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ERP is a type of software application used most often by medium and larger enterprises, and sometimes by smaller companies. ERP software focuses on integrating business processes into a single, streamlined database and user interface by offering modules for each of the core business areas: human resources, financials, inventory management, sales and customer relationship management, along with other business-critical functionalities.
A successful ERP implementation is the difference between an ERP that functions and an ERP that provides outstanding investment return by supporting specific business objectives. ERP software selection is separate from the implementation process, but choosing an ERP that meets your business's needs dramatically increases the odds of a successful ERP implementation.
Select the ERP solution which best matches your business goals and processes
Map the journey of your business interactions with the ERP system, including customizations
Create a clear implementation schedule and budget, including measurable goals and objectives
Identify a change management team, responsible for dealing with uncertainties, unexpected issues or resistance towards new business processes or IT systems
Create a team of stakeholders, including department heads and end-users, who will carry out various ERP implementation aspects, including providing or assisting with training
Clean and organize data to be imported from old systems into the new ERP database
Monitor and report on implementation process to stakeholders throughout each step to avoid scope creep and the disruption of business productivity
Successful ERP implementations will vary slightly depending on verticals and business requirements, but the basic steps remain similar regardless of the industry.
Steps to a successful ERP implementation process remain roughly the same, but the methodology behind the implementation will vary according to factors such as company size, vendor services available, industry and business requirements, and the available IT expertise within the business.
One of the best implementation methodologies involves combining the company's in-house resources and the ERP vendor or implementation partner working together to achieve a smooth installation process.
Company-driven implementations rely entirely on an IT department or a stakeholder group to lead the project. In some cases, the business recruits an external consultant or contractor to help.
Some companies may not have an IT department capable of handling complex software implementation projects. In these cases, the ERP vendor or another service provider, such as a value-added reseller, will dictate the implementation methodology.
The most expansive ERP implementation methodology is a joint venture plan that involves multiple companies operating in a specific industry or vertical. In this case, since these companies feature similar business processes, the organizations collaborate to establish best practices that help members of the joint venture make the most out of the ERP.
Multiple ERP Rollout Methodologies are :
Phased rollout (according to module, geography, business priority, business unit)
Software-as-a-Service (SaaS) Rollout
The implementation life cycle outlines the stages of ERP implementation from start to finish. However, it's important to remember that the ERP life cycle lends itself to continual improvement by fine-tuning the technology to serve better business processes that support specific objectives. Therefore, some believe that the implementation life cycle ends only when the ERP is shelved for a new solution:
Planning and organization
System evaluation and selection
Initial software installation
Data conversion and loading
Procedure development and configuration
Testing and system validation
Post-live implementation adjustments
The return on investment for ERP implementation compares the software system's cost against the cost savings and increased revenue created by the solution.
Organizations should remember that implementation risks rise during compressed schedules, with the ERP less likely to align to business processes that serve specific goals. Essentially, chasing ROI with an aggressive implementation is a high risk, moderate reward proposition.
Adopting an appropriate ERP change management strategy reduces organizational resistance to change while extracting as much benefit as possible from the new system. Establishing a change management process reduces negative incidents related to the transformation of IT and business processes.
The goal of the change management process is to ensure that standardized methods and procedures are used for efficient and prompt handling of all changes, minimize the impact of change-related incidents upon service quality, and consequently improve the day-to-day operations the organization.
Small- and midsize businesses (SMBs) often work within tighter budgetary restraints, requiring more precision and discipline for implementation compared to enterprises with larger budgets.
Following steps cans be taken to ensure that the implementation results in the expected benefits -
Obtain full implementation support from the business owners, C-level executives, department heads, and managers first.
Define your business objectives, business processes, and the IT requirements that support your business goals.
Outline the expected business benefits to be derived from the ERP.
Ensure that incoming ERP is compatible with any existing systems that will remain in place.
Train staff on the new system before full implementation takes place.
Facilitate communication within and between teams and departments.
Focus on quick, short-term wins before attempting larger victories.
Planning an ERP implementation should begin with leadership from the top of the company, starting with a clear formulation of the business objectives which the organization needs to achieve. A CIO tends to be the best person to lead the charge, although another leader may be assigned to spearhead the effort.
Once business objectives have been identified, it's important to relate the business processes that achieve these objectives to the technological solutions offered by an ERP. A tightly-controlled ERP implementation plan will avoid scope creep by maintaining a strong focus on business objectives and the ERP functionality needed to support those objectives, thus avoiding unnecessary features.
Recruiting managers and department heads to help with planning may provide additional value by relying on the specialized expertise they've gathered in your industry and in their particular operational areas. These types of leaders liaise between end-users and top-level stakeholders, explaining the benefits of new processes to employees while providing vital training to get everyone up to speed on the new system.
After your organization completes the software selection process to choose an ERP system that aligns well with your particular business requirements, you'll need to partner with an implementation team. Whether you're dealing with an independent contractor or an in-house implementation team provided by the software manufacturer, you'll need to include them as part of a detailed plan to install the new solution, transfer data, and test the ERP before you go live.
Data conversion can be one of the most pressing challenges of ERP implementation. In terms of hardware, purchasing new servers, workstations, and other items may result in additional costs and configuration headaches.
Data conversion may turn into a massive headache when attempting to merge several disparate datasets into a single ERP database. Cleaning the data prior to importing it reduces the probability of duplicated or corrupted data populating your database.
Technical ERP challenges may require creative solutions to avoid overwhelming costs of implementation. Purchasing new servers, workstations, and other hardware required for ERP may be expensive because of the high bandwidth and low latency required for the new system's efficient operation.
People tend to be resistant to change, which may cause problems when end-users or management refuses to utilize the new system, returning to legacy installations instead. A change management plan including training, communication, and stakeholders' involvement from each department will help avoid unnecessary strife caused by resistance to change.
ERP implementation failure still occurs, even if the rate of failure has been curtailed over the past few years. The following list represents common obstacles to a successful ERP implementation. All organizations should strive to avoid these pitfalls.
Lack of leadership from the top
Inadequate consideration of business requirements
Poor fit between application software and business processes
Inadequate implementation resources
No change management plan
Autocratic approach instead of collaborative
Inadequate contingency planning
Lack of due diligence when checking client references
Unrealistic expectations for ROI and other ERP benefits
Insufficient training for end-users and department stakeholders
Deviating from plans in an attempt to cut costs
No mid-to-long-term scalability