Enterprise eesource planning software has gained immense popularity in the last few years. 96% of emerging companies that excel in their respective industries rely on ERP solutions.

And why not? ERP enables businesses to integrate all their business processes, streamline their workflows, boost productivity, and provide a holistic view of their projects.

However, it is worth mentioning that 50% of ERP implementations fail the first time around. Besides, most implementations cost three to four times what was initially expected.

The good thing is you can mitigate the chances of ERP implementation failures with the right steps and processes. And that’s what we will discuss today. So let’s begin with understanding what the ERP implementation process is.

What is ERP Implementation?

The ERP implementation process includes integrating all your functions, transferring your data from traditional systems to the ERP (both financial and transactional), and optimizing your operations.

It is worth mentioning that ERP implementation is complex and can take months to complete. But ERP will be important in the long run. Here are some statistics that prove it.

• Automates and speeds up daily operations, resulting in reduced administration costs by 23% and operational costs by 26%.
• Streamlines every activity and improves customer experiences by as much as 68%.
• Reduces cycle time by 35% and inventory levels by 38%.
• ERP can also increase productivity by 20% to 30%.
• All in all, 95% of companies said that the ERP system improves their overall performance. 

What are the Phases of an ERP Implementation Plan?

An ERP implementation life cycle consists of six phases, from discovery and planning to customization and deployment.

Usually, there are six ERP implementation phases:

1. Discovery and Planning
2. Design and Development
3. Customization
4. Data Migration
5. Testing and Deployment
6. Training Your Employees

Let’s dig deeper into every ERP implementation phase.

1. Discovery and Planning
   ERP implementation plans include finding the right ERP solution, setting up a project team, creating a schedule, and estimating your budget.
   Finding the ERP solution is easy. All you have to do is browse through the curated list of best ERP systems by SoftwareSuggest. Then, make sure you choose the one that fits your business’s requirements and long-term goals.
   The next step is to create an ERP implementation team.
   To begin with, you will need the following members of your team.
   • Project manager: They will be responsible for ensuring everything is running smoothly.
   • Application analyst: To ensure efficient ERP data migration and cleansing.
   • Application developer: To customize the ERP as per your requirements.
   • Quality analyst: To analyze the system’s performance and suggest changes.

   While these people will be a core part of the ERP implementation process, you will need more people working on different functions.

   For instance, you will need:

   • Accounting head during account, general ledger, asset, and cash management
   • Engineers during production management, document management, designs, and scheduling
   • Shop floor staff during document management, inventory management, and warehouse management
   • Sales head during forecasting, business intelligence, and CRM functions

   Coming to goals, you will need to identify the issues, including process efficiencies, that you want to solve via ERP. You should also consider your business’s vision to increase the ERP system implementation life.

   The planning stage will also include expected ERP implementation costs. According to the latest research by SelectHub, 45% of ERP projects go over budget. Also, on average, ERP implementation takes 30% longer than expected.

   Therefore, we recommend having a buffer (time and money) in place for ERP implementation so it does not affect your daily operations.

2. Design
   Now that you have defined your current workflows and the issues you want to solve via ERP, it’s time to create a detailed design. This is one of the most important ERP implementation steps, so you need to involve everyone from your organization.
   As mentioned in the last step, you should involve people from different departments as they have the most intimate understanding of the current business processes.
   Also, when you involve everyone in the design phase, they will be more likely to adopt the system and take full advantage of it.
   Additionally, you should focus on identifying gaps in your current processes and finding potential solutions. This will enable you to build a sustainable tool that is aligned with your goals and provides the best business management solution as per your current business processes.

