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reduces the amount of effort that you may have to put in otherwise if you were using another system that is probably outdated.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 Implementation?
The process of integrating an ERP system into an organization’s current infrastructure is referred to as ERP implementation. It entails a series of phases that are carefully prepared to provide a smooth transition from legacy systems to the new ERP solution. A well-executed ERP implementation can increase data accuracy, promote collaboration, and deliver real-time insights for better decision-making.
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.
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.
Phase 1. Initiation and Discovery
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.
Phase 2. Requirement Analysis
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. This involves conducting interviews, workshops, and surveys with key stakeholders. The team analyzes existing workflows, data structures, and system integrations to determine the optimal ERP configuration. Through this, your business will be able to evaluate the benefits, risks, and costs involved.
Phase 3. Planning
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.
Phase 4. System Design
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 implementation team turns the requirements acquired in the previous phase into a detailed system design during the system design phase. Defining the ERP modules to be installed, designing workflows, developing data models, and establishing interaction points with other systems are all part of this process. The system design phase establishes the groundwork for the ERP solution’s actual development and setup.
Phase 5. Development and Configuration
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.
The implementation team customizes the ERP system according to the established requirements during the development and configuration phase. This includes writing custom code, configuring modules, customizing user roles and permissions, and creating workflows. To minimize customization and future upgrade hassles, establish conformity with industry best practices, and exploit the ERP system’s standard features.
Phase 6. 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.
Phase 7. Testing
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.
Phase 8. Training and User Acceptance
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.
The implementation team provides comprehensive training to end-users, including system navigation, data entry, reporting, and troubleshooting. Training can be conducted through workshops, online tutorials, and documentation. User acceptance is closely monitored, and feedback is collected to address any concerns or areas for improvement.
Phase 9. Deployment
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.
Phase 10. 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.
ERP Implementation Phases Conducted By Renowned Brands
ERP Implementation is a daunting task for growing organizations that are looking for this transformation. Let us find out how big brands took out their ERP implementation into different phases which were successful.
SAP Implementation at Coca-Cola
Coca-Cola, a renowned beverage company, embarked on an ERP implementation project to streamline its global operations. The phases included project initiation, requirement analysis, system design, development and configuration, testing and quality assurance, training, and user acceptance, data migration, and go-live. Coca-Cola successfully implemented SAP ERP, enabling better inventory management, supply chain visibility, and financial reporting across its global network.
Oracle Implementation at Amazon
Amazon, the world’s largest e-commerce company, implemented Oracle ERP as part of its strategy to enhance operational efficiency. The implementation phases involved project initiation, requirement gathering, system design, configuration and customization, testing and quality assurance, training, data migration, and go-live. Oracle ERP empowered Amazon with real-time insights, streamlined order management, and improved financial controls.
Microsoft Dynamics Implementation at L’Oréal
L’Oréal, a leading beauty and cosmetics company, underwent an ERP implementation using Microsoft Dynamics. The implementation phases included project initiation, requirement analysis, system design, customization and development, testing, training, data migration, and go-live. Microsoft Dynamics helped L’Oréal optimize its supply chain, streamline product lifecycle management, and improve financial visibility across its global subsidiaries.
SAP S/4HANA Implementation at Adidas
Adidas, a renowned sports apparel manufacturer, implemented SAP S/4HANA ERP to enhance its operational efficiency. The implementation followed phases such as project initiation, requirement gathering, system design, configuration, testing and quality assurance, training, data migration, and go-live. SAP S/4HANA enabled Adidas to streamline its supply chain, improve inventory management, and gain real-time visibility into its sales and financial data.
NetSuite Implementation at Airbnb
Airbnb, a popular online marketplace for vacation rentals, opted for NetSuite ERP implementation to support its growing business operations. The implementation phases encompassed project initiation, requirement analysis, system design, customization, testing and quality assurance, user training, data migration, and go-live. NetSuite helped Airbnb automate its financial processes, improve financial reporting, and streamline vendor management.
These examples show how well-known brands successfully navigated the ERP implementation journey, employing industry-leading ERP solutions to optimize business processes, boost productivity, and drive growth.
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 licenses 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.
In this blog, we have discussed 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.