ERP consultant should be your first call when you are considering setting up an ERP software solution. The ERP implementation is an immense undertaking so, no wonder, that most companies prefer to hire an ERP consultant to help them handle the entire process.
ERP stands for Enterprise Resource Planning and refers to software systems that are used by organizations to manage various activities essential for running a business. These activities include accounting, inventory and order management, manufacturing, human resources management, marketing, project management, etc. An ERP system integrates all business functions into a single shared database. ERP software enables the flow of data between a plethora of business processes and provides data integrity.
Today, ERP systems are critical to manage businesses across all industries. Being an integral part of a business, the ERP solution streamlines and accelerates the business process, provides a competitive edge to the company, and boosts the overall growth of any business. Want to learn more about how your business can benefit from ERP software? Read an article on our blog in which we discuss how ERP implementation can transform your business and save a significant amount of time and money in the long run.
You have already decided to adopt an ERP system but still are not sure which one you should choose? Choosing an ERP solution that meets the specific requirements of your business is tricky but it’s only half of the battle. The key to success is a well-designed implementation plan. Keep reading to learn about must-follow steps for successful implementation of an ERP solution. You will also learn how hiring an ERP consulting firm can help you better manage your ERP implementation project and overcome possible challenges at all its stages.
ERP Project Management Steps
Of course, every ERP project is unique but still, there are some general rules and essential steps you should follow. These 10 effective tactics can help you stick to your budget and successfully integrate ERP into your business strategy. But you should remember that some of these easy steps may overlap or you may need to be working on two or more steps simultaneously.
1. Choose an ERP selection team
Choose good communicators among your employees who represent main functional areas such as:
- Quality assurance
- Sales and Marketing
- Scheduling and Planning
- Customer Service
You’ll also need a project manager (PM) who has a proven record of successful ERP implementations. You can choose someone from your IT department to fill the role or hire an experienced ERP specialist.
2. Identify the problem
It’s a very important step. Although ERP software can provide effective solutions to many challenges faced by organizations, you have to identify the real objective of implementing ERP. Analyze your KPIs to understand why you actually need ERP software. Evaluate and document your business challenges. Analyze your findings and prioritize your goals.
Then you need to determine your budget and the time frame. Keep in mind that ERP software is not one large purchase and you’ll need to consider the upfront costs (development, implementation, customization etc.) and the annual costs (support, training, user access).
3. Select the best ERP system for your company
According to Aberdeen Group, ERP systems that give accurate real-time information about daily operations can help small and medium-sized businesses reduce administration costs by 22% and operational costs by 23%. That’s why you need to evaluate the available options and choose the system most appropriate for your specific business needs.
You can perform research individually or delegate this task to an experienced ERP consultant. Evaluate available options taking into account your current needs and future requirements. The preferable options are cloud ERP solutions because of their flexibility to meet the future requirements as your business grows.
Start your research with websites that provide unbiased reviews of ERP software and try to find side-by-side comparisons. Search for videos and screenshots of software that you are interested in. At the end of your search, you should narrow down your options to a maximum of 4 and identify how they differ in their features and which of them fit best for your core needs. Then, you should ask for live demonstrations and explore these options in depth to select the best software for your business.
4. Prepare an ERP implementation plan
Now it’s time to think about the implementation approach and decide when and how you want to implement your ERP solution. There are 3 options to choose from.
- Big Bang Implementation – everything happens at once and new ERP system goes live on a set date in all functional areas. This approach is the fastest and is often cheaper but it’s very risky.
- Phased Rollout – the new ERP solution is implemented step-by-step or in sections. This method requires a lot of time to complete. Sometimes, you may encounter problems when transferring data between the new and the previous system.
- Parallel Implementation – you run the previous ERP system in conjunction with the new one. This method is the most expensive because you need to support both systems but it is the safest one.
When selecting the most suitable method of implementation, you should consider your budget, time frame, and the time required for training your personnel.
5. Prepare for the change
Tell your employees about ERP implementation timelines, possible changes in business processes and responsibilities, and relevant training. Try to engage all employees when possible.
Analyze your current data. Identify the necessary and most important data sets that are to be transferred to your new ERP system and make sure they are accurate. Ask your ERP consultant if you need advice on how to clean up data for ERP import.
You also need to check the infrastructure on which the new ERP software will run to ensure that it is scalable and can be updated per demand.
Typically, ERP software is designed according to the needs of a specific industry and in many cases, no customization is required. But sometimes, you may need to hire an ERP developer to customize the new system for your business process and add new functionalities.
