How to implement enterprise resource planning (ERP)

Implementing an ERP system is a demanding task that impacts many company areas. Any large endeavor needs a well-planned implementation. Planning your implementation into phases with defined goals might boost your success.

Starting an ERP deployment without defined project goal, scope, and organization might lead to serious issues later.

What's ERP implementation

ERP systems connect financial management, HR, sales, and manufacturing to boost productivity and efficiency. ERP implementation involves planning, configuring, and installing an ERP system. Because ERP systems automate many activities, the process takes months and is complicated.

The business must carefully identify its requirements, establish how to restructure procedures to utilize the system, setup the ERP system to support those processes, and thoroughly test it before releasing it to users to assure a successful deployment. To complete all those processes on time, meticulous planning and progressive execution are needed.

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ERP Implementation Plan Phases

Flowchart of ERP installation phases: discovery and planning, design, development, support, deployment, and testing.

ERP installation plans typically include six phases with specified goals. Each firm is unique, therefore phases may overlap and differ. The ERP implementation lifecycle involves discovery, planning, design, development, testing, deployment, and support.

1. Investigation, Planning

The initial ERP installation phase? This comprises system selection, project team formation, and system requirements.

The project team will manage many tasks such as planning, scheduling, resource allocation, product and design choices, and daily project management.

The ERP project team usually includes an executive sponsor, a project manager, and department representatives. Senior management involvement ensures the initiative receives the resources it requires and supports organizational change. The team may employ a consultant or ERP installation partner for system design and configuration. A representative from IT and a report writer who will provide tailored reports for organization users should also be included.

The team will first study present concerns, such as process inefficiencies and ERP system needs. If the company has produced an ERP business case, it may have specified broad business concerns and implementation goals, such as a speedier financial closure, better operational insight, or IPO preparation. These can guide further extensive analysis, workflow documentation, and system development.

As the company determines its needs, the team may choose and buy an ERP system. A key choice is whether to employ an on-premises or cloud-based ERP system. In your data center, you acquire and install hardware and software for an on-premises system. Cloud-based ERP, which is a subscription service accessed online, is easier to adopt and requires less IT expertise. 

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2. Design

The design phase creates a thorough ERP system design from specified requirements and workflows. This involves creating more efficient workflows and other system-using business operations. Users know business processes best, thus they should be included in design. Include them in the design to ensure they'll use the new system and enjoy it.

Gap analysis can discover process subtleties and unique idiosyncrasies that may require ERP software modification or workflow or process improvements to match the ERP system. The team might disclose gaps to its implementation partner or supplier and request remedies.

3. Growth

With established design criteria, work may commence. The software must be configured and customized to accommodate the revised operations. Integrating the ERP system with any other company software that won't be replaced may also be necessary. The company must deploy hardware and software for an on-premises ERP system.

Training materials to assist users acclimate to the new system should be developed alongside software development. It must also plan data migration, which may be complicated since it entails extracting, processing, and loading data from numerous systems with different formats and duplicate or inconsistent data. Instead of migrating all historical data, which is likely useless, the project team should choose which data to move. Read about data transfer below.

4. Testing

Testing and development may coexist. The project team may test modules and features, make changes, and retest. One ERP module may be tested while another is in development. After verifying the software's fundamental features, it should be rigorously tested for its full capabilities, including letting certain employees use it for all their daily tasks. Initial end-user training and data migration testing should occur at this phase.

Most suppliers offer pre- and post-deployment user training options. The company should leverage development-phase training resources in addition to vendor support. Resources that address end-users' daily tasks are valuable. 

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5. Deploy

The system launch is your goal. Be prepared for complications as there may be many moving components and confused staff despite your best attempts to prepare them. The project team should be ready to answer queries, explain the system, and repair concerns. Troubleshooting should be possible with your installation partner. Users may need time to adjust to the system and boost productivity.

Some data can be transferred before deployment, but current transactions should be migrated promptly.

Some firms implement all ERP system modules at once, while others start with high-priority modules or processes and add others later. Some companies operate outdated systems alongside the new ERP deployment to mitigate risk, but this can increase project costs and lower user productivity.

6. Support/Updates

Maintaining your ERP implementation after deployment keeps users happy and ensures business advantages. The project team may still manage the ERP system, but it will focus on user input and system adjustments. New system features may require further development and configuration. The system must be taught to new hires.

You may need to replace hardware and apply software upgrades for an on-premises ERP system. Your cloud-based ERP vendor may update the program automatically.