ERP implementation plan is probably the topic that is getting a lot of attention these days. Planning is the most essential phase of any project, whether it is a university assignment or a business process. When you are starting with a process, planning is its first step which also lays its foundation. If you get planning wrong, the entire process goes downhill. Therefore, planning is a very crucial activity.
The same is true of ERP implementation, which is based on a solid and foolproof plan. An ERP implementation plan lists out everything that must happen in the entire process step-by-step. It includes major steps from drafting a budget to choosing the best option for yourself. To avoid any problems in the end, you must be very clear with it.
In this blog, we will talk about an ERP implementation plan and how it should be carried out to ensure the best results for your business.
What is ERP Implementation?
The process of installing, configuring, and implementing an ERP system in an organization is known as ERP implementation. ERP systems are software suites that combine all of an organization’s core business activities, such as accounting, manufacturing, sales, and human resources.
ERP Implementation Plan For Success
An ERP implementation plan is a document that outlines the steps involved in implementing an enterprise resource planning (ERP) system. The following information should be included in the plan:
- Business objectives: The plan should outline the business objectives that the ERP implementation is meant to achieve.
- Project scope: The project scope should be defined in the plan, including the modules that will be implemented, the data that will be migrated, and the procedures that will be altered.
- Timeframe: The plan should include a timeframe for the project, including implementation phases and goals that will be met.
- Budget: The project budget, including the expenses of software, hardware, and consulting services, should be included in the plan.
- Resources: The project’s resources, including people, time, and money, should be identified in the plan.
- Risks: The strategy should outline the project’s hazards and how these risks will be handled.
- Plan for communication: The communication plan should detail how the project will be conveyed to stakeholders such as employees, customers, and suppliers.
- Change management plan: The plan should outline how the changes associated with the ERP implementation will be managed, including training, support, and communication.
The ERP implementation plan should be a living document that is updated as the project progresses. By having a well-defined plan, organizations can increase the chances of success for their ERP implementations.
Let’s discuss the important ERP Implementation planning stages.
ERP Implementation Process and Change Management Plan
Each ERP implementation process is different from the others but, there are certain similarities between them. Generally, there are some similar phases like buying the software, installing licenses, transferring data, and analyzing business processes.
A major issue in the ERP implementation plan is training employees to understand the demands of the new software. They must have clarity and training and you require a good management plan for this purpose. The change management plan that you formulate must define the goals of your business.
Here is a list of essential features that it must contain:
- Analysis: Begin by analyzing the ERP’s readiness to identify opportunities and risks.
- Role Assessment: You must understand the problems that your employees may be facing while working.
- Communication plan: One should also develop a detailed plan of communication defining targets, among other things.
- Enable the employees: You can create new roles and a training plan for the employees to enhance their potential along with the process.
- Training execution: You must also perform the onboarding training for the ERP system.
ERP Implementation Plan: Methodology Stages
The methodology involved in an ERP implementation plan can either be simple or complex, depending on several factors like the size of your business, its complexity, and the form of ERP implementation.
An ERP implementation plan falls into two categories: on-premise and cloud-based solutions. An on-premise solution requires installing hardware infrastructure and employing staff to maintain it. This takes longer because of the support activities that are involved like configuration setup, among others.
A cloud-based solution is faster than the former as the service provider manages the infrastructure and lets you focus on data migration and other important activities. All the additional steps are taken care of, by the service provider only.
ERP Implementation Plan: Budget
Whether your ERP implementation plan will be successful or not, depends largely on your budgeting. A major reason why a lot of companies spend more than what they had anticipated, is because they expand the scope of their project. There are three categories that ERP implementation plan budgets are divided into:
- Technical costs: These include the software, licenses, hardware, and other necessary implementations. You will also have to involve stuff like regular upgrades, data configurations, and maintenance among others.
- Workforce costs: These encompass things such as training costs, project management, consultation costs, and other management-related expenses.
- Data migration costs: Here you have to spend on domains like extracting data from the old system, sunsetting costs, and data transfer costs.
Cost of ERP Implementation Plan
There is no hard and fast rule when it comes to the cost of an ERP implementation plan but, you can surely estimate the same through factors like size and complexity of the project, number of users, customization, if any, data migration, etc. The cost will also depend on whether you are using an on-premise ERP or a cloud-based solution.