3. Development and Customization
   

   Once you have validated the design requirements, you can begin the development phase. It will include configuring and customizing the software to meet your business requirements.
   The development process will differ depending on whether you are investing in a cloud-based ERP or an on-premise system. For instance, on-premise ERP solutions will be installed locally on your company’s hardware and servers, whereas cloud ERP will be stored in your vendor’s servers.
   Cloud-based ERP, on the other hand, gives more flexibility (supporting remote work) and offers real-time updates on what’s happening in the organization. You can even use your smartphone to keep track of your business processes anywhere.
   That said, this is the ERP implementation phase, where developers will configure the system to match functionality requirements, process flows, and wireframes.
   And while they’re doing it, they will need to document the entire process. This will help ensure that future changes in the ERP can be made with complete knowledge of how the system was developed, thereby preventing issues and failures.
   They will also need to create training materials to help non-technical employees understand and use the system efficiently.
   Tip: Customization can affect your project’s timeline and cost. Therefore, make changes only where it is crucial and avoid customizing every aspect of the tool.

4. Data Migration
   

   The next step is to migrate the data to the ERP system. The development team will plan the migration process from the legacy systems into the new ERP software.
   However, it can be incredibly complex because different legacy systems will have data in different formats.
   One of the biggest challenges to data migration is that many departments have their own copies of information about the same customers or products. Also, the rising regional and industry-specific regulations affect how businesses store and use data. Therefore, when transferring your data to the ERP, you will need to comply with all the laws to prevent any legal issues.
   To ensure a successful migration, you will need to develop clear protocols to handle incomplete or missing data.
   

   
   You will need to help your data migration team with
   • Data cleansing and verification
   • Database setup
   • Mapping legacy data to new database fields
   • Data transfer to the new system
   • Testing and validation of legacy data
   • Testing and verification of new data inputs

   Also, follow these ERP migration best practices to increase the chances of success.

   • Start early and allocate enough resources to ensure data migration doesn’t become a bottleneck.
   • Before starting the migration process, analyze your existing data, eliminate redundant ones, and think about how they will be used for decision-making across the organization.
   • Assign data governance responsibilities for complying with regulations that might affect your business.

   create an infographic with these points with the heading “Data Migration in the ERP Implementation Process”

5. Testing and Deployment
   

   Usually, testing and development go hand in hand. For instance, the project team might test different modules and functionalities as they are developed and suggest changes accordingly.
   However, rigorous testing of the ERP system is crucial after the development is over. You can do that by allowing some employees to incorporate ERP into their day-to-day activities. This ERP implementation phase will also include testing the migrated data to ensure everything is in place before completely shifting to ERP.
   You will also need to check the ERP security issues and data integrity to ensure you are safe from data breaches.
   Once you’re confident about the ERP implementation, it’s time to go live. Some organizations deploy all the modules at once, while others focus on the high-priority functions first (like accounting and manufacturing) and add other modules gradually. To minimize the risk, many organizations run both their legacy systems and the ERP in parallel until they’re completely confident.
   Irrespective of how you want to deploy the ERP, here are some things to plan.

   • Testing the system (pre and post-deployment)
   • Identifying metrics for project evaluation
   • Creating a backup strategy in case of system downtime
   • Network speed and reliability tests
   • Data backup processes

   It is also worth mentioning that despite your best efforts, you might face issues initially, including employee unwillingness to adapt to the system.

   To combat this, you should ensure that the project team is readily available to answer questions and help your employees understand the system to increase adaptability.

6. Training Your Employees
   

   Every successful ERP implementation involves a training phase where you teach employees how to get the most out of the system in less time. Nurturing them at every stage will keep them happy and ensure you achieve the desired results.
   Depending on how you’re working (remotely or in-office), you can train your employees in person or virtually. Although, virtual training is more effective as it allows you to customize the training materials to specific roles and is easier to coordinate.
   Here are some best practices to follow while training your employees for ERP implementation.

   • Offer role-based training to speed up the process and ensure employees don’t waste time learning unnecessary things.
   • Share recorded videos on how to use the key features
   • Allow employees to give feedback on learning and the ERP as a whole. This will enable you to further customize the process for better results.
   • Extend the training beyond technology requirements.

   You will also need to plan how the job responsibilities will be covered while employees attend the training.

   You can also consider rewarding your employees with perks and gifts to encourage them to complete all the training modules.