7. Provide training your employees
When the system is configured, train your employees on how to use the new ERP software in the most optimal and cost-effective way. You should invest in the group and individual training and consider using in-person and e-learning methods. Remember that training is essential for the success of the ERP system implementation process.
8. Test the ERP system
Testing your new system requires time and diligence. Your task is to make sure that all data are transferred smoothly and there are no gaps. You need to identify issues during routine operations and get all the bugs out.
9. Go live
After the new ERP system has been properly configured and tested, it’s time to go live. Still, it is recommended to perform an additional functionality test after launching.
10. ERP support
Advanced ERP systems require attention after they have been installed. You will need to perform regular software updates and contact your support team when general maintenance is required.
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ERP Implementation Challenges
Choosing to implement an ERP system is a big decision for any company. As you see, ERP implementation process is rather lengthy, and it can potentially create a lot of challenges, especially if you do it for the first time. You may encounter issues practically at every stage of ERP implementation. It can be confusing to determine your objectives and choose the perfect software. You may discover that your hardware infrastructure is outdated and can’t support the new ERP system or you may fail to provide appropriate training for your employees. Chances are that you may exceed your established budget and have no idea what to do next.
In fact, it doesn’t matter whether you are a small, family-owned business, medium-sized company or a big corporation: there will be struggles. And there are plenty of things that can go wrong.
Unfortunately, many companies fail when it comes to implementing the new ERP system or upgrading an old one. Here are some ERP failure statistics.
- Nearly 50% of the ERP implementations fail.
- 57% of ERP implementations take longer than expected.
- 54% of ERP systems go over budget.
Looks scary, doesn’t it? And you might be wondering why so many businesses fail with ERP implementation. Actually, there are many reasons but based on our extensive experience, we can point out the following common ERP failure factors:
- Improper planning. A detailed plan is a must for a project of this size but too often, the plans are not realistic or specific enough. Sometimes, companies may underestimate the number of changes that are to be made or, on the contrary, develop high-level plans with extremely broad assumptions. Poor planning is the most typical mistake that causes failures. But if you don’t have a good plan, you will never know how much will your project cost or when it will end.
- Excessive customization. Customization is important if you want to make the new ERP software a better fit for your business but it adds risk and cost to any ERP project.
- Insufficient testing. Advanced ERP software consists of several systems and platforms and even a single error can result in a wreck in your business processes. Detailed testing allows to check software compatibility and whether the system works properly. Testing should be performed before the system is completely deployed to discover and fix all potential issues. Otherwise, you may face costly unplanned updates.
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ERP Consulting – a Remedy to Painful Project Management
Today, ERP systems touch almost every aspect of a company so poor execution of ERP implementation leads to huge waste of time and money. How can you avoid the most common pitfalls? The answer is obvious: To run the project smoothly, you need a full team of narrow ERP specialists with expertise in specific fields.
ERP business analyst sets the stage
It goes without saying that a successful ERP project begins with a good business analyst. ERP business analyst is responsible for performing an enterprise analysis to identify business needs and set the objectives. He can help you to deconstruct business processes and find opportunities for improvement using technology.
ERP developer adjusts the system to your needs
An ERP developer does all the additional coding and customization of the ERP system to fit the needs of the client. If you choose to implement an open-source system, ERP developers can customize it to meet the specific requirements of your industry and add new features.
ERP integration specialist ensures smooth data exchange
Integration of the new ERP modules with your existing CRM system is one of the most challenging steps in the ERP project. ERP integration specialist can help you choose the most suitable approach from the common implementation options such as “Swivel chair”, point-to-point integration, custom application or adaptors, and enterprise service bus (ESB). Want to know more about these approaches? Read our ERP implementation article.
ERP migration specialist ensures seamless data transfer from legacy systems
Your company already has a lot of data – customer names, invoices, purchase orders etc. It’s important to move the data from the existing system without losing a tiny bit but it has to be clean data. ERP migration specialist will define a data migration strategy and ensure that the transferred data can be used in the new system.
ERP project manager orchestrates the process
A project manager has a lot of important responsibilities and manages the team of ERP specialists. He determines the objectives, provides project planning and coordination of resources during the implementation, calculates and monitors time and budget spent, and keeps all departments and executives up-to-date on all stages.
Here at Quandary, we have a great team of experienced ERP specialists that can work on your premises or from our office. If you are considering ERP consulting for your business, contact us to find out how we can help you with your ERP project.
Book your free initial consultation today!