What is ERP Implementation? The 10 Process Stages You Need to Know!

Are you one of the many companies that’ll be implementing a new ERP software solution in the coming months? Enterprise Resource Planning—ERP as it’s often referred to—is a software solution that automates and integrates all your business processes into one user-friendly platform.

Essentially, implementing a new ERP system is the arduous process of changing all your companies’ business processes. ERP implementation requires strategic planning, testing, and eventually launching the software to become your central business model.

What is ERP Implementation?

ERP implementation can be defined as the process involving the installation of relevant ERP software as well as the migration of your company’s financial data to the new system. It also involves the training of appointed users and access configurations. Considering all the various deployment options of an ERP system is also dependent on successful testing.

Understanding the ERP Implementation Process

Once you have decided to convert your company’s current business model to include an ERP system, the next step on the agenda will be implementation. ERP implementation can be defined as the process that examines current practices and converts and improves these business processes to the new ERP software.

The processes that are covered by ERP implementation include the following:

  • Data migration as well as cleansing and removal of old redundant data
  • Change management through constant interacting with users
  • Testing of software and all related applications
  • Strategic planning of future maintenance of the new software
  • Training users on the various software functionalities

To get a more concise view of the actual ERP implementation methodology, I’ve summarised the process into 10 easy steps.

Step 1: Choosing the Right ERP Vendor

Purchasing an ERP software system is a large endeavor. Not only does it require a considerable amount of money, but it also consumes a lot of time, effort, and training. As far as your business is concerned, it’s an investment and should be treated as such. Currently, SAP and Sage are the second and third biggest ERP software suppliers respectively.

With this in mind, you might be asking yourself how you can guarantee that this investment into your company’s future pays the required dividends, both short-term and long-term. The simple answer is to ensure that you partner with the best ERP software installation expert in your specific industry.

But, with so many companies offering the same product how do you know which vendor will be the right one to select? Which vendor will offer you the most professional services? Here are a few factors to consider when selecting the ERP vendor that’s best suited to your business. This will prevent you from wasting time and resources.

Industry-Specific Knowledge

ERP software is not a “one-size-fits-all” purchase. Each industry has its own challenges and requirements to function at its optimum level. The first step is to ensure that the ERP supplier can provide an industry-specific software solution.

The software needs to match all your business requirements. It also needs to be written in a language that meets your business and customer needs. The closer the program is to what you need, the less money will be spent on customization. This will result in an easy implementation process.

Long-term Stability

It’s important to consider the track record of the vendor you’re considering. A vendor that’s well-established as an ERP provider will go a long way toward reassuring you of a successful implementation project.

This goes hand-in-hand with the vendor’s reputation in the industry. Do some research about their previous dealings and implementations. Make a note of having a conversation with at least two or three of their previous clients who had similar product implementation. Enquire about after-sales service, IT support, costing, and ability to deliver on promises.

ERP Implementation Procedures

An effective ERP supplier must have the skill and experience to deal with any pre and post-go-live issues. This means they need to provide you with project management best practices throughout the whole implementation process. Make sure to familiarize yourself with all terms and conditions offered by the vendor. It’s also possible to employ a third-party ERP consultant to assist with the process.

Step 2: Determine Your ERP Goals

ERP GoalsBefore any new system is acquired, it’s crucial to establish the business needs going forward. This is done by drawing up a list of goals that you require the new software to fulfill. Goals need to be realistic and should be possible to achieve during the various implementation processes.

Essentially, you need to ask yourself questions similar to the following:

  • Why does your company need the new technology?
  • Is this ERP software industry-specific and has it effectively been tested?
  • What target or results do you want the software to help you achieve?
  • What are your existing business processes and how do they differ from the new business processes?
  • What are the problems in your current system that you hope implementing a new ERP system will solve?
  • What is the implementation timeline and how will this affect your day-to-day operations? What effect will this have on your customers?
  • How long will training users take and have SMART goals been set regarding this time frame?

Step 3: Design User Interface to your Company’s PreferenceUser Experience

People who have used, purchased, or installed the Enterprise Resource Planning software have a lot of stories to tell about how good or bad the system is. However, not enough consideration is given to the design and user interface aspect of the system.

User interface refers to the way employees can access and use the system. Part of a successful ERP implementation relies on how well an employee understands the new ERP software. There are a few characteristics that define a user-friendly interface that’s specifically suited to your business needs.

Minimal Design

All commands and functionalities should be visible and easily accessible. It’s important to create a screen that’s clutter-free and structured. It’s important to use colors and fonts in a manner that simplifies the process.

