More than half of all organizations that implement ERPs see positive ROI fairly quickly. However, most organizations say ERP implementation takes at least 6 months, which can delay the gratification.
A good ERP system can help you significantly increase efficiencies and decrease costs, all while improving support for a variety of business processes across your organization. So, pushing through those 6 months of implementation is worth it.
Find out more about the project management requirements for implementing an enterprise resource planning solution below, including what the six phases of ERP implementation are and why they’re important.
What is ERP Implementation?
ERP implementation encompasses all the work required to bring the right ERP solution into your business. It starts with awareness that ERP software is the right choice for your organization and covers all the effort from that point to when you successfully go live and have a fully-functioning system.
Whether you have an existing on-premises solution that you want to migrate to a cloud-based ERP or you are just starting your enterprise resource planning journey, you’ll have to go through implementation. How well you plan for this endeavor and navigate the project management phases that come with it impacts your implementation's success.
The more successful your ERP implementation is, the more benefits you typically get once you roll out the new solution. That’s why it’s critical to start with a plan.
Why Do I Need a Plan?
With the lengthy timeline of most ERP projects and the need to keep end-users and stakeholders informed of progress along the way, a written plan of action is essential. Here are a few ways planning reduces the risks of ERP implementation failure:
- A plan keeps people on the same page. Scope creep is a common reason for failure when implementing an ERP. You may set out to address some specific functionality or business processes but end up seeking to meet ever-expanding demands as the scope of the project changes. A written implementation plan helps point stakeholders and others back to true north for the project, reducing this type of challenge.
- Plans help you consider the big picture. Many businesses turn to ERPs to streamline and connect processes from different areas of the business. Understanding your organization’s change management requirements and the needs of all related business units helps inform decision-making throughout the implementation process.
- A written plan can be edited. When you have a plan, you can make careful, data-backed decisions to change it. That provides some agility throughout implementation. Without a plan, organizations may make many on-the-fly decisions that aren’t as carefully considered and lead to lackluster results.
What Type of Implementation Project Do I Have?
One of the first steps in creating a viable plan for your implementation project is understanding what type of effort you’re undertaking. Some implementations can be completed in a few weeks or months by an ERP consultant, while others take more than a year of input from internal team members; it all comes down to the type of project. Here’s a look at a few common ERP implementation types:
- On-premises to cloud ERP migration. This involves moving from an on-premises solution to one that’s based in the cloud. You might implement cloud storage or other features from your existing ERP vendor or migrate everything to a product from a new vendor.
- Cloud-to-cloud data migration. With this implementation, you are moving from one cloud-based ERP system to another. You may be migrating data only, leaving your team working in the same interface they always have or you might need to roll out a new interface and train your team to use it.
- CRM to ERP switch. In some cases, ERP implementation involves switching from a different solution to an ERP model, such as migrating from an existing customer relationship management tool to an ERP tool. Or, you might want to migrate from numerous disparate accounting, human resource, and customer management systems to a single system and source of truth.
- Completely new software implementation. In some cases, businesses don’t have existing software solutions, and they are embarking on a totally new implementation.
Successful ERP implementation requires the right resources on your project team, so talk to your vendor or implementation partner to understand what kind of effort you’re looking at. Then, you can choose internal resources that match the required work and necessary skills.
The 6 Key Phases of ERP Implementation
According to Gartner, up to 75% of all ERP implementation projects are deemed failures by the financial and IT professionals in charge of evaluating them. Some factors that commonly keep organizations from achieving ERP implementation success include a lack of clear goals and direction, poor planning, inappropriate resource allocation, and poor buy-in.
Embarking on your project with the right methodology and a clear understanding of the implementation phases can help you avoid these pitfalls.
The first phase of your implementation covers research and decision-making. It should include:
- Gathering business requirements. Meet with all impacted stakeholders and selected subject-matter experts to understand the business needs for any solution you choose.
- Setting a budget. Decide how much you can spend on the initial implementation work, as well as long-term on the solution.