You must plan at least one percent of the operating budget of your business however, this again depends on the size of your project. An on-premise solution will demand more expenditure as it requires other ongoing costs to be taken care of. You will have to spend on its IT infrastructure and additional workforce for the same.
On the other hand, the initial costs of a cloud-based solution are less because of mere software and connectivity requirements. This is the reason why most businesses prefer such an ERP implementation plan. The ERP vendor takes care of all needs of this software, without you having to stress.
How to Go About an ERP Implementation Plan?
I. Constitute a Project Team
The project team comprises people who will be responsible for your implementation project and oversee everyday activities. Each business will have a different form of team depending on the size of the company and the type of ERP being deployed. An ERP project team will include project managers, analysts, developers, key users, and engineers. Each member will be assigned a set of roles that they will take care of on their own.
If you have a small business and you are deploying a cloud-based solution, the team will include a project manager, some key users, and a consultant. But if you have a larger business, your project team will include a steering committee as well. Such a committee will include the executives and management.
II. Develop an ERP Implementation Change Management Plan
An ERP implementation change management plan should include the following elements:
|Planning Step||What To Do?|
|Executive sponsorship||The strategy should select a senior leader who will be in charge of overseeing the change management process. This individual should have the authority to make decisions and allocate resources to ensure the plan’s success.|
|Stakeholder analysis||The strategy should identify and assess the level of influence and interest in the project of all stakeholders who will be affected by the ERP deployment. This data will be utilized to create a communication strategy and to personalize change management communications to various audiences.|
|Change communication plan||The strategy should detail how the organization will inform its employees, customers, and other stakeholders about the ERP implementation. This strategy should include a communication timeframe as well as the channels that will be used to communicate with various audiences.|
|Training plan||The strategy should detail how the company intends to train its personnel on the new ERP system. This plan should include a training timeline as well as the training materials to be used.|
|Support plan||The plan should detail how the company will support its personnel when the ERP Implementation is complete. This plan should contain a method for problem resolution and helpdesk support.|
|Measurement plan||The strategy should detail how the organization intends to assess the success of the change management approach. This plan should include metrics for tracking employee satisfaction, new system uptake, and overall ERP Implementation success.|
In addition to these components, the ERP implementation change management plan should be tailored to the organization’s specific needs. The plan, for example, may need to accommodate cultural or geographic differences, or it may need to be tailored to different departments or business units.
III. Predict Costs Through a Budget
There is no fixed budget for any ERP implementation plan but you can forecast your budget and related costs based on factors like size, complexity and demands of your business as well as the type of deployment.
A small, less complex business will not experience too many expenses as compared to a large and highly complex business. Moreover, if you will implement a cloud-based solution, you will have to spend less; while on the other hand, if you are deploying an on-premise solution, the costs will be higher.
IV. ERP Data Migration
Data migration is an essential part of any ERP implementation plan and therefore, it needs to be done with utmost care. Your end goal is to migrate data that the project team deems necessary. This process can become simpler and smoother if there is proper coordination between the team and consultation with a project analyst beforehand.
V. Train the ERP User Base
No matter which ERP solution you deploy, if your employees or end users do not know how to use it to the business’ advantage, it will fail. Therefore, you need to train them in the best manner and the training must be comprehensive. You can also use e-learning, which will help them complete the training as per their time commitments. Such training focuses on their role only and gives them a holistic understanding of the same.
VI. Plan the Go-live Activities
Once you have entirely worked on your ERP software, data migration and end-user training, it is time to go-live that is, deploy the software finally! Remember that transaction-based data, including stocks, orders, purchasing orders and balances keep changing and so, you should transfer it in the end. This will ensure its accuracy. Post this, the ERP system will be completely ready for use.
VII. Success Evaluation
You can evaluate whether your ERP implementation plan was successful or not by looking at factors like customer reactions, returns on investment and others. You must consider the following metrics:
- Return on investment: Are you getting the money you invested in your ERP system as a return?
- Reduction in human error: If your employees are not making a lot of mistakes it means that your training helped and worked.
- Enhanced productivity levels: Check whether the new system was able to achieve the goals you have set for it or not.
- Rise in client satisfaction
Remember to wait for a few months before beginning the evaluation of the ERP implementation plan, as everything takes time. So, evaluate only when your ERP implementation plan has been deployed completely.
