The deployment of an Enterprise Resource Planning (ERP) system is a significant venture that can influence diverse aspects of the business. As with any extensive initiative, the cornerstone of a successful ERP implementation plan lies in a carefully crafted approach. Dividing your ERP implementation plan into precise stages, each with defined objectives, can amplify the likelihood of success.
Conversely, plunging into an ERP deployment without delineating a clear project trajectory, scope, and framework upfront, can substantially heighten the risk of substantial complications down the line.
What Does ERP Implementation Entail?
An Enterprise Resource Planning (ERP) system consolidates numerous business functions, including financial management, human resources, sales, and manufacturing. This integration fosters a host of benefits such as amplified productivity and improved operational efficiency. ERP implementation characterises the comprehensive procedure of strategising, setting up, and rolling out an ERP system—a complex process that generally spans several months, given the extensive functionalities an ERP system automates and supports.
For an implementation to triumph, it is essential for the organisation to meticulously articulate its specific needs, devise a strategy for process re-engineering to leverage the ERP system optimally, configure the system to accommodate these newly designed processes, and conduct exhaustive testing prior to its official deployment for end-users. Ensuring the smooth and timely execution of each of these steps necessitates thoughtful planning and a systematised, stage-wise implementation methodology.
What Constitutes the Stages of an ERP Implementation Plan?
An average ERP implementation strategy is typically segmented into six stages, each harbouring specific objectives. Given the unique characteristics of every business, these phases may slightly differ depending on the organisation, and might even overlap at times.
Discovery and Planning
The journey of all ERP projects begins with a discovery and planning phase that encompasses the research and selection of a system, the assembly of a dedicated project team, and the definition of intricate system prerequisites.
The project team assumes a wide array of responsibilities related to the implementation, such as charting out the project blueprint and deadlines, assuring the provision of adequate resources, making pivotal product and design choices, and handling everyday project management.
The usual constituents of the ERP project team include an executive sponsor, a project manager, and delegates from departments that will utilise the system. Involving top-tier management is crucial to ensure the project garners necessary resources and endorses change throughout the organisation. The team might also enlist the assistance of an external consultant or an ERP implementation partner to offer specialised insights into system design and configuration. It should also integrate internal specialists involved in the implementation process, like an IT representative and a report writer responsible for generating customised reports for users across the organisation.
One of the initial objectives of the team should be to develop a comprehensive understanding of existing issues, including process inefficiencies and ERP system requirements. If the organisation has previously formulated an ERP business case, broad business issues and implementation goals may already be defined. These can guide more detailed analysis, like documentation of current workflows, and help concentrate the system development efforts.
The team may also choose and procure an ERP system during this phase, once the organisation crystallises its requirements. A significant decision here is whether to opt for an on-premises or a cloud-based ERP system. While an on-premises system requires the acquisition and installation of hardware and software in the organisation’s data centre, a cloud-based ERP system is usually offered as a subscription service accessed via the internet, providing a faster implementation process and demanding fewer in-house IT skills.
Design
Operating from detailed requirements and a clear understanding of existing workflows, the design phase sets out to generate a comprehensive design for the new ERP system. This includes designing efficient workflows and business processes that optimally leverage the system. User involvement in this phase is crucial, given their intimate familiarity with the current business processes. Engaging them in the design not only ensures system compatibility but also fosters user acceptance of the new system and encourages optimal usage.
A gap analysis can pinpoint process intricacies and unique idiosyncrasies that may necessitate ERP software customisation or alterations to workflows or processes to align better with the ERP system. The team can then communicate these gaps to their implementation partner or supplier and request potential solutions.
Development
With crystal clear design requirements in hand, the development phase can commence. This stage involves configuring the software to support redesigned processes and, where necessary, customising it. It may also include developing integration points with any of the organisation’s pre-existing business applications that the ERP system will not supplant. If the organisation opts for an on-premises ERP system, it will need to install the required hardware and software.
In tandem with software development, the team should prepare training materials to aid users in acclimating to the new system. They should also start planning data migration, a complex process involving data extraction, transformation, and loading from multiple systems, each potentially using different formats and harboring duplicate or inconsistent information. The project team should decide which data to migrate during this phase, avoiding a sweeping migration of all historical data, a lot of which might be irrelevant.
Testing
Testing often runs concurrently with the development phase. The project team might test specific modules and features, implement fixes or adjustments based on the results, and then retest. Alternatively, they could test one ERP module while another is under development. Initial testing of the software’s basic functions should be succeeded by rigorous testing of the system’s full capabilities, allowing a few employees to test the system for their everyday activities. This phase should also cover migrated data testing and include preliminary end-user training.
Most vendors provide pre- and post-deployment tools for user training. However, beyond vendor support, the organisation should maximise the training materials created during the development phase, as resources tailored to end-users’ day-to-day responsibilities can offer significant value.
Deployment
This stage marks the momentous day when the system officially goes live. Preparedness for potential issues is vital as multiple moving parts and potentially perplexed employees may complicate the process, despite best preparatory efforts. The project team should be readily accessible to address queries, assist users in understanding the system, and troubleshoot any issues that arise. If necessary, the implementation partner should be ready to help with problem-solving. It may take some time for users to adapt to the system and realise the expected productivity enhancements.
Certain data can be migrated before deployment, while other information, such as current transactions, should be migrated right before going live.
While some organisations aim for concurrent deployment of all ERP system modules, others prioritise specific high-priority modules or processes and add others later in stages. To minimise risk, some organisations may choose to run older systems in parallel with the new ERP implementation for a while, although this can inflate the overall project cost and impair user productivity.
Support and Updates
Nurturing your ERP implementation post-deployment aids in keeping users content and ensures the business reaps the desired benefits. During this phase, the project team might still manage the ERP system, but its focus will pivot towards receiving user feedback and making system adjustments accordingly. Additional development and configuration may be required as new features are added to the system. New staff members will also need system training.
If your ERP system is on-premises, periodic software updates and potentially hardware upgrades will be necessary. If you’re using a cloud-based ERP system, your vendor might automatically update the software.
Best Practices for ERP Implementation
A phased implementation strategy alone does not guarantee success; it is equally vital to adhere to ERP implementation best practices within each phase. The following are some overarching best practices:
- Prioritise Planning: The temptation to dive into design and development might be high, but it is imperative not to underestimate or rush the initial planning and discovery phase. This phase is responsible for laying a solid foundation for the entire implementation project, ensuring high-level backing, clarity in the plan, and allocation of adequate budget and personnel.
- Value Support and Training: Some project team members might view the deployment date as the end goal of the implementation process, thereby overlooking the importance of post-deployment activities. However, for the system’s users, the deployment date marks the beginning; it’s the subsequent actions that determine the project’s ongoing success. Therefore, planning and allocating sufficient resources to technical support, issue resolution, and updates are crucial. End-user training also plays a pivotal role; employees must be comfortable using the system and familiar with any new workflows, especially if external consultants will no longer be available for assistance. Paying careful attention to these areas will help your organisation reap the full benefits of the system.
- Mindfully Plan Data Migration: Organisations sometimes fall into the trap of migrating all historical data to the new system, which can be a mistake. Some data from older systems may be obsolete or irrelevant. Is a decade-old order information still valuable? Do all the suppliers in your list still exist? The transition to an ERP system presents an opportunity to cleanse and streamline the organisation’s data, making it worth the effort to design a clear plan for doing so. Thoroughly scrutinising legacy data to weed out outdated customer accounts and identify data inaccuracies is a wise move.
- Encourage Open Communication: Communication is a cornerstone throughout all phases of the implementation. The team should consistently communicate with the entire organisation, articulating the reasons for the ERP implementation, the goals, expected benefits, and what to anticipate at each phase. Two-way communication is essential: the project team should proactively listen to user concerns pre- and post-deployment.
Frequently Asked Questions on ERP Implementation Phases
What is the most challenging phase in an ERP implementation?
The level of difficulty can vary depending on numerous factors, including the complexity of the chosen system. However, the planning and discovery phase often poses significant challenges. Securing organisational commitment in terms of time, funding, and consensus on a clear project timeline can be difficult. Proceeding to subsequent stages of the ERP implementation without a comprehensive plan tends to invite complications.
How can ERP implementation delays be avoided?
Invest sufficient time and effort in the initial phase to formulate a robust estimate of the timeline and necessary resources. Constructing an implementation timeline can be daunting due to the multitude of variables involved. Many projects lag because the initial timeline was unrealistic. It may be helpful to reevaluate the timeline at critical junctures during the implementation to ascertain whether adjustments are needed.
Do the implementation phases differ for cloud ERP versus on-premises ERP?
While the overarching phases remain consistent for both types of ERP systems, certain activities within each phase may differ. The most conspicuous difference arises in Phase 1, which typically involves delivery and installation of hardware. This phase, along with subsequent phases that require configuration and system updates, demand specific technical skills. Additionally, the overall implementation timeline may extend if the organisation opts for an on-premises system rather than a cloud-based ERP.
How critical is executive sponsorship in the early phases of ERP Implementation?
Executive sponsorship’s role in an ERP project is pivotal. The ERP project often competes with numerous other operational priorities for resources. A dedicated executive sponsor, such as the CEO or CFO, can ensure the project receives the necessary support from the entire organisation. Without this high-level backing, those directly involved in the implementation—like the project manager and department heads—may confront considerable obstacles.
