Imagine a business where processes are streamlined, operations are automated, and real-time data drive decisions. This is the power of an Enterprise Resource Planning (ERP) system. With the advent of advanced technologies like Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), Blockchain, and Advanced Data Analytics, ERP implementation can bring a multitude of benefits to your business, revolutionizing the way you operate.
While the benefits of ERP implementation are undeniable, the process itself can be challenging. Haphazard approaches and lack of planning can lead to chaos and operational inaccuracies. However, with a well-structured plan, you can navigate these challenges and ensure a successful and high-return ERP implementation. By breaking down your ERP implementation plan into distinct phases, each with clear objectives, you can maximize the impact of your implementation strategy, instilling confidence in your team and stakeholders.
Do you know that 40% of companies have witnessed reduced IT costs after ERP implementation?
Also, 49% of companies witnessed simplified business processes after ERP implementation.
What do these statistics reveal? ERP implementation is no longer an option, but a necessity to get a competitive edge and improve ROI.
This blog discusses what ERP implementation is and different steps of it to give you a clear understanding of how to implement an ERP system.
What is ERP Implementation?
The answer to what is ERP implementation is simple. It is all about developing and implementing a customized ERP solution within your system and processes. It is a comprehensive process of planning, designing, customizing, and deploying an ERP system in your business. A robust and efficient ERP system will impact all business departments, such as HR, sales, manufacturing, supply chains, warehousing, finances, operations, etc.
ERP Implementation: A Step-By-Step Guide
We will discuss ERP implementation steps one by one to give you a clear idea how a planned strategy works and mitigates risks and inaccuracies.
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Step 1: Current System Assessment
The crucial first step in the ERP system implementation journey is to conduct a comprehensive assessment of your current system. This assessment is not just a formality but a key process that sets the foundation for the entire ERP implementation. It's essential to identify the pain points and areas for improvement in your current system. This includes listing all bottlenecks, inaccuracies, and your expectations of the new ERP system. Take a deep dive into your financial, manufacturing, inventory, sales, and other systems and processes to uncover any loopholes and operational irregularities.
Also, note down processes you want to automate, such as financial systems, production processes, invoicing, existing workflows, etc.
In-depth assessment of your current systems will empower you to set your expectations and determine which operations and processes are critical for your business. It will also help you choose the right ERP system for your business.
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Step 2: Identify Your Goals & Objectives
The next step is to set your goals, business needs, and future objectives. Yes, an efficient ERP system brings many benefits to you, but what exactly do you want to achieve? Start with key performance indicators (KPIs) and how a new ERP system can help you achieve them. Make a list of all the goals, such as automation, improved efficiency, productivity, better customer relationships, reduced costs, better ROI, etc.
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Step 3: Plan and Choose an ERP Implementation Team
The ERP team plays a critical role in making the implementation process successful. You need to be careful when choosing a team. You must select multiple players, such as implementation partners, software developers, project managers, quality analysts, etc. Also, you can add a member from teams, such as finance, sales, marketing, human resources, supply chains, etc., to let them be familiar with the implementation process and quick user adoption.
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Step 4: Determine Your Budget
What is your budget for the ERP implementation process? This step requires you to determine the budget and timeframe for the process. There are upfront costs involved that you need to consider, such as development, customization, testing, implementation, deployment, etc. Furthermore, there are annual costs, like ongoing support, system upgrades, future scalability changes, user training, and access.
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Step 5: Selecting an ERP system
The next step is crucial. You need to select the right ERP system for your business. Plenty of ERP software is available on the market, and you can choose one after carefully evaluating each. Discuss your expectations, software customization, post-implementation support, and other details with vendors. Selecting the ERP system is a crucial decision you will make once in your lifetime. Hence, leave no stones unturned to choose one that perfectly aligns with your business needs and fulfils your requirements and expectations.
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Step 6: Design
The next part is to design your customized ERP system. This step requires you to create a detailed design for your ERP system with detailed workflows, processes, user dashboards, and other components.
It would be wise to involve key stakeholders and end-users in the design process to address their needs and perspectives in the final design. Also, find the right gaps that must be customized to improve operational efficiency. Discuss the customization part and system configurations with the ERP implementation partner.
In this way, you will have a clear design roadmap that is comprehensive, user-centric, and requirement-oriented.
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Step 7: Development
The next step in the ERP implementation methodology is development, where software developers start configuring and customizing the ERP software based on design requirements. This step also involves integrating the ERP software with any existing systems or third-party tools.
Developers will ensure that the end-product is configured to align with your organization’s processes and workflows and meet business expectations. They will also ensure that all the necessary hardware and software are installed for smooth operations.
During the development phase, the implementation team can start developing comprehensive training materials for end-users, aiming for quick and effective user adoption.
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Step 8: Data Migration
Data migration is a complex task, and you must prepare proactively for it. First, you must start cleaning and formatting your existing system’s data. To ensure data compatibility, developers will perform data formation for the new ERP system. Once it is done, they will start loading data into the new system.
A full data audit of your existing system is a crucial step in ensuring a smooth and successful data migration. Categorize the data types you want to migrate to the new system. Choose the right data migration method and clean the data to ensure accuracy. To mitigate data losses, it is recommended that you take data backup and make a recovery plan. Also, you must keep in mind data regulations and protocols while dealing with data migration.
As data migration is a complex process, it would be good to hire an experienced team with a proven track record to avoid data losses and inaccuracies.
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Step 9: Testing
Testing the ERP software before deployment is crucial to avoiding errors and inaccuracies. If you are following the agile approach, testing and development go together. For example, developers complete and submit one ERP module to the testing team and start working on another module. A comprehensive testing strategy is crucial for a high-quality and functional ERP system.
While it's convenient to ask vendors for pre- and post-deployment testing tools to initiate user training, it's important to remember that this should not be the sole testing method. Relying solely on vendors can leave you vulnerable to errors and security risks. Therefore, it's crucial to take a proactive approach and test the system thoroughly on-premises to ensure its robustness and security.
37% of stakeholders believe that testing during migration is crucial to ensure security and compliance.
You can start with basic function testing initially and then move towards rigorous testing afterwards.
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Step 10: Deployment
This is what you were waiting for, weren’t you? The deployment step might bring potential issues, but you don’t need to worry about them. Ask your employees and implementation partners to keep a close eye on details. Let them make necessary adjustments to fix issues and troubleshoot. With deployment, let the training sessions begin for your employees.
While it's possible to deploy important ERP modules initially and the rest afterwards, it's important to be aware of the potential risks. Some organizations opt to keep running the existing systems with the new ERP system to minimize risks and chaos. However, this approach may lead to increased costs and reduced productivity. It's crucial to be prepared for these possibilities and to have a plan in place to address them, ensuring a smooth transition.
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Step 11: Support and Updates
Keeping a sharp eye on the ERP system post-deployment is crucial to ensuring uninterrupted operations. Gather user feedback and improve the system accordingly. When you add new features to the system, you might need additional development and configuration. Furthermore, you must train the new staff continuously to keep them on track. For on-premises ERP modules, development teams must install periodic software updates. However, your vendor will automatically update the system for cloud-based solutions.
Conclusion
Replacing the old legacy system with the advanced, cloud-based ERP system can bring a plethora of benefits for your organization. However, ERP system implementation is a complex process, and you must hire the best implementation partners with a proven track record and domain expertise. Develop a plan and implementation roadmap before proceeding to mitigate errors, comply with data regulations, and improve the chances of success.
