The importance of enterprise resource planning (ERP) in business organisations can’t be downplayed. Without it, a company won’t be able to maximize its resources, putting it at risk of closure.
An ERP system integrates and streamlines all business functions, thus increasing efficiency and productivity. In most cases, it includes automating several business processes such as financial management, sales, manufacturing, supply chain management, and many others. With proper ERP planning and implementation, organisations can grow better and faster with fewer hurdles.
Managing ERP implementation is a complex task, and businesses must avoid creating a deficient ERP implementation project plan to achieve success. In this article, you’ll discover the critical phases of an implementation plan to reduce the risks of business failure.
Ensuring the success of managing ERP implementation starts with the planning process. This initial phase is crucial as it enables organizations to assess and define their requirements. Without these critical processes, the entire exercise is likely to fail. Activities involved at this stage include the following:
- Creation of the project implementation team: Ideally, the team must involve employees from all departments to get an overview of the plan’s viability. A diversified team will ensure that all pain points are brought forward and addressed in the project. Each staff can also contribute their insights and expertise in forming an ERP draft. This process can be highly complex and time-consuming. An organization could hire independent ERP consultants to make the process less tedious. These specialists can work with the internal project team in designing the ERP implementation phases suitable for your needs. (1)
Apart from the project team, the company must identify other critical factors involved in all stages of the ERP implementation. These include the support of business executives, teamwork, collaboration and communication, vendor support, and user involvement and training. Without obtaining these elements, the ERP planning and implementation processes are at risk of failing. (2)
- Gap identification and analysis: The team in charge of creating an ERP implementation project plan must assess the current business processes and evaluate those that need to be automated or streamlined. Gaps should be arranged in order of importance to make it easier to achieve clear objectives and deliverables. Results can also be presented to the top executives, who will discuss with a third-party vendor for potential solutions. To find out more about a proper ERP implementation process flow for your organisation, study some formats from businesses in your industry.
2. Project design
After clearly identifying the business’s requirements, the project team can proceed with determining the scope of the activity and the objectives, as well as the processes involved in ERP implementation. Designing more efficient workflows and procedures should be one of the priorities at this stage, ideally with the involvement of the staff or end-users. These individuals must be on board with the proposed changes to optimise the new system.
3. System development
After identifying the design requirements, the development of the new software and other systems can be initiated. The team can also decide whether to use cloud-based or on-premise storage for the ERP system. If using the latter, the company would need to install new software or purchase additional hardware to ensure compatibility and flawless integration.
In some cases, a new system might not be needed but rather an integration of some core business functions. For instance, some organizations only need to integrate sales and customer relationship management applications.
4. Testing and training
After developing a new ERP system, the organisation must perform initial testing to determine whether or not the new procedure works as planned. At this stage, an updated manual or process flow must be distributed to the staff to ensure the objectives are met. Software vendors typically conduct end-user training or supply training materials to their clients. (3)
In some cases, testing and development can be done simultaneously to ensure that problems can be corrected immediately without compromising the next steps. As ERP systems have different components, one department can test the essential functions for a certain period, while the company’s in-house information technology (IT) team can explore the system further.
5. Live deployment
If there are no major hiccups during the new ERP system’s testing and development phase, organizations can deploy the new system, ideally with the vendor’s assistance. At this stage, it’s essential to prepare for risks and issues, such as employees not fully embracing the new system.
The project team, your IT department, or the vendors can help your employees address these concerns. Do expect these issues for the first two weeks of the deployment, maybe more if your new system is more complex than the previous one. Before reaching this stage, the project team shall have fulfilled all the necessary preparations, such as data migration and software or hardware upgrades.
To ensure business sustainability, entities must focus on post-ERP deployment activities such as system maintenance, updating, or upgrading. Overall productivity lies in the reliability and smooth performance of these newly-established processes. (4)
While processes for ERP implementation planning may vary from one business to another, organisations must prioritise minimising mistakes during these critical stages. The key is identifying improvement opportunities and addressing the gaps efficiently and actively. Failure to do so will put this costly exercise to waste.
- “A 5-step guide to ERP implementation”, Source: https://dynamics.microsoft.com/en-us/erp/erp-implementation/
- “Critical Succes Factors across the Stages of ERP System Implementation in Sohar University: A Case Study”, Source: https://ijmar.org/v3n1/16-003.html
- “Phases of ERP Implementation”, Source: https://www.managementstudyguide.com/erp-implementation-phases.htm
- “ERP Implementation Life-Cycle”, Source: https://www.geeksforgeeks.org/erp-implementation-life-cycle/