How to Implement Enterprise Resource Planning (ERP) Software

ERP implementation is a complex process. Learn how to perform it in this article!

Do you consider an implementation of enterprise resource planning in your business? In that case, this guide is for you. Firstly, we’ll look at the essence of ERP implementation in the modern world. You’ll learn about the core business requirements of this process. Secondly, our goal is to review the common errors of ERP implementation, such as the underestimation of project complexity. Using this information, you’ll be able to promote ERP software implementation in your firm without encountering major long-term barriers.

What Is ERP Implementation?

ERP implementation is the process of installing an ERP within your business. It involves multiple steps such as configuring the relevant software, moving paper-based data to a digital system, and testing the reliability of the new framework. This process is complex; for this reason, the most reasonable decision is to cooperate with an ERP partner company, which will manage the majority of the transition for you.

Phases of an ERP Implementation Plan

Let’s go through the core ERP implementation phases you need to consider. As you’ll see, those actions aren’t as complex as it may seem:

1. Plan ERP implementation

The first step in the ERP implementation process is undoubtedly planning. In this respect, you have to do two separate activities. Your primary goal is to clearly understand why you need an ERP solution for your business. Not all firms require an investment in this technology. Why is this the case? For example, some companies already have a combination of inventory management and financial tools. In those cases, an additional solution can only complicate the further management of a business. Our recommendation is to engage in the ERP implementation process only in situations when you will gain major benefits from improved information flows. For instance, this is the case in situations when your business doesn’t have any significant IT systems for business analysis or uses some weak solutions. 

More importantly, it’s vital to review what options you have on the market in terms of ERP solutions. One should also plan what solution they’ll use within their firm. Without such planning, there’s a risk of encountering long-term problems with the mismatch between available functions and the ones that your firm needs in the first place.

2. Outline implementation design

Another vital goal is to clearly outline where exactly an ERP will be used and what component of an ERP you need. ERP software solutions are diverse. Thus, your implementation project can take different forms. You should actively consider whether you require financial modules or, for example, something related to inventory management. ERP implementation process can involve numerous options depending on the core strengths and weaknesses of your company. Consequently, it’s essential to engage in a full-scale planning process while working with those solutions. Choose what elements you need to cut costs of an ERP.

3. Migrate to a new solution and develop integration features for it

Once you’ve established the core features of ERP implementation, it’s time to consider migration to a new solution and the ways to develop integration features for it. The first aspect you should consider in this regard is the transformation of your business processes toward the new systems. In short, you should train workers and prepare them to use new systems with maximum efficiency. 

The second aspect of implementing enterprise resource planning is undoubtedly a focus on developing some vital integration features for your software. What’s necessary in this respect? Above all, we recommend investing in solutions that allow you to connect the already existing information collection systems to your ERP. For instance, your implementation plan can involve the creation of solutions aimed at integrating inventory management into the new analytical frameworks. Even the most robust proprietary solutions are unlikely to fit your firm in their entirety. For this reason, we recommend looking at the solutions that enable custom development of additional features to facilitate ERP implementation success.

4. Test your solution

It’s not enough to implement a new solution and then develop additional features for it. You should also actively think about the stability of the involved system. How exactly can it be made stable? In our opinion, testing becomes one of the core stages of ERP implementation at this point. You should hire a team of testing specialists and also do a beta test of your project to see how it functions in real-life conditions. This approach will enable you to clearly understand the weaknesses and strengths of your framework. Using this information, you should be able to implement a strong system for your business after removing the majority of the errors that can potentially plague it. ERP implementation is, more or less, impossible without an active investment in advanced testing processes.

5. Maintain your solution

The final step in ERP implementation is the maintenance of your solution. Business units are in a constant process of transformation. This information means that older solutions can eventually become outdated due to not fitting into the demands of new markets. In this light, ERP development ceases to be a process that is singular in time. Instead, ERP implementation process is a continuous approach that requires constant investments of human resources. They’re likely to be much lower than in the case of the initial implementation, but you’ll still need a full-scale project team to work with such systems. The goal is to upgrade them all the time to fit the rising requirements of the market. Without this change, your systems will quickly become outdated and start failing. Hence, there should be a focus on the gradual evolution of your framework towards the new conditions on the market.

