It would not be wrong to say that ERP implementation is the need of the hour. Today, every other major firm is deploying ERP for the better functioning of their affairs. This software reduces the amount of effort that you may have to put in otherwise if you were using another system that is probably outdated. This is why ERP implementation becomes intrinsic due to the several advantages that it holds. However, if you do not have apt knowledge about how to go about the process, you will end up nowhere. But don’t worry as we have your back!
In this blog, we will tell you about the major ERP implementation phases that your business must go through.
What is ERP?
ERP or enterprise resource planning refers to the process of planning, customizing and deploying your ERP system throughout your entire business. ERP implementation is the process of implementing ERP. It helps you manage the daily chores of your business efficiently and gives it the direction that it needs. This software not only manages all your data but also gives you fruitful insights into it.
It gives you an upper hand when it comes to the assessment of all your information by a team that is practically trained for this purpose. When you implement ERP at your firm, you save time, resources and all the extra effort that you would be using otherwise.
The ERP implementation phases include various things, mostly consisting of:
- ERP software installation
- Settings and options configuration
- Transfer of data from the old system
- Assigning employees with defined roles
- ERP software training for end users
The time that the ERP implementation phases will take varies from two months to two years, depending on the approach that you choose as well as the complexity of your business. If yours is a large business with more complex daily activities, you should be prepared to invest a lot of time in this.
B. Scope and Importance of ERP Implementation for Businesses
The process of ERP implementation phases is important because it provides you with a single-system solution that integrates processes across the business. We have enlisted the following points to underline the importance of ERP implementation phases:
a. Collaboration: A lot of times the problem of duplication arises because of different departments using the same information. However, when they collaborate this issue takes a backseat. Implementation of ERP provides you with a centralised form of information and leads to an increase in productivity, collaboration and efficiency of your firm.
b. Better performance: By putting all things in one place and ensuring that there is no repetition in work, ERP promises to improve the overall performance of your employees. It transforms the work from being robotic to something that requires less effort and better results.
c. Enhanced tracking capacity: ERP implementation helps you manage resources, transport final goods and ensure customer satisfaction. It provides an overview of the business and helps one identify and find solutions to the problems that occur.
d. Detailed analysis: It further improves the functionality of your business by keeping an account of all that goes on and what each user does. It helps you create reports and get a better understanding of your functions.
e. Return on Investment: While ERP implementation might come out as a costly affair in the beginning but it is a one-time investment. Once it started working you will realise that it is value for money by reducing training, saving time and providing better visibility.
C. ERP Implementation Phases
ERP implementation phases are very critical for the success of your ERP system. If you do not follow any of these phases in the manner prescribed below, your implementation process can turn out to be a disaster. Therefore, you should carefully follow each of the 10 ERP implementation phases listed below.
This step gives your process involving ERP implementation phases a strong foundation and so, you should carry it out well. It involves extensive research for collecting information on the current systems and processes of your business. This will help the software understand the basic problems that might occur. You can create a discovery team for this purpose. This team will comprise senior stakeholders, project managers, technical leads, external consultants and representatives of departments.
Once the discovery team has gathered all required information, you may begin with analysis, the second of the ten ERP implementation phases. This will help you determine the business case for ERP implementation, which will outline project goals and how these will be achieved. Through this, your business will be able to evaluate the benefits, risks and costs involved.
The third of the ten ERP implementation phases requires you to keep a check on the following three domains:
a. Resources: You should choose a team that will help you with ERP implementation and further take care of it by ensuring that it is viable for your firm. You can involve a diverse group of people in this part.
b. Change management plan: Here you will be laying down a road map to transform your current scheme of management to a better form. You should also include a set of guidelines to follow in the future.
c. Budget Forecasting: Keep a check on how you want to spend your money throughout the implementation so that you do not incur losses in the end.
In this phase, you should document how the ERP will enable new workflows and processes from the perspective of an end user. Make sure you take feedback from your actual end users to avoid any hiccups in the future due to a mismatch.
The developers will arrange the chosen ERP software so that it matches your requirements, process flows and wireframes. This will include a high level of customization to meet the exact requirements of your business. You can also jot down all the knowledge of how you are developing the system.
