The Definitive Guide to ERP Implementation
“Enterprise resource planning (ERP) solutions contain the ability to revolutionize companies by boosting customer engagement and streamlining manufacturing.”
Yet some business struggles to understand how an ERP system works, as well as how to implement it successfully. There is a total of 75% of ERP projects that fails ultimately.
Because of the cost and time involved in ERP implementation, it is more important for your company to research and understand the process thoroughly before taking any step forward. Given that, we already collected an in-depth guide that you can consider to practice success and avoid failures. Here, we will also discuss the risks, expert tips, costs, challenges, and methodologies involved.
Defining ERP Implementation
ERP implementation refers to the process wherein current business practices, streamlining operating procedures, cleansing, and migrating data, installing and testing software, strategic planning, maintaining support and going live, managing change, and training users are examined. These don’t happen simultaneously but through a continuous cycle or process.
7 Steps to Implement ERP Successfully
Here are the seven steps to successfully implement ERP:
The initial step is to define the vision, scope, and need of an ERP solution. Here, you are required to form a team for the implementation that will effectively communicate, as well as has the commitment and knowledge to guide the project throughout. Below are the must be considered roles:
· Executive Sponsor
· Project Manager
· Application Analyst
· Application Developer
· Quality Assurance Test Engineer
Also, the team needs to examine and document current processes or businesses, as well as map out how the flow goes from one to another department. It is important to spot common errors or problems, unnecessary or duplicated efforts, and missed customer opportunities.
The installation of an ERP software serves as an opportunity for evaluating current operations and re-engineering business processes that lead to a standard operating procedure. You need to figure out the automating processes or just the manual and later on design a blueprint to see the flow of new business practice.
The responsible individual here is the application developer who must install and build software infrastructure, including data collection, networking facilities, and display devices.
Next, we have migration, which refers to transferring all records and information into a new system. Many businesses and organizations store their physical asset, supplier, and customer records in databases and multiple formats containing unnecessary information and errors. Hence, this data needs to be reviewed and edited to guarantee uniformity and accuracy before migration. Any late information also needs to be eliminated.
When the data is already verified and updated, the application analyst must migrate the data into a new system. Involved here are mapping database fields between new and old systems, data transferring, and setting up new devices.
The quality assurance test engineer is responsible for the processes involved in this step wherein testing of the systems is dominant. All functionality, reports, and interfaces must work with transaction data and real-life scenarios. Also, the users need to validate that the business processes are correctly flowing between the departments.
The systems must be tested thoroughly before proceeding to the go-live date. As discussed below, user training is another opportunity to view if errors are still within the system.
Training users require important effort and time, considering that employees are also expecting their responsibilities to be carried out normally throughout the process. The time depends on both the complexity and size of the ERP solution, as well as on the employees’ mentality about changing their work ways.
Depending on the available resources and size of an ERP project, companies can choose among three methods when deploying the software and going live.
All of the users’ transition from a system of legacy to a new one is made in a day. This is regarded as the cheapest and fastest method; however, there can be major operational problems brought about by technical difficulties.
The users must simultaneously run both systems. This is because there is a fall back system, and this is a less risky method. However, the users must spend time duplicating their work as two systems can be too expensive.
By business, function, or unit is the users’ transition. The team responsible for implementation must improve each group’s transition, but it can be a long process, and integration of ERP modules can be difficult individually.
Your company needs to be available and flexible to any unexpected challenge on go-live dates. You need to have on hand temporary IT staff and employees who are willing to work overtime. You also need to develop strategies in communication to be used in times of system downtime.
When the software of ERP has been deployed, auditing and testing the system again for speed, reliability, and accuracy must be done. You need to prioritize the balance sheet, accounts receivable ledgers, and inventory. Also, IT must support users as they document, modify, and verify business processes.
Lots of companies believe that the implementation of ERP mostly ends up with a go-live date. However, there is required software maintenance and support to the users. Budgeting human resources and time when identifying the issues, as well as fix errors, can bring improvements in the whole ERP solution cycle.
In addition to that, right after going live, you must evaluate the ERP project’s success. Here, you must consider the metrics of key performance tied back to the projects’ objectives and goals.
· Return on investment
· Increase in supply chain productivity, manufacturing, and customer engagement
· Costs compared to the budget
· Decreased human errors
How long will it take to implement ERP?
ERP implementation can take time, ranging from a few months to years before the deployment of software. The duration depends on the size of the company, its quality and amount of data, project resources, number of users, and level of customization. Just be prepared for potential setbacks and delays. Make continuous efforts, and the fruit of all your hard works will be seen in the end.