Just like everything else, ERP needs support and maintenance after being deployed. You must ensure that you have experienced support personnel to help you out with this. If you deploy a cloud-based solution, the vendor will take care of all system requirements without having to trouble you. You must not do away with this part of the ERP implementation plan if you want to ensure its smooth functioning.
9 Best Practices to Employ
While the ERP implementation can be very time-intensive, you can avoid the unnecessary hassle by following these 9 practices:
i. Executive buy-in: This will ensure better collaboration and redistribution of the budget and resources. It will also help you understand the long-term goals of the business.
ii. Focus on results: You must focus more on what the ERP can bring to the table in the form of results and not the technology being deployed. Make decisions from the perspective of the end and not the means.
iii. Define system requirements: This requires you to enlist all the needs of your system initially, so that later on you do not have to face any problems.
iv. Choosing the right team: Your team is equally important for the success of your ERP and so, you should give preference to expertise and not seniority while choosing.
v. Create a change management plan: You must have a robust plan in place that involves apt training, communication and clear business rules so that the system is not disconnected.
vi. Set a realistic budget and timeline: Be realistic when you are deciding on your budget and the timeline, that is, what will be done and when. This prevents any future hassles.
vii. Clean data before transferring: Ensure that you migrate actual and relevant data to the new system so that it can utilize the information in the best manner possible.
viii. Test system before going live: To avoid any last-minute issues, test the ERP system before it goes live. Identify the problems involved beforehand to ensure a smooth deployment.
ix. Invest in training: Do not take training lightly because your employees are the ones who will handle the work for you, as end-users. Ensure quality training.
ERP Implementation Plan Failure Rate
To be honest, there are some chances that your ERP implementation plan can fail at times. Some top companies have conducted surveys to find out the failure rate of such plans, which is listed below:
According to McKinsey, 75% of all ERP implementation projects fail to meet their set targets while 74% of them take longer than expected. The main reasons vary from poor planning to untrained employees because this process involves both, technical as well as cultural change.
Deloitte has also identified 10 impediments to an ERP implementation plan as well. Resistance to change, inadequate sponsorship, unrealistic expectations and poor project management were the common reasons behind most failures. Therefore, you need to ensure good planning and training for the best results.
Tips for Avoiding Extra Costs
While all of us create a budget before starting with the ERP implementation plan, there are often cases when it may run over budget. If you do not want to incur extra costs during the process, you should keep in mind some important points.
You should focus on the total cost of ownership or TCO. Begin by managing this and its benefits to reduce the expenses and increase the return. This will have a big impact on your business. Do not force changes that are not needed. This will unnecessarily increase the implementation and operating costs.
You should also manage customer orders, update pricing, add new products and services etc., and focus on the routine business processes that are important for the company. Do not over-customise the software to reduce costs.
In the end, we suggest that you use a secure cloud-based ERP solution and ensure that the vendor takes care of all the security that is needed for your system.
3 Crucial Steps to Consider in ERP Implementation
When you are implementing an ERP plan, there are three steps you need to keep in mind. These steps not only streamline the entire process for you, but also ensure positive results for you as well as your business. You may refer to the three major steps listed below.
i. Map the Process
If you will keep mapping the entire process of ERP implementation you will be able to understand the inefficiencies in the project, clarify gaps in the relevant data and identify the major inputs and outputs. It will also ensure better collaboration across departments such that the scope for improvement is identified and solutions to recurring problems are discovered.
This step will also help you in prioritizing certain solutions that will ensure improvement for your business. Moreover, the software vendor will be able to understand the needs of your business as well as its functionality and customize the software accordingly.
ii. Assess the Process
You must also assess the process of implementation by referring to the qualitative as well as quantitative metrics. Continuously measuring the effectiveness and performance of the ERP implementation plan can help you understand how far you have come. This data will also be critical in knowing where your business is lagging and will make finding solutions easier. Clearly define the goals and needs of the project before beginning the assessment for a better understanding.
Once you have identified the shortcomings of the ERP implementation plan, you should start working on improving the same. You can deploy easy solutions to take care of the issues which have a negative impact on the overall performance of your system, at large.
If you think a particular solution needs system interference, you should clearly define it. Make sure that you state the reasons for any changes that you want to make and bear in mind that clarity and communication are the two pillars for this step to be successful.
In this blog, we have talked about the way you can go about an ERP implementation plan by following the given steps and practices. ERP is essential for all businesses and so if you want yours to do well, you should take utmost care when it comes to drafting a plan and starting with its implementation.