ERP Implementation Best Practices

In our opinion, a set of major ERP best practices exist. To ensure the maximal success of your systems, you should consider all those practices during the implementation phases.

Involve the key stakeholders

Successful ERP implementation requires numerous stakeholders. For example, you may need employees, managers, and even suppliers for proper project management. All those individuals play a crucial role in the functioning of those systems. How exactly? They’re the main source of information for those frameworks. No ERP implementation project can function well without major human intervention. For instance, it’s impossible to find out whether some elements of the inventory are in a good state without workers checking in on them. In short, you should actively consider an investment in workforce engagement if you want maximal success with your implementation effort. You may run into a situation where the data you gather from such a system turns out to be false if you don’t get the support of the employee.

Understand project complexity

A big problem encountered by many companies in an ERP implementation plan is the failure to understand project complexity. It’s not uncommon to think that you only have to pay a subscription for a project and then add a small implementation budget. In reality, ERPs control all business processes, meaning that their implementation is among the most complex workflows for any business. ERP implementation best practices require a focus on a clear understanding of the core elements of your project. 

What does this underestimation result in concerning the majority of cases? Above all, it results in the underestimation of budgets. It’s not uncommon for various companies on the market to simply dedicate sums that are too small to the implementation of an ERP. This situation is highly negative because it leads to a lack of employees for business functions promotion. At some point, your team will run out of resources and later fail to fully implement all core features of a modern ERP system. This challenge during the implementation of an ERP system can end in massive resource losses and the full inefficiency of an ERP solution for your business.

Create a clear implementation plan

Among the best practices for a successful ERP implementation is the creation of a full-scale implementation methodology. Many firms want to install ERPs but don’t think about the why and how of the process. Thus, they either implement too many modules, some of which are unnecessary or, instead, implement too few modules, making their systems completely useless for the average expert. How can one avoid this issue and guarantee the success of the project? 

Above all, you should clearly understand what your organization needs. For instance, some companies require financial management and supply chain management. Hence, the most rational approach for them is to implement ERPs that already have this type of feature in them. There are numerous solutions on the market, which, in many ways, enable you to promote diverse activities in your firms. The goal is to choose an ERP system that fits your market the best to ensure successful migration.

Create a dedicated transition team

If you want to ensure a successful implementation of an ERP, having a dedicated transition team is one more best practice. ERP systems are typically highly complex and, thus, require advanced expertise to function. This means that it’s vital to have a set of specialists with in-depth knowledge about this technology before implementing it in its entirety. This team will ultimately play two large roles in the implementation life cycle. Firstly, its goal is to assist with knowledge collection and plan your ERP implementation. Such a team can provide your firm with the expertise necessary for inserting the relevant technology into every business process and decision-making process. Secondly, the ERP implementation team is a vital component for motivating the implementation process. What do we mean by that? A team of this kind becomes central to promoting an ERP transition, despite the difficulties encountered by your team. This approach, ultimately, is essential for overcoming moments of lacking motivation in every type of ERP system.

Provide adequate training

A dedicated team can guarantee not only good performance of the ERP system but also long-term training. As we’ve mentioned before, stakeholder buy-in is crucial if you want to guarantee maximal positive effects from ERP implementation. To achieve this buy-in, your best bet is to train the workforce, as it’ll serve as the main source of information for your system. Consequently, our recommendation here is to not only create an implementation team but also to think about the methods of training your workforce through an ERP project team.

Provide high-quality support and maintenance

A major negative aspect that can befall any firm is failing to provide ongoing maintenance for their ERP project. We’ve already mentioned that ERPs, in many ways, require flexibility. Business requirements change, demanding major transformation in your approach to managing projects, too. As a result, we recommend focusing not only on the migration process but also on creating an adequate set of processes for transferring your project from implementation to long-term maintenance as a part of the ERP implementation. For this goal, the best choice is to create a team that will know every technical aspect of your project and enable you to gradually upgrade its features. This will help make the ERP software system implementation a continuous process that depends on the constant transformation of your firm.