VI. Data Migration
Data migration is the act of transferring your present business data to the new system. It is a crucial element of the ERP implementation phases. Your data may include things such as accounts history and employee or product data among others. You can migrate your data using the given steps:
a. Converting and collecting data from previous software: Each system is different from the other and before starting with the data transfer or migration you should collect it. You should try and remove outdated information, which is no longer in use so that the new system utilizes the actual state of your business in the best manner.
b. Review and approve: Human beings can make errors and therefore, it becomes essential to confirm that the migrated data is accurate. This is much better than facing serious issues later. You can spend some time in this domain before taking any major steps.
Testing is another important part of the ERP implementation phases. You can conduct three kinds of tests, depending on what seems better to you.
a. Technical Test: In this test, you will be able to ensure that the code provided by the vendor is not faulty. If your code is faulty, your software will fail. You can either make your internal IT department conduct this test or pay a third party to do so.
b. Functional Test: In this test, you have to ensure that all promises made by you to yourself are met. You can use the checklist that you created during the planning phase to do so and arrange a point-wise demonstration as well.
c. User Acceptance Test: Your project team will conduct this test. You should involve people having in-depth knowledge for this purpose. Confirm auto backups, be prepared for configuration changes and keep buffer time for adjustments.
In this phase, your employees will get to learn how they can use the new software that you have employed. For this purpose, you should train them well so that they become familiar with the technicalities of the ERP system. This will ensure better efficiency and improvement for your business.
You can carry out the deployment of ERP implementation phases in several ways:
- All at once: You can deploy all the functions and completely transform the working of your company right away.
- Phased: This will be a phased deployment and the system will be broken into smaller modules or units and launched singly.
- Parallel: Here both, the parent system and the ERP system will work simultaneously, till the new software starts working well.
X. Support & Updates
After the implementation is done, you need to ensure proper maintenance of your system for its best performance. You will also be able to evaluate your success post-implementation through this. Talk to the developer and find out if they provide regular updates and maintenance facilities or not. You must keep investing in this domain for a smooth ERP as well.
D. Main Costs of ERP Implementation Phases
Your expenses for the ERP implementation phases can be divided into three parts. Firstly, the major costs that you will have to bear are related to the ERP software that you choose because this will not only include the cost of the software, but also its licences and cloud or on-premise infrastructure and networking.
Secondly, you must create an account for the personnel, for whatever duration the project runs. These costs are covered for the following people majorly:
- Software development and integration team
- Consultants and system architects
- Testing & QA professionals
- Training professionals and platforms
- Project managers
Lastly, you will also have to spend on the maintenance and support of the new system. This will include ongoing software licensing fees, support staff for hardware maintenance and software developers to handle bugs. You must draw a budget comprising expenses before beginning the implementation process and forecast the fiscal benefits of the same.
E. Best Method
There are two main methods involved in ERP implementation phases, big bang ERP and the phased approach.
a. Big bang ERP: In this method, your entire system goes live at once. All modules across all departments start functioning in one go. It shortens the timeline of implementation however, it can disrupt the daily business operations and stress out your employees.
b. Phased approach: In this method, the ERP system is rolled out one by one. This implementation methodology is also called “land and expand” and it takes longer due to gradual implementation. It can however help reduce risk and anxiety on employees.
F. ERP Implementation Phases: Best Practices
Here is a list of some key practices that you can employ during the ERP implementation phases:
- Plan accordingly: Understandably, a lot of firms do not want to take planning seriously but this is something that one should avoid. A good plan lays a strong base for the entire process and so, you need to plan well because the entire functioning depends on your planning.
- Work on training: Train your employees well as they are the ones who will ensure the success of your software. An untrained team can put the entire implementation to vain and so, ensure that end users know the system like the palm of their hand.
- Data migration: Your data is intrinsic to your business and so be very particular about data migration. A loss of any credible information can be hazardous for your firm so be certain about what you do and how you do it.
- Communicate: When you keep communicating, you not only develop good interpersonal relations but also enable a good environment. This has a positive impact on ERP implementation.
G. How Long do ERP Implementation Phases Take?
Firstly, you should be patient with the process as it will not happen in a single day. Generally, the ERP implementation phases will take around 4 to 8 months however, the actual period depends on the complexity of your project and the size of your business.
A smaller business with a simpler form of project will take less time than the opposite. Just remember that the process will take time for the best result and therefore, you should avoid any form of haste.
H. How to Select ERP Packages?
Selecting the best ERP package, according to the needs of your business is crucial for the success of your implementation. You cannot just choose any package and expect it to work for you, in the way you want it to. Before selecting a system, you must keep a few points in mind to avoid any mistakes.
a. Accounting and fiscal management: Certain ERP software comes with in-built automation and other capabilities, which can help you manage the two quite well. Everything from accounts to cash flows to foreign currency transactions, if any, are taken care of by the software. You can also access on-time details whenever required.
b. Flexibility to manage operations: The bigger your business gets, the more complex the functions become and this is where ERP helps. You can manage all the functions on the go and relax while this software does everything for you!
c. Business forecasting: ERP also helps you predict how your business will do by visualising the scenarios and analysing all the details that it has. It will tell you about the possible benefits or losses that you may incur, all on its own.
d. Inventory management: If you manage your stocks well, you will get better results. When you will automate this process, the ERP system will manage everything for you. . It will also forecast stock movements and give you information about stock trends, among other things.
e. Insightful reports: If you want your business to grow, it is obvious that you will need information related to it. ERP gives you complete information about your business that can help you make the right decision. You may activate the automated report generation feature for this purpose.
f. Data access on-the-go: You can access all the data related to your business even when you are not inside your office. Technology helps you do this and you should utilise it to your best advantage. ERP makes this very convenient and helps you out so that you do not miss any data ever!
You should consider these factors before choosing an ERP software for your business as these will ensure positive results for you as well as your firm.
In this blog, we have discussed about the 10 best ERP implementation phases, which you can employ to ensure good outcomes for the business. You should refer to the phases mentioned above and make sure that there is no shirking during the entire process. A proper plan, a good sponsor and wise decisions will help you achieve what you desire in a matter of months!
Frequently Asked Questions
What is ERP implementation life cycle?
An ERP implementation life cycle refers to the time it takes to deploy ERP software for your business. It involves several phases and processes like discovery and planning, design, development, support, deployment and training. The time that ERP implementation phases will take depends on how complex your business functions are however, it generally takes around 6-12 months.
How long does an ERP implementation take?
This totally depends on the complexity and size of your business. If you own a large business, requiring highly integrated processes then the time will be longer. ERP implementation phases usually take about a few months to even a few years but the majority of the projects do this within 6-12 months of deployment.
When should a company implement an ERP system?
If you are facing serious challenges with the software system that you are currently using, then it is time for you to start with the ERP implementation phases. In most cases, businesses experience the need due to disconnected systems, which create problems having a negative impact on your business.
What is the first phase of ERP implementation?
The first of the ERP implementation phases is discovery and planning. In this phase you will constitute a project team that will construct a project plan for you. This team will analyse the major problems connected with your business and its requirements, which will be a roadmap for the rest of the process.
Which is the most difficult phase in an ERP implementation?
This depends on the kind of ERP system you have selected for implementation but generally, the discovery and planning phase is very difficult. This is an important phase because if this goes wrong, your ERP implementation will fail entirely. It is difficult because organizing people and committing them to a common and time-intensive goal is hard. Discovery and planning require a lot of commitment and focus, which is hard to achieve at times.
Are the ERP implementation phases different if you use cloud ERP vs on-premise ERP?
The ERP implementation phases for each system will be the same however, there can be some changes. One major difference will be during the first phase of hardware delivery and installment. In this phase, you will need technology. Moreover, the implementation period will be more if you install an on-premises ERP as compared to the former.
How important is executive sponsorship in the early ERP implementation phases?
Executive sponsorship is quite critical in the initial ERP implementation phases. This process requires a lot of resources and physical capital, without which your speed may decrease. However, a good executive sponsor will ensure that your implementation process gets whatever it needs.
How can you avoid ERP implementation delays?
You can avoid ERP implementation delays if you develop a clear plan of action for the entire process. This plan should mention the resources, processes and decisions involved in each step. You must review this plan regularly and make amends, wherever necessary.