ERP Implementation: 6 Key Phases

The implementation of an enterprise resource management (ERP) system can be complex and impact many areas of the business. A well-planned implementation plan is crucial for any major initiative. You can maximize your success by breaking down your implementation into phases with clear objectives.

However, if you jump into an ERP implementation before defining clear project scope, structure, and direction, it increases your chances of running into significant problems later.

ERP

ERP systems integrate many business functions, including financial management, sales, and manufacturing. This provides benefits like increased productivity and efficiency. The process of implementing an ERP is described as planning, configuring, and deploying it. It usually takes several months and is complex because ERP systems support many functions.

The organization must carefully plan its requirements and determine how to change processes to make the ERP system more useful. Once the processes are redesigned, the ERP system needs to be configured to support them. Finally, it should test the system thoroughly before it is released to the public. It takes careful planning and a phased, structured implementation approach to ensure that you can navigate all of these steps smoothly.

What are the phases of an ERP Implementation plan?

An ERP implementation plan can be broken down into six phases with different objectives. Each business is different, so each phase may differ slightly depending on its purpose. They also might overlap. This six-part ERP implementation lifecycle covers discovery, planning, design, development, and testing. It also includes support and maintenance.

 

1. Discovery & Planning

What is the first stage of ERP implementation? This involves researching and selecting the right system, setting up a team, and defining specific system requirements.

The project team will manage a wide range of tasks related to implementation. These include laying out the project plan, and target dates, assuring adequate resources are available, making product and design choices, and managing day-to-day projects.

An executive sponsor, project manager, and representatives of the departments using the ERP system make up the ERP project team. Senior management involvement is crucial to ensure that the project receives the resources it requires and provides the support needed to implement changes across the organization. To help with the design and configuration of the system, an external consultant or ERP partner may be hired by the team. The team should include any internal specialists who are involved in the implementation of the system. This could include a representative from IT or a report writer who will create customized reports for all users within the organization.

The team will begin by gaining a deep understanding of current issues. This includes process inefficiencies as well as requirements for an ERP system. If an ERP business case has been developed, the team may already have identified broad business issues and goals. These may include a quicker financial close, better insight into operations, or preparing for an IPO. These can be used for more detailed analysis and documentation of workflows.

As the company develops clear requirements, the team might select an ERP system and purchase it. The most important decision is whether an ERP system will be used on-premises or in the cloud. An on-premises ERP system requires that you purchase and install software and hardware in your data center. Cloud-based ERP, on the other hand, is usually offered as a subscription service that can be accessed via the internet. This allows for faster implementation and requires fewer IT skills.

2. Design

The design phase begins with a thorough understanding of the current workflows and detailed requirements. This allows us to create a detailed design for our new ERP system. This involves creating new workflows that are more efficient and other business processes that make use of the system. Users are the best people to include in the design phase. They have the best understanding of the current business processes. Participating in the design phase helps ensure they will embrace the new system and use it to its full potential.

Gap analysis is a tool that can be used for identifying process intricacies or unique quirks that could require customization of ERP software, or changes to workflows or processes to better align with the ERP system. The team can identify gaps and present them to the supplier or partner in implementation.

3. Development

The development phase can start when you have clear design requirements. This includes configuring the software and customizing it to suit the new processes. Integration with other business applications may be required. The organization must install the software and hardware required to use an on-premise ERP system.

The team should also develop training materials for users to assist them in adjusting to the new system. The team must also begin planning data migration. This can be complicated as it involves multiple formats of data and different information. This phase should be decided by the project team. It is important to avoid blanket migrations of historical data that may prove inconvenient. (See below for more information on data migration.

4. Test

Development and testing may be done simultaneously. The project team might test certain modules or features, make adjustments or fixes based on the results and then retest. It may also test an ERP module that is in development. After initial testing, rigorous testing should follow. This includes allowing employees to test the system in their daily activities. This should include testing the migrated data as well as introductory end-user training.

Many vendors will provide pre-and/or post-deployment tools for user training. The organization should not only get vendor support but also make use of training materials that were created during the development phase. Resources that are tailored to the needs of your end-users can be a real asset.

5. Deployment

You’ve been working towards this day: the date the system goes live. You should be prepared for possible problems. There may be many moving parts and some confused employees. You should always be able to reach out to the project team to help you understand the system, answer any questions and fix any problems. If necessary, your implementation partner should be available to assist with troubleshooting. Users may need to adjust to the system over time to achieve anticipated productivity gains.

Some data can be moved before deployment while others, such as transactions and current transactions, should be transferred immediately after going live.

While some organizations want to simultaneously deploy all modules of an ERP system, others place greater emphasis on certain high-priority processes or modules and then add more later. Some organizations continue to use older systems concurrently with the new ERP system to reduce risk. However, this can increase project costs and decrease user productivity.

6. Support and Updates

After deployment, it is important to maintain the happiness of users and ensure that the ERP implementation delivers the desired results. While the ERP system will still be managed by the project team, the focus of the team will shift to user feedback and adapting the system as a result. As new features are added, they may require additional configuration and development. The system will need to be taught to new staff.

You will need to update your ERP system on-premises periodically. In some cases, you may also need to upgrade the hardware. Your vendor might automatically update your cloud-based ERP system if you use it.

ERP Implementation Best Practices

A phased approach to implementation is not enough. Each phase should be guided by ERP best practices. These are the best practices:

Don’t underestimate planning

It’s tempting to jump into design and development immediately, but it is important not to rush the discovery and initial planning phase. This phase is crucial to establish a solid foundation for the whole implementation project. It ensures that there is high-level support, a clear plan, and adequate budget and staffing.

Support and training are not to be underestimated

 Sometimes project team members might feel that the deployment date marks the end of an implementation effort, and not pay enough attention to what happens afterward. For the users of the system, the deployment date is only the beginning. It’s the next step that will determine the success or failure of the project. 

It is important to plan and allocate sufficient resources to provide technical support, resolve issues, and provide updates. This is where training the end user is crucial. It is important that employees are comfortable with the system and can easily navigate new workflows. This is especially true if they don’t have an external consultant to assist them. These areas are essential to enable your organization to reap the benefits.

Plan data migration carefully

Sometimes organizations make the mistake of migrating all their historical data to the new system. Some of the data in older systems might be outdated or not needed. Do you really need 10-year-old order data? Is every supplier on your list still available? It’s a chance to organize and streamline the company’s data. A plan is a good idea. It is a good idea to carefully review legacy data, eliminating old customer accounts and looking out for data errors.

Communication

It is crucial throughout the entire process. It should be a priority for the team to communicate regularly to all members of the organization about the reasons for ERP implementation, the benefits and goals, and what to expect at each stage. Communication should be two-way: Users’ concerns before and after deployment should be listened to by the project team.

 

An ERP system can be one of your biggest investments in time, money, and resources. It will only be as effective as the way you implement it. After your ERP goes live, create a solid plan and keep reviewing and optimizing your business processes. This, along with adding functionalities and features as you go, will ensure that you have a long-lasting ERP product.