- Selecting a solution. Use the data gathered in the above two steps to evaluate potential vendors and ERP solutions. Choose one that best meets your needs.
- Define your implementation project. Choose an internal project team, define which business processes are relevant and how the solution will impact them, and set specific goals that define what success looks like for your project.
Working with the goals defined in phase one, your project team and implementation partner will design a new ERP system. The extent of the design work depends on a variety of factors, including whether you’re opting for a solution with out-of-the-box functionality, an option with various modules that can be customized to meet your needs, or a from-scratch software development.
Regardless of the type of project you’re embarking on, it’s important to take time during this phase to:
- Design workflows that capture existing and desired business processes in the most efficient manner possible
- Consider necessary integrations with legacy systems
- Dig deep into the unique needs of your processes and teams to define any customizations that might be necessary
During the development phase of an ERP implementation project, the team does the work that was defined in the design phase. In some cases, this might require developing and coding new tools. Most of the time when working with a vendor and an existing ERP solution, development is more about configuring the resources, customizing them where necessary, and integrating them with your existing tools.
The implementation team must ensure ample system testing occurs throughout development and through deployment. Your in-house technical and project management resources may work alongside the vendor to test various applications and functions during development. However, it’s important to leverage team members throughout relevant departments in your organization to conduct full user testing before you go live with the ERP.
Ultimately, it’s a good idea to get super-users within your organization to put processes through their paces. Have someone in accounting testing ledger entry, invoicing, and AR capabilities. Ask someone in human resources to test recruiting, onboarding, and employee management functions. If you listed a business process in the planning stage and built it into the ERP, someone needs to test it.
After testing — and addressing any bugs that come up during that process — you’re ready to deploy your new solution. To enhance buy-in, invest time and resources in user training. Ask your vendor what type of training is included. It may be a good idea, for example, to have a vendor training rep come to your location to provide help during the initial rollout.
Change management time. Spend time in the weeks leading up to the final deployment communicating about the implementation to your entire team. Pose the new resource as a positive for everyone and let people know how you believe it can help them. Be transparent about the implementation process and let your team know that hiccups are completely normal. This reduces the chance that people will become frustrated as you work through any initial challenges.
In this stage, it’s also helpful to have “change champions” within different departments, who can collect and deliver feedback on the product after it’s been rolled out; these may be the same super-users involved in the design and testing stages or it may be someone else on their respective teams.
Don’t disband your implementation team right after deployment. They still have a job to do in supporting other team members. They might provide training programs or be available to troubleshoot bugs and other issues that arise as you roll the ERP out across your organization.
Once the ERP is being used across all functional teams seamlessly, the project is a success and the implementation team’s work is finished. Support, however, is always required. Take time to understand what support your vendor offers and remain current on software updates.
ERP System Implementation Best Practices
Choosing the right ERP solution is one of the most important things you can do to ensure success with implementation. Following the phases in the guide above is another way to mitigate risks.
We’ll leave you with a few quick words on real-life ERP failures, what caused them, and how you can avoid them to help you achieve success with your own ERP implementation.
- Mission Produce lost track of avocado inventory during its ERP implementation. It lost millions due to the failure. Avoid this type of issue by running mission-critical processes in your old system as well as your new system to ensure the new system works. Then, you can finalize your migration.
- J&J Snack Foods experienced knock-on effects from an implementation delay, leading to increased costs of more than $7 million. While you can’t plan for every possible outcome, taking time to plan ahead, involving key stakeholders, and creating a realistic project timeline can reduce the risk of business-critical delays.
- Leaseplan, a vehicle management company, eventually cut its losses and ended a failed attempt at an ERP development. According to Leaseplan, the scope and scale of what it planned simply didn’t work for what it and its customers actually needed. Mitigate the risks of this type of failure by working closely with subject-matter experts to define business requirements for your ERP.
Are you knee-deep in an ERP implementation? Tell me about your experience or ask for advice and support in the comments.