Key Ways to Measure the Success of ERP Implementation

Let’s discuss the key ways of measuring the successes of ERP implementation. In our opinion, there are multiple ways to achieve this goal. Here are the core criteria that indicate improvements for all your employees and other vital stakeholders.

Resource savings

The first important criterion to measure the success of ERP implementation requires the improvement in resource use. In this regard, you should remember that the main goal of a typical ERP implementation plan is to help your company save money on resource usage. This information means you can measure if an ERP system is successful simply by looking at the long-term effects of its implementation. If there’s a major improvement in the expenditure of resources, then your system is highly successful, and you succeeded in choosing the right ERP system. In our opinion, this criterion is likely the main one: no other central reasons to implement ERPs apart from improving processes and removing issues that lead to unnecessary expenditure of resources exist.

Upgraded processes

The second core criterion for assessing the success of ERP solutions is undoubtedly an upgrade to the existing processes. How can one measure it? Firstly, by looking at the number of resources you spend per minute on a process. Secondly, through a focus on the employee testimonials. If there’s an improvement in processes, your workers are highly likely to notice those improvements and highlight them as a major source of decreased stress during work. Improved processes generally free up a large number of resources for your firm, allowing you to integrate more additional processes that are essential for transforming your business. 

Improved data accuracy

Data accuracy is one more aspect that can be improved by the implementation of ERP systems. In this respect, you can measure the success of your system by looking at the differences between audits and worker reports. If testing proves that those differences became minimal for your firm, this means ERP implementation is a success. Ultimately, ERP systems streamline the collection of tremendous amounts of information. Thus, their core benefit should undoubtedly come in the form of long-term improvements to the production processes at your firm.

Major user adoption

One of the best ways to assess the success of your systems is to look at the user adoption rates for them. If your ERP framework is inefficient, no amount of promotion will help implement such a system. There will simply be too much resistance to the activities of your implementation team in this case. In this light, the simple readiness of the employees to adopt your solution is already a sign that it’s highly efficient and popular among them. Our experience shows that all people dislike inefficient systems and, hence, do everything to avoid them as much as possible.

Improved ROI

In the end, the presented improvements in processes can reduce resource expenditure and, more importantly, boost your ability to earn profits on particular projects. The outcome of implementing an improved system for enterprise resource planning is a boost to return on investment. We recommend reviewing this aspect together with other elements of ERP implementation. Why? Sometimes, a temptation exists to attribute certain improvements to innovations. In reality, they may come from other sources. Thus, you can be sure that ROI is improved because of a new system only after you’ve analyzed multiple sources of information that are in closer proximity to the core effects of these systems.

Final Notes

To summarize, the presented information indicates that ERPs are a worthy investment for many firms. They can help you save money on resources and, more importantly, even improve processes to the extent that they will boost your ROI. Ultimately, the implementation process isn’t difficult: you just need to understand that it requires sufficient resources. What’s the best way to find out if your resource expenditures are sufficient? In our opinion, you should address companies that know how ERP implementation works. Keenethics is among such companies. You can contact us for help in this regard: our team can analyze your case and deliver a clear judgment on the implementation cost. We can become your next proactive ERP implementation partner.

FAQ

How long does it take to implement an ERP system?

In our opinion, everything depends on the scope of an ERP system. Larger systems may require up to a year for implementation due to company scope. Smaller ones can take between two and six months.

What does an ERP Implementation Consultant charge?

Everything depends on the scope of your assessment scenario. Smaller scenarios will require smaller sums, and larger ones will demand more investments on your part. The best way to find out the ERP implementation consultant costs is to directly address them. For instance, you can contact our team to find out information of this nature.

How much harder is it to implement on-premise ERP than cloud ERP?

In general, you need much more technical expertise in server implementation and ERP configuration to work with such systems during manufacturing software development. Cloud approaches are notable for many sane defaults and good configuration. In turn, on-premise ERPs are noteworthy for offering maximal freedom during the implementation process, which, in many cases, results in greater difficulties for the relevant developers.