ERP systems have developed over the years to become extremely robust, encapsulating every aspect of your business to give you a single source of truth to rely on when making critical business decisions. However, for companies making the switch to their first ERP system, it can be a daunting task if not prepared immensely.
No ERP system is the same and will require a different implementation process depending on your company's needs and customizations. However, after years of implementing different ERP systems, there is a guideline set with the core features that you should plan for during your Implementation to ensure no costly errors arise. In this blog, we’ll go into detail on these features and the cost breakdown of an ERP implementation plan.
Key Phases of the ERP Implementation Process
As previously mentioned, no implementation is the exact same. However, after decades of experience and countless implementations, we can break down the process into six key phrases that you should be planning for.
Discovery & Planning
This phase is most likely the stage of the implementation process that you’re currently in and is debatably the most important. ERP systems are both a huge investment and project for any business to tackle and require the proper research and planning to avoid joining the list of ERP horror stories. To begin this phase, you should conduct thorough research into the different ERP systems on the market along with their strengths and weaknesses to determine which is the best fit for both your business and industry needs. After deciding which system to move forward with you need to start gathering the necessary resources to make your ERP dreams a reality, your project team. Whether internal, through your ERP system vendor, or with a third-party ERP consultant, your project team is critical for a successful implementation. These teams will ensure that best practices are being followed and ultimately act as the glue to take your business from day one setup to the final product. You should aim to have the following roles in your ERP implementation project team:
Executive Sponsor
This member from the top of your organization will be the change agent and ultimately drive the implementation strategy as the internal face of the project. The executive sponsor is usually responsible for making final decisions after assessing risks, consulting within the organization, and externally with other team members.
Project Manager
Project managers are the support beams of your project team. This person is responsible for making sure the implementation plan is running smoothly, deadlines are being met, and the project remains within scope. This involves communication with nearly all parties involved in the implementation process, especially with the executive sponsor as they will often be the liaison between them and other team members. Whether this individual is hired internally or brought on specifically for the implementation, this is not a position you should underestimate.
End-User
End users are important for testing the ERP system within their specific departments. These team members should have good communication, leadership, and technical skills so they can raise any concerns with department-specific features of the system. These “super users” will not only help the proper implementation of your ERP system but also gain a comprehensive understanding of the new processes. This is extremely valuable when it comes time to launch as they can help other colleagues not only adapt but embrace the new system on launch.
Cross-Functional Team Members
Responsible for directing software design and configuration, these technical experts are necessary to evolve business processes and identify ways to improve these processes with the new system. Cross-functional team members should cover multiple departments across your business including IT, finance, and manufacturing.
Reporting
With access to previously unattainable data, you should have a report writer on your project team. These people will determine which data to extract and create reports that analyze your business from front to back. This requires extensive knowledge of your specific ERP system’s tools and the type of data it stores, along with a complete understanding of the organization's previous reporting processes.
Partners/Third-Party Consultants
ERP partners are often brought on to handle the technical work regarding the implementation process. As most consultant teams have decades of experience and hundreds of implementations, they know the ins and outs of a successful system along with different industry-specific customizations needed to create the most efficient system possible. These teams of software experts take your ERP system out of the box and unlock your ERP software so it can reach its full potential. For more information, check out the 7 Benefits of Implementing ERP With A Partner.
Design
In the second phase, your project team will develop a detailed design of your new ERP system including new business processes and workflows. These will help automate repetitive tasks and help you take advantage of the true power your ERP software possesses. Be sure to incorporate multiple team members in this phase as they normally have the best grasp on current business processes and ideas on how the software can address weak points that currently exist. Additionally, this early involvement will ensure your company embraces the change in processes once the system is live. For companies that decide to implement their ERP with a consultant/partner, this phase will be an area of opportunity to capitalize on previously mentioned out-of-the-box procedures and look at customization options that can enable your ERP system to work for you rather than with you.
Development
Now that you’ve outlined clear, precise design requirements your organization can move onto the development phase. In this phase, your organization will configure the ERP software, integrate any legacy systems that won’t be replaced with the new ERP system, and begin any customizations needed. During this phase, your team should also be focusing on developing training materials to help end-users gain a correct understanding of the new software. This might sound silly as you’d expect a company to use its software, especially with an investment of this size but that’s not always the case. Sometimes employees have been using their previous business processes for years and would rather be comfortable continuing their old practices rather than being forced to learn something new. You should spend time creating in-depth training materials that help ease your employees and give them the confidence to embrace the drastic change. Finally, towards the end of the development phase will come one of the most important aspects of the whole implementation: data migration. This can prove to be difficult as you want to retain any important data but also not migrate all historical data and leave your new system with unnecessary information. You should plan beforehand which data to migrate and why it’s important to keep this data so your project team can ensure the proper data migration. Working with a partner during this process can be extremely helpful as they usually know what data is nonessential, which is worth keeping, and how to properly migrate it to your new ERP system.
Testing
Although technically listed after, testing will also occur during the development phase. During this phase, the project team will perform a series of manual and automated tests on the ERP software to ensure it’s working as expected. As ERP systems continue to become more robust and more customizations/integrations are offered, this phase is extremely critical being the last step before going live and should be a main focus in the implementation process. Rigorous testing of the functionality, performance, integrations, and security of your new ERP system will ensure a smooth roll-out for your organization. Additionally, end-users should be testing their day-to-day responsibilities during this phase to ensure no major issues occur during the deployment process.
Deployment
Finally, your system goes live, however, it’s not as easy as just flipping the switch on. Due to the drastic change in business process, employees are bound to be a bit confused even with proper training and you should be prepared to assist them in the early stages of deployment. Additionally, your project team should be on-hand to address any concerns, document and fix issues, and troubleshoot. The deployment phase roll-out can be direct or spread out depending on the needs of an organization. For example, a company with 10 employees and manageable data might only need a few days to fully transfer over to a new system while Fortune 500 companies might need a few months due to the number of moving parts. If your organization decides to spread out the deployment process, rank your modules and focus on high-priority items then move down the ladder.
Ongoing Support
Although the amount of attention and dedication previously required isn’t necessary after successful deployment, you should still devote time to support and nurture your ERP system to maximize efficiency. This includes employee engagement, software updates, system adjustments, and potential new integrations and customizations not initially realized in the planning process. By continuing to focus on these factors, you will inevitably maximize your ERP system investment and set the organization up for future success.
Cost Breakdown of the Implementation Process
Now that you have a more comprehensive understanding of the factors that go into the implementation planning process, it’s time to talk about associated costs. Without proper research and planning, many companies greatly underestimate the actual cost of their implementation and don’t realize it until it’s too late. As previously mentioned, every implementation is unique and it’s nearly impossible to give exact costs for your implementation. However, after years of experience as ERP consultants, we’ve put together a list of the factors you should consider when creating your ERP implementation budget:
Number of Users
The number of users with access to your ERP software system is one of the most important aspects to consider when budgeting for your implementation. To ensure a proper allocation, you should consider the number of current employees, any plans for expansion, and the policies for your specific ERP software regarding the number of users and costs associated per user. Some software has unlimited user licenses, some group them together, and others charge per user. If your company plans to make significant hires within a few years, the cost-effective option right now may end up costing you big time down the road. Conduct thorough research during this stage to pick whichever plan/software works best with your headcount.
Integrations and Customizations
After selecting your ERP software, you’re left with a tough decision: do I use just the base software or go for out-of-the-box modules, customizations, and features? Although smaller companies may not need any extreme customizations to create a more efficient system, it can be make-or-break for larger companies that need these customizations for competitive advantage. As we say, your ERP system should be working for you, not with you. Discuss internally the specific requirements your business needs and determine which of those, if any, don’t come with the base software. By focusing on these key features needed, you will avoid over-purchasing some of the all-in-one bundle options which often leave you with more features than you actually need. If still unsure about the specific requirements you need/want in an ERP system, reach out to a team of industry experts that can consult with you on their previous implementations.
Implementation Partners/Consultants
Deciding how you’re going to implement your ERP system is a make-or-break decision. Are you going to remain in-house and use the (sometimes) provided support from the software company or hire a team of experts to come in and lead the charge? Ultimately, working with partners can save you from costly mistakes down the road and ensure your ERP system is implemented correctly, quickly, and efficiently. Check out our blog post, Implementing ERP Directly Or With A Partner: Which Is Better? for a more in-depth analysis.
Change Management
You should plan in advance for many different change management activities including, but not limited to: training, business readiness assessments, role assessments, communication plans, and workforce enablement.
Over Compensating
Our most important tip when it comes to your implementation budget is to be prepared for the unexpected. Depending on the needs of your system and the preparation is done beforehand, there’s a high possibility that the implementation process could extend beyond the proposed duration. You don’t want to be stuck with no budget remaining and an ERP system that doesn’t work properly. Conduct meticulous research and work with industry experts to avoid these situations.
We hope this blog has provided you with the necessary information to take the next step in your ERP system journey. A proper ERP implementation plan along with a comprehensive budget can take your ERP system from a dream to reality while avoiding the infamous horror stories. If you’re ready to take the next step in your implementation process, contact us and learn how our team of industry experts can help you regardless of what stage in the implementation process you’re currently at.