ERP Implementation Methodology

Although the overall ERP implementation plan remains similar, the approach you pick might differ. There are two primary ERP implementation methodologies:

• The Waterfall approach
• The Agile Methodology

The Waterfall Approach

The most popular implementation methodology in the software development field, the Waterfall approach, is all about going in the linear sequential flow. This means that any phase of ERP implementation begins only when the previous one is completed.

The major disadvantage of the Waterfall approach in ERP implementation is that it makes it difficult (in fact, almost impossible) to make changes at a later stage.

What if you realized you need a new feature just before deployment? What if you want to customize the ERP further?

In these cases, the Waterfall approach will just increase the implementation time and cost.

Therefore, you should use the Waterfall approach if you are not doing more customizations and have created a fool-proof ERP implementation plan.

The Agile Methodology

The agile methodology is a perfect approach for continually changing environments like ERP implementation. It offers more flexibility and ensures fast development than the Waterfall approach.

In the agile methodology, instead of going through each step one by one, the project is divided into sprints, allowing you to simultaneously develop multiple aspects of the ERP. Also, the testing occurs at the end of each sprint, and adjustments are made accordingly.

In the end, every sprint is brought together to complete the implementation.

Note: It is crucial to understand the pros and cons of both the ERP implementation methodologies. There’s no one-size-fits-all approach, and you should also take advice from your ERP consultant before finalizing a strategy.

ERP Implementation Best Practices

As mentioned above, ERP implementation failure is common. However, it can be avoided by planning and following the best practices.

1. Get Executive Buy-In
   

   Successful ERP implementation depends largely on the top management. In many instances, C-suite executives back out from ERP implementation, owing to its cost and long duration.
   Therefore, it is crucial to ensure that they are aligned with the long-term benefits ERP brings to the organization, including better productivity and improved customer satisfaction, eventually leading to an increase in profitability.
   Executive buy-in is also about them fully committed to overseeing the project through planning to support.

2. Clearly Define Your Requirements
   

   While you probably already know why you need an ERP system and the functionalities you need, it’s time to document everything.
   That’s because when you start establishing your requirements, you will be able to identify needs that you might have overlooked.
   Also, don’t forget to take input from everyone in the organization, from the stakeholders to shop floor staff. This will help identify current pain points and potential future gains, enabling you to better plan the ERP implementation process.

3. Don’t Underestimate Training
   

   For people involved in the ERP implementation life cycle, the deployment date is the end of the project. However, for other users, it is the beginning. And what happens afterward is critical to the continued success of the project.
   Therefore, make sure to invest in ERP training and ensure all your employees can use it efficiently. If not, you will see them spending more time understanding the system themselves than actually using it.

4. Set a Realistic Timeline and Budget
   

   As we’ve mentioned before, in most cases, the budget and timeline exceed what was initially planned. However, an experienced ERP consultant can help you set a realistic timeline and budget by taking your customization requests into consideration.
   Also, your budget should include at least a 25% contingency for unexpected costs to prevent financial issues in the middle of the implementation.

Evaluate Your ERP Implementation’s Success

Evaluation is something you should do at least after three to four months of ERP deployment. Give your employees time to understand and get used to the system.

Here are some metrics you should look for while analyzing your ERP implementation’s success.

• ROI: The bottom line for any company, return on investment, is a crucial metric. Check if you have seen a significant ROI on what you spent on the ERP.
• Decrease in human errors: ERP automates tedious processes and allows your employees to focus on other value-adding tasks. A well-implemented ERP should reduce human errors.
• Increase in productivity: Has automation and process integration led to increased productivity? If not, it’s time to revisit your ERP implementation strategies.
• Increase in customer satisfaction: In the end, everything boils down to how happy your customers are. Check if you are processing orders quickly and if the turnaround time and CSAT score have improved.

Final Thoughts

ERP can help you streamline your operations and create a highly integrated organization. However, you need to carefully plan each step of ERP implementation to increase the chances of success and eventually generate a higher ROI.