Enterprise Resource Planning (ERP) can help your business in many ways. If you are on the way to digitally transforming your business, then it will help you on this journey. No longer will you have to put up with limited functionality or old tech that your legacy system used. Modern ERP systems can also help you to identify and capitalise on new opportunities.
But care should be taken when implementing any new system. Good planning will help you avoid unwanted costs and risks, and a good working knowledge of ERP best-practices will reduce the chances of anything going wrong, helping you to fully embrace all the functionality of a new ERP system.
Where to begin with a new ERP system?
There’s a lot to think about when planning to implement a new ERP system. Rather than starting by thinking which new features you would like, instead consider which modern processes you would benefit from. These processes should allow you to be agile, flexible and make you a much more competitive business, able to serve customers wherever they’re located in the world.
Businesses move and change at speed, and so must your business processes. Your current processes may once have been cost-effective and useful, but that doesn’t mean they always will be. If you think they are inflexible, or leave some of your business needs unmet, then it’s time to update them. Consider whether your current processes can satisfy the demands of mobile users, or give alerts, or support the provision of business intelligence. Keep these improved business processes at the heart of your implementation plan.
Your project team – the difference between success and failure
A good plan for an improved system is only as good as the team that is implementing it and using it. It has been proven many times in business that a good implementation team is critical to succeeding in implementing a new ERP system. Ensure team members have the skills, support and time to do the job well, or you’ll risk extra costs, delays or poor results.
Those employees who have the most time to work on a new ERP project may not be the right people for the role – simply having time may mean they are not as busy using it as others, who may be better placed to roll out the new system. Choose people who know the business processes inside out, who play a business-critical function and have respect from senior management. They should be given as much time as possible to dedicate to the project – ideally 40 hours per week for full time staff, or as many hours as possible.
Don’t choose people who can’t spend at least 25% of their time on the project (a minimum of 10 hours per week). If you do, they risk using their time simply catching up on the project activities without really adding anything of value.
Without strong support from the executives in the business, even the best teams can struggle. Senior support will allow the team to make decisions which will be acceptable to management, for example around priorities and resource allocation.
Using the best people for the job and planning effectively is crucial, because rolling out a new ERP system is one of the most important things a company can do.
Planning your ERP implementation
Make sure you prioritise your needs so that the focus is on the major wins, at the same time as building a technology base and core software that can expand as your business grows.
Any schedule for an implementation sequence should be realistic. Your leadership team needs to be available for it, as well as any in-house experts who will work on it.
Tailor your plan and KPIs to fit your business’s specific requirements. Certain key steps are crucial to the success of implementations:
Choose a software and services partner to support implementation
Not many project teams have implemented ERP systems before, so they may need help. Research and choose a consultant qualified in ERP implementation who has actually worked with the ERP application that you are going to install. Establish that they see how the new software supports both your current and future business processes. Obtain references for them to satisfy yourself that they are the best.
If some of your customers are based abroad, ensure your software and services partner(s) has knowledge of relevant foreign currencies, languages and international businesses to help your implementation. They should also have staff trained in your sector and at your locations.
You should check that the the project management software used by a firm is compatible with your own internal scheduling, planning and tracking tools.
List all project tasks
You should develop an extensive list of everything that needs to be done with your implementation partner. One task may have several other tasks associated with it – for example, the list for ‘training’ might include:
- Training your IT team: their training should enable them to install and maintain the system in the most optimal way.
- Training the project team: train them so they understand how to tailor your business processes.
- Training business users: anyone who is expected to use the software should be trained in using it.
- Ongoing training: put a long-term training plan in place which covers new starters as they join your business.
Ask your implementation partner to create a detailed list of all phases and steps necessary to implement the new system. Key phases to allocate time to will include conference room piloting, application customisation, user acceptance, and data cleansing, amongst others.
Calculate your timeline
You must understand the tasks and the work involved so you’re able to calculate the number of ‘work hours’ it will require. It must be accurate, even if the estimate is a range of hours. Assign the total work hours for that phase to the person responsible for completing it.
This step is crucial, as it allows you to accurately calculate your timeline, and assess if you need any external help, so you don’t begin to see scope-creep. If you find it daunting, ask your implementation partner, who will be familiar with the software you are implementing.
Create a realistic schedule
Only when you have set out the work hours available and required can you then create a manageable schedule. The first version may indicate a problem with capacity when compared to the timeframe originally given to management.
For instance, there might be a discrepancy in time planned vs actual time taken, when you look at the hours required and divide them by the hours actually available per year.
What can you do to avoid missing the go-live target date? Consider these solutions:
- Break the project up into distinct phases,
- Call on more internal and external resources – in other words, increase the work hours available for the project,
- Reduce the scope, even though it may include essential tasks,
- Extend the go-live date to a more realistic one.
These sorts of decisions are usually only made by the executive management team – which is why they need to be involved in the process from the very beginning.
Hold a conference room pilot
Understanding the range of options in your ERP system and testing them on the community of users is a crucial part of validating the progress you’re making. Before going live, run a pilot in a conference room. This will make sure that the correct business processes are in place to meet both the current and future needs of the organisation.
