implementation mean?
An ERP system brings information from many separate systems into one location. There is no limit to the amount of data an ERP system can handle.
You must include a change management process for your ERP to succeed. Change management ensures that you take users’ needs into account and that everybody who needs training gets it.
Even after turning the system on, you must update it regularly to keep it at maximum efficiency.
Importance of an ERP implementation plan
Almost 75% of ERP implementation projects exceed the budget and fail to meet deadlines. The main culprit of these failures is poor planning and failure to adapt to changing times.
You cannot understate the importance of a proper ERP implementation plan. Because of the massive scale of ERP implementations, small misalignment can easily cause cascade failures that risk the entire project.
Main Phases of an ERP Implementation Plan
To give an ERP implementation the best chance of succeeding, you must divide it into distinct stages. They start from developing the concept to training and supporting its end users. These are the key phases every successful ERP implementation needs.
This phase entails extensive research to gather information about the organisation’s processes and existing systems. It helps to define the problem landscape the ERP system will solve. Discovery is the foundation on which an ERP implementation rests.
In discovery, technical information gathered helps to identify the ERP system required. The data also indicates if the ERP infrastructure can be deployed on-site or using cloud systems.
People who form the discovery team include project managers, stakeholders, external consultants, technical leads, and departmental representatives. All people who will interact with the ERP must participate in the discovery stage.
Experts analyze the information uncovered during discovery to make a case for the need to invest in an ERP system. The analysis aims to outline the project’s objectives and show how to achieve them using the ERP system.
The analysis helps the company weigh the risks, benefits, and costs of the ERP system. The ultimate goal is to decide if it is worth investing money into the system.
The deployment of an ERP system is a significant transformation in the company’s operation. A foolproof implementation plan helps the company implement an ERP system successfully.
The plan outlines all the resources needed, implementation timelines, and how to manage the implementation. Let’s go into further details.
During planning, you have to choose a team that will handle the entire project. Both non-technical and technical members will participate in developing the system and evaluating its viability.
Involve stakeholders from all over the company in the implementation team. These stakeholders will help shape the system’s design to fit its purpose.
b. Change management plan
This plan enumerates the tasks to perform to move from the old fragmented system. The milestones revolve around data migration, budget forecasting, QA and testing, and end-user training.
The change management plan should also outline communication guidelines, how to escalate urgent matters, and how to track the overall progress.
c. Budget forecasting
As mentioned earlier, most ERP implementation projects overrun the budget. Budget forecasting ensures that you create realistic budgets with enough headroom to cover unexpected roadblocks. It is hence recommend setting a substantial contingency fee to cover any surprises.
You might need to adjust the contingency fee severally during the implementation process, which is normal.
For this stage, you create a detailed design of the new ERP workflow and processes using information collected in the preceding steps.
The design stage produces process maps that visualize the workflow of the ERP system the way users will experience it.
Stakeholders need to give you feedback at this stage to ensure they agree with and understand how they will interact with the system.
It is where the rubber meets the road. Developers start configuring the ERP software to meet the functional requirements, wire-frames, and process flows. This process involves a lot of customization to meet the organization’s needs.
Developers also produce clear documentation throughout the development stage. Documenting the process ensures they capture all knowledge to make future adjustments easier.
The implementation team starts planning to move data from the old systems into the ERP software. It is a complex system because it takes data stored in many different forms.
The team also formulates a guideline to deal with missing or incomplete data. They also clean up erroneous data to prevent it from choking the new system.
Developers test the new system at predetermined points or after every step. The quality assurance team checks every part of the system to find bugs and data integrity issues. They also run user testing to ensure the system will meet the desired needs. Testing eases the team into the training phase.
The training ensures end users adapt to the ERP system. Employees also get training on any business processes that changed when the ERP system was under development.
A successful ERP implementation will inevitably reduce the workloads of certain staff members. The company should consider retraining the affected employees to carry out under-served roles.
How does the company train employees to use the new ERP system?
The best way to train employees is to use a multi-pronged approach. The company uses different training procedures. The variation of training methods helps to cover all skill levels of their employees. Some of the training methods the company can use include:
Instructional materials during the onboarding process
- Peer learning
- E-learning platforms
- In-person classes
- Written documentation
- Digital adoption platforms.
The initiation process of an ERP system can vary depending on the size of the system and the resources available.
There are three main approaches it can take.
a. All at Once
Developers turn the entire system on. It usually takes a single day to implement the system this way.
In this approach, the developers split the system into small modules. They align these modules with business functions or departments. A phased implementation takes longer. On the plus side, it allows for thorough testing as individual parts get commissioned.
The company operates both the old and new systems together. The parallel implementation allows the company to ensure that the new system works while minimising risk. After the company is satisfied with the new system, it retires the old system.
The only downside to this approach is that it costs more to run both systems.
Every successful ERP implementation needs continuous support. The support team ensures that the system runs well throughout its life cycle. They also ensure that the system scales effectively as the needs of the company change. The support team conducts maintenance tasks, including bug fixes, optimising performance, fine-tuning data flow, and creating new data streams.
The company analyzes the system’s success and calculates its return on investment. It also evaluates the efficiency gains and staff satisfaction.
Best practices for ERP implementation
A company may take several steps to ensure they implement a new ERP system successfully and cost-effectively. Here are some of the steps.
i. Get executive buy-in
It ensures that senior stakeholders become committed to the success of the system. It is a sign that they understand the system’s long-term benefits and how it directly influences the company’s revenue and profits.
ii. Prioritise business outcomes instead of technology
A system that focuses on technical aspects alone might be hard to use. The system might fail to align with what the company wants to get out of it. To avoid this, companies need to focus on their end goal rather than how to attain it.
iii. Start by clearly defining what you need
Before setting up any software, a company needs to detail all its needs. Well-executed discovery and planning stages capture all these details.
iv. Proper team member selection
The company should select a cross-functional and diverse team to represent all areas that the ERP software will touch.
v. Have a clear change management plan
Implementing an ERP system is a change that can disorient employees and cause low productivity. A robust change management plan will ensure that the employees continue to work unimpeded with the new system.
vi. Clean data being migrated
This process involves cleaning legacy data sources up before migrating them. Cleaning up data makes sure that the new system works well with the old data.
Adopting a new ERP system seems more daunting than it is. People get scared because of its cost and the probability of failure.
However, if you fully map out how end-users will interact with the new system, you minimize the likelihood of failure. Ultimately, the software is only fit for its purpose if the end users can use it.