User-friendly

An interface should also make it easy for users to navigate their way around the system without having to constantly refer back to training guides. Designing a user-friendly interface will motivate your employees to explore the system on their own and easily find solutions to the queries.

This type of design will also make employees more comfortable and confident in using the system. Once employees feel comfortable with the way the system works and their understanding of it, there will be fewer IT queries to deal with.

Responsiveness

Choosing a cloud-based ERP software platform allows you to access your system from anywhere if that’s what you prefer. Cloud EPR means your employees can log in using their tablets, smartphones, or laptops.

If this is an option you’d like to consider, ensure that your interface is compatible with different screen dimensions. Two of the most popular cloud-based ERP software programs are SAP Business One and SAGE ERP 300. It’s worth looking into if you’re running a small to a medium-sized start-up business.

As mentioned earlier, each business might require its own customized interface, customized to its specific business requirements.

Step 4: Development of ERP System

ERP software development assists organizations to better manage the resources available to them. The key aim of an ERP system is to integrate business processes as well as facilitate the general flow of information within your company.

Not all ERP systems are the same. However, there are a few crucial ERP features that are commonly found in most ERP software systems. Let’s have a look at these.

Integration

Integration is the key factor that sets an ERP system apart from other software types. An ERP software system is made up of a host of business applications built to easily work together. The integration allows these different applications to create a user-friendly platform.

A single ERP database can collect, analyze and store data across various departments which are commonly called business units on the ERP system. Streamlined databases are a more effective way for anyone using the system to access relevant information needed to provide the relevant levels of customer service.

Customer Relationship Management

Customer relationship management, or CRM as it’s referred to in the ERP industry, is software that has two beneficial advantages. Firstly, CRM systems are a perfect option for companies whose consumer base is too large to manage and control with mere spreadsheets.

Secondly, CRMs within an ERP system can centralize customer information which allows for quick access when performing functions on other parts of the system. An instance of this would be being able to access a customer’s address while processing shipping information.

Tracking and Visibility

Some experts regard the ERP solution’s ability to provide comprehensive visibility as the greatest feature. The most prominent example of this is what’s known as supply chain visibility. Many ERP solutions have the technology to track completed products from manufacture to final delivery.

Aside from tracking tangible objects, the inventory system and ERP system can also track required information, such as:

  • Sales
  • Product marketing
  • Staff productivity
  • Production statistics

Reporting

Reporting Dashboard ExampleERP can report required analysis to end-users. Tools to provide these reports are usually made up of the following:

  • Customizable dashboards for each department
  • Pie charts
  • Gantt charts
  • Bar graphs

It’s important to note that access is often restricted to the reporting functions. This is done to protect a company’s confidential information. The last thing you need is for your sales revenue figures to be shared with your competitors.

Data Analysis

Collecting and processing data through all your different business functions is already a primary ERP function. It makes sense then that an effective ERP system adds analysis to the mix. ERP can easily analyze all data pertaining to different business operations, production statistics, client data, sales data, and many other components.

This type of analysis gives you the necessary tools to increase general productivity. It can also provide you with future projections of product lines, sales figures, and estimated product revenues.

Step 5: Parallel Implementation

A key step in your ERP implementation process is what’s commonly called parallel implementation. This is a phasing strategy that many organizations are opting for. It encompasses operating the new ERP system as well as the existing system simultaneously.

Typically, users train and practice on the new system which isn’t live, but active for training purposes. They then continue to work on the old system to ensure there is no disruption of the daily business operations. This is particularly useful in a manufacturing company where order processing won’t be interrupted.

Customer interactions and transactions are not compromised while the staff is learning the ins-and-outs of the new system. End-user training is not too rushed and employees have relevant time to learn all the new ERP activities. ERP project team leaders agree that this is the least risky strategy.

Step 6: Phased Rollout

A phased rollout simply allows your new ERP software system to evolve over some time. This means that implementation is broken down into smaller sections. A phased rollout allows users to easily and gradually adjust to the new ERP system.

There are generally six phases of an ERP implementation plan which are listed below:

  • Discovery and creating a project plan
  • Design
  • Development
  • System testing
  • Deployment
  • Ongoing IT and system customer support

Opting for a passed rollout process is particularly effective in a production environment. This allows for production processes to continue uninterrupted.

Step 7: Training for your Staff

Online Learning for StaffThe success of any new ERP system largely depends on the training and engagement of the staff that is going to use it. These staff members are commonly referred to as the end-users. They’re the employees who’ll use the system to deal directly with the company’s customers.

Changing technology and introducing new software can be very daunting to some employees. This is especially true in cases where particular employees have been using the “old” or “current” system for several years. To get your employees engaged with the new system, it’s important to follow these expert tips:

  • Request training guides from your ERP development partners for each new stage of the process. These guides should be in the form of modular training that each employee needs to complete.
  • Create a sense of urgency among staff from the start. Explain the importance of meeting deadlines with modular training. Encourage them to be interested and enthusiastic about the training. User acceptance is key to implementation success.
  • Motivate your employees by showing them how the system will benefit their particular job functions. For instance, does the new system streamline their admin duties? Does it enable them to assist customers more efficiently?
  • During each phase of the training, make use of training videos and other visual aids. Ensure there is actual interaction with the system in a training environment.
  • Create teams in which you partner stronger employees with colleagues who may be finding it difficult to keep up. Create a buddy system where team members can teach and guide each other.
  • If necessary, make use of a professional with experience in adult learning in the workplace.

To give you some insight into one of many training videos you could use to introduce your employees to your chosen ERP system, watch the clip below;

 

Step 8: Testing the ERP System

The importance of a comprehensive and efficient test run before your ERP system goes live is vital. Whether you’re running a multi-million dollar corporation or a small start-up, ERP experts recommend that testing the full capacity of the system is part of a successful implementation.

The main reasons for ERP implementation failure can easily be chalked down to five factors:

  • ERP software is not tested before going live.
  • The testing is done by employees and not by ERP experts who are part of the ERP project team.
  • Testing is done badly, hurriedly or not in totality due to time constraints or budget restrictions.
  • Staff is not trained properly, or training of key employees is not finalized before the go-live date.
  • The ERP system hasn’t been suitably customized to your particular business needs.

Step 9: Deployment of ERP into Your Company Process

The last step of your company’s ERP system implementation is known as the “go-live” process. This is done when hardware and software have been installed and incorporated. Staff should be fully trained and assessed by this time.

Your project manager and implementation team should have prepared for every possible scenario and have the tools available to deal with each problem. Going live is a very hectic and stressful process so everyone needs to be ready and prepared.

The most effective way to proceed through this phase effectively is to draw up a checklist that includes all departments. Your project manager or your implementation partner may already have a general checklist in place. Ensure that it covers every aspect of your particular scenario.

The most important factors that should be on your checklist include the following:

  • Has all the hardware required for business operations been installed, tested and synchronized?
  • Have all the necessary business reports been tested and printed? Analyze all data in the report and verify accuracy. Ensure there are no glitches.
  • All accounting and financial reports should also be tested and information verified.
  • Ensure that your Email Client has been thoroughly synchronized with your ERP software.
  • Ensure all end users have access to the system required for their particular job title. Make sure each user has an individual password that grants them access to the functions and reports they need to work effectively.
  • Confirm that data migration has been done and is 100% accurate. Compare it to data from the old system or reports that were printed off of the outgoing system.
  • Ensure that backup measures are in place. Each team member should know the channel of command to follow in the event of any hardware or software malfunction.

Generally, the implementation life cycle of an ERP system from project planning to go-live ranges from 6 to 12 months. To better understand the process changes that take place in the life cycle of an ERP system, you might find the below clip useful.

 

Step 10: Support & Updates

To avoid ERP implementation problems, every project manager needs to ensure that adequate IT support is in place and available on-premises. The success of your post-go-live environment will depend on having the right technical supports on hand to deal with each issue as it arises.

Expert tips for maintaining a secure and updated ERP system include the following:

  • Keep your ERP software updated: This keeps the system free of viruses and prevents breaches that can compromise software security.
  • Keep users regularly updated: Inform active users of security and system changes. Constantly update passwords and ensure only authorized personnel has access to the system.
  • Arrange for regular backup and data storage: Regular maintenance of the system’s backup points will ensure the system is protected from security risks.
  • Separate duties: Split daily duties and functions so that employees can anticipate potential threats to the system.
  • Review the security options offered by the ERP system: If you don’t have your own security protocols in place consider the options offered by the ERP software. Ensure that these protocols protect your data and functionalities from hackers. Putting the correct security measures in place and keeping them updated will go a long way towards protecting your customer’s data and keeping it secure. This applies to your confidential company information such as financial ledgers, designs, and marketing strategies as well.

The Bottom Line

When it comes to ERP software, a positive and well-planned implementation approach is crucial to the success of the whole ERP project. Take the time to follow through with each expert tip we’ve offered and ensure constant liaison with your software provider.

ERP implementation is by far the biggest IT project most companies will ever experience. This will ensure your ERP use goes down smoothly and benefits you in the long run!

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