During this multi-week phase, pilot software will be installed by your implementation partner. This lets you ensure your processes are working correctly and that there are no unpleasant surprises. Use best practices to save time, especially if you can make cost-effective adjustments with configuration tools.
Cleanse your data
This can be time consuming, even though it sounds like a simple process. Begin assessing the accuracy of your data as soon as you can. Business process alterations will happen throughout the project, so there may well be additional data management steps as your project progresses.
Keep everyone informed
Try to avoid a situation where not everyone is up to date on progress, or they are surprised by it. Contact all key stakeholders weekly, so they know both the positive elements and the challenges of the implementation process so far.
Consider creating a visual representation of your progress, which is something that many project management systems can do.
Begin with the most important processes
Ensure you prioritise the business processes you want to work on first. These may not be the same for all businesses, but there are some common important ones:
- Mobility: Now, more than ever, remote working is a vital capability to be able to offer – as Covid 19 has shown. Companies that adapt quickly and remain agile are the ones who will use disruption to their advantage.
- Human Resources (HR): Workforces are more diverse than ever nowadays, so to meet these challenges your staff need to be able to access payroll, benefits, compliance and other information at the touch of a button. Recruitment and retention are also significant stages in assessing current and future business plans.
- Manufacturing and supply-chain management: Managing the challenges of low margins, supply chain disruption and tight schedules requires time and energy. The whole team should work together with suppliers, importers/exporters, carriers, banks and other partners to make it work. Mobile devices in many locations may also be needed.
- Finance and accounting: It’s crucial that a business has accurate, real-time data on financial transactions, KPIs and other analytics, which span all departments and all locations. These will usually have to be integrated with budgets, forecasts, projects, asset management and compliance data.
- Business intelligence: Business intelligence will enable your team to have rapid updates on issues affecting the business, and allow them to drill down into the detail and solve problems. They need this whether they are in the office, travelling elsewhere, or working from home. Ideally the business intelligence will be stored in a single database.
- Customer relationship management (CRM): Almost every part of a modern business is affected and influenced by CRM processes. For example, retail showrooms, e-commerce, customer service, distributors and direct sales will all share customer data with operations, purchasing, engineering, shipping and accounts teams.
- Languages, currencies and locations: The ability to expand your organisation and move into new regions easily and quickly is crucial. It calls for advanced software capabilities, and a consistency of service from your software provider in every location.
How to avoid extra cost in ERP implementation
It’s vital to control the project and its costs; investing in a new ERP system takes time, needs business process and implementation consultancy, cloud services, software advice, and equipment like tablets, PCs and phones.
Keep an eye on the following areas:
- Routine processes that provide significant value should be your focus: concentrate on processes such as price updates, adding new products, change of manufacturer details, employee onboarding, or managing customer orders.
- Don’t force unnecessary changes, and match the business direction: don’t be pressured into changing your way of operating just to fit some software – this will only increase your operating costs as well as the cost of implementation.
- Capitalise on a configurable user interface and avoid customisation: capabilities such as dashboards, alerts, business intelligence, workflows, and mobile capabilities allow you to streamline work for all parts of the business, and make quick, cost saving changes as needed.
- Data breaches and hacks into the system are expensive: use a second secure cloud ERP system whilst using the Internet, and check that your service supplier and the software itself support several secure deployment options.
- The total cost of ownership (TCO) should be your main focus: ERP implementations impact your business significantly, so try to manage your total costs, and benefits, over time. That way you can maximise your returns, and minimise expenses.
How to mitigate implementation risks
There will also be some level of risk in any project, but following certain tried and tested tips will give you the best chance of completing your project on time and on budget.
- Avoid project scope creep – you’ll often find you come across new needs and opportunities during implementation of ERP, so always manage change orders and avoid cost and time overruns.
- Don’t stretch outdated technology further than it was designed to go. Get rid of old, standalone technology that cannot keep up with modern demands, and consolidate your data into one database (often called a ‘single source of truth’), with in-built business intelligence for performance across many locations.
- Choose software and implementation partners who are knowledgeable about your industry, and your locality. Always interview references who are from the same sort of business as your own.
- Integrate systems across business departments/function as well as with suppliers and customers. Make sure you have cloud integration capabilities and know-how with supplier networks.
- Ensure you have consistent expertise across every location you operate in. You will need training, support and implementation – often this will come from a mixture of software distributors, local management, consulting firms and your own software partner.
When is implementation complete?
Even once you have completed your initial implementation, it is important to have the flexibility to update and add to capabilities – for example, if you add new locations, service lines, products or following an acquisition.
Teaming up with customers and even helping to redefine how your industry conducts business is made possible once you have gone through a digital transformation. You might be able to utilise machine learning and AI, or integrate new equipment and vehicles via the Internet of Things – enabling you to increase efficiency and speed.
Taking the next steps
Always be prepared for unexpected issues – they happened in every ERP project. However, when you follow ERP implementation best practice, you give yourself the best chance to identify and solve issues before they develop, so you manage your risks and costs more effect.