Implementing an enterprise resource planning (ERP) system is a big step for any organization. ERP software supports an organization’s primary business processes, such as accounting, budgeting, inventory management, supply chain management, order processing, human resources and payroll.
Because an ERP implementation is a major project with a broad impact, it’s important to follow best practices throughout each phase of the process to make sure the ERP deployment proceeds smoothly, and to ensure that you get the most benefit from the system.
9 Key ERP Implementation Best Practices
These best practices cover each major ERP implementation stage, from defining requirements to training and providing support. As you work your way through your implementation checklist, they can help ensure that your ERP implementation meets your business goals, minimize the risk of delays and cost overruns, and enable employees to use the system effectively.
1. Project Team
Establishing a strong project team is critical. Typically, an ERP implementation team includes an executive sponsor, a project manager and representatives of key business groups involved in the project. Having an executive sponsor who can adjust business priorities and pull in additional resources when needed is vital to success. The team’s responsibilities involve establishing top-level goals, requirements and key performance indicators (KPIs); conducting day-to-day project management, including ensuring that the project stays on time and on budget; and measuring results. Because of the expertise required by the project management functions, less-resourced companies may need the help of an outside consultant to overcome these challenges.
During the implementation, the team must be able to resolve conflicts and mediate between different groups within the organization. It may also need to make decisions about mid-stream changes to the ERP implementation strategy, based on user feedback and input. Team members therefore should be both knowledgeable and highly respected within the organization.
2. Key Requirements
In any ERP project, it’s vital to establish clear requirements, which should be linked to your business goals. Those goals might, for example, include automating processes to save time and reduce costs, improving your ability to respond to customers and enabling better analysis across the business.
The requirements gathering stage includes analyzing current systems, workflows and key business processes, such as accounting, human resources, customer relationship management (CRM) and inventory management. It’s important to think about exactly what you want to accomplish and how each process could be improved—an ERP implementation is an opportunity to introduce a better process, not simply to automate an existing inefficient one.
This analysis should help to generate a list of key requirements that your ERP implementation will need to meet. Those requirements could include reducing financial close time in half, delivering real-time reporting or automating the connection between payroll and the core accounting system. Project teams must also be willing to adapt a company’s existing processes to the ERP system. Oftentimes, ERP systems have years of best practices from across industries baked in and can be more efficient than a company’ s existing processes or workflows.
With an understanding of key requirements, it’s possible to identify specific KPIs. These KPIs can represent targets to measure the success of your ERP implementation. For example, a manufacturer might want to improve cycle time, inventory turns, demand forecast accuracