The Risks, Benefits, and 9 Key Stages of a Successful ERP Implementation Plan

ERP implementation is the process of building ERP Software on the blocks of existing applications to link data, drive analytics engines, and deliver key insights. To be successful, the implementation process involves careful planning for installation, configuration, and deployment.

Successful ERP deployment creates opportunities to improve 95% of core business processes. But, as with any adoption of a business-wide application, there are risks involved too; from deployment issues to wrongful data management.

For a business to have the best chance of success with ERP implementation, there is a 9-stage process:

1. Build a team
2. Define objectives
3. Find a system
4. Identify requirements
5. Cleans data
6. Customise ERP modules
7. Clean complex data
8. Test data
9. Deploy & measure

As a typically once-in-a-generation project, ERP implementation should be part of a long-term, top-to-bottom strategy. It requires considered planning and project management to help successfully deliver benefits such as reduced operational costs and improved real-time reporting.

Why Business Leaders Push For Successful ERP Implementation

The leading business objectives cited for ERP implementation are to:

• Achieve cost savings (46%)
• Improve performance metrics (46%)
• Enhance efficiencies in business transactions (40%)
• Support growth (36%)

Succeeding with implementation is a challenge for any business looking to unify its digital applications. As well as to automate processes and uncover extra value from data or business opportunities.

CIOs, IT leaders, and buyers typically lead the drive for ERP adoption. They are responsible for application implementation and data integration. This makes it a business-wide strategy and not just an IT project.

The larger the business, the more software steps there are to implement. Meaning the more (larger) teams there are to train and greater data sets to integrate. These create complexity and the potential for issues and require careful and agile management.

Also, as businesses grow, an ERP system must embrace future applications and data sources. This requires a well-thought-out approach to implementing and testing the ERP.

Understanding The Common Risks Involved In an ERP Implementation Process

Any major IT project faces multiple challenges, both from adopting new software and preparing existing software and data for it. The challenges associated with the implementation of an ERP system are:

• Data management: With ERP, the primary challenge comes from ensuring data can be migrated and implemented accurately to deliver process and analytics improvements.
• Process management: Replicating business processes through digital twins, process automation or upgrading existing steps in the ERP may require redesigning processes to generate improvements.
• Customisation and development: A few lucky or very-well drilled businesses can implement an ERP with next to no customisation. For the rest, additional layers of integrations, plug-ins and adapters may be required to bring data or processes in from existing applications.
• Testing and deployment: As the ERP process moves on, stringent testing must take place to ensure compatibility and functionality to ensure the ERP’s desired capabilities. Depending on the type of implementation, these can take place as modules or elements are deployed.
• Support and long-term goals: Managers and technical teams must be in place to resolve issues, and deal with user queries and problems. Leaders must ensure the ERP meets launch success metrics and delivers long-term benefits. If those are not met, then proactive measures must be enforced.

The Benefits of a Successful ERP Implementation

After the costs, effort, and leadership, the rewards of an ERP implementation need to be measurable and visible across an organisation. With the primary goals typically being to save money and deliver innovation and efficiency.

A recent ERP implementation survey showed the primary benefits for businesses were:

• Enhanced productivity
• Centralising departmental and functional data
• Reduced operational costs associated with business functions
• Having access to accurate predictive analytics
• A shared transparency of business data
• Improved customer satisfaction
• Improved reporting through the use of real-time data
• The ability to scale and customise a system

When it comes to cost-saving benefits of implementing ERP, specific examples include:

• Reducing the number of applications
• Cutting cloud service or application license costs
• Highlighting efficiencies within business processes
• Identifying supply chain weak points
• Managers can identify and resolve issues faster through analytics and dashboard alerts

Additionally, ERPs can support efforts to drive change management and encourage organised flexibility to approach new uses for data. As well as create new applications and speed the adoption of new technologies further into the second half of the decade.

Use Our ERP Software Finder to Identify the Best Tool For Your Business Processes

The 9 Stages of a Successful ERP Implementation Plan

The ERP implementation life cycle has multiple stages, each of which can run for weeks or months. Vendors, implementers, and integration partners all operate or offer broadly similar advice. Some stages will loop across multiple iterations, each with multiple stages, depending on the scale of the task.

For each step, the best practice for implementation is to form a team that operates as a centre of excellence. Each stage should be managed by appropriate members with knowledge and domain expertise across applications and services.

1. Build a Cross-Department Team For Maximum Engagement and Understanding

Find, partner with, or hire people with ERP knowledge and experience. Opt for those with a clear view of business goals and functional operations.

2. Define Clear Business Objectives; the ERP’s Project Scope and Success Criteria

Set out clear objectives, achievable stage goals, and a timeline for the project. Plan for flexibility for changing business operations or implementation issues.

3. Find the Right ERP Software That Meets Your Business Needs

Explore ERP feature lists, road maps, and success stories to identify the software that matches your future business needs.

4. Run Discovery Checks to Identify Current Applications, Data Sources, and Future Digital Needs

Some businesses have firm inventories of their software, others have a sprawling mass of solutions. Either way, identify applications and data store, including pilots and “personal” files, that workers may have.

5. Clean-up Data For Migration and Implementation Where Needed

Not all data is good enough for your ERP, some will need cleansing and reformatting to fit with your new services.

6. Customise the ERP to Ensure Access From All Applications

For applications and modules that do not integrate well with your ERP, there are plenty of migration and customisation tools to support implementation efforts.

7. Clean-up Complexities That May Impact Future Digital Operations

Through testing and strategic planning, your team will likely uncover longer-term impacts of the ERP implementation. Ensure these are addressed as early as possible.

8. Test the System, Run Pilots, and Initiate User Training

Test your ERP to its limits to understand product weaknesses and limitations. This helps to uncover undocumented features and issues.

9. Deploy and Build a Roadmap For Future ERP Evolution

ERP deployment is only the beginning of the journey. Operators take charge of complex interactions and find endless clever or unintended uses for the software.

4 Effective Ways to Measure the Success of Your ERP Implementation Project

Success starts with day one of the ERP project, identifying the major objectives at a board level.

As the ERP team builds up and explores the current state of the business and the technical benefits, those goals can be codified with metric-based achievements. Typically, these will focus:

1. Hours saved across individuals, teams, or departments
2. Money saved across internal and external costs
3. Growth-based benefits from a new understanding of data
4. Improved operational functionality and efficiency

FAQs

What Is ERP Implementation?

An ERP implementation sees a business replace or improve existing software with a new ERP software product. The implementation will migrate business data over to the ERP, along with operational processes, and partner/market information.

At the sharp end, users are trained on the features and new benefits an ERP brings. As a major project with a lengthy life cycle, complex-sounding stages can be broken down into simpler steps.

From Big Bang to Hybrid, the 4 Types of Implementation

1. The Big Bang
2. Phased
3. Parallel Operations
4. Hybrid Balanced

Smaller businesses with a limited digital service requirement can go all-in with a Big Bang approach. Implementing and integrating all existing systems at once. Larger enterprises might go big bang, but the risk of breaking something across the supply chain, manufacturing, sales, and other management processes is risky.

The more rational approach for larger businesses is to Phase in the ERP implementations, piece by piece. This makes change more manageable and reduces the risk of data issues. An alternative version is to run both old and new software in Parallel until all stakeholders are satisfied with the results. This is ideal for mission-critical applications or financial services operators.

Finally, the Hybrid approach mixes the above approaches. This helps a business manage the costs and risks associated with each to deliver the best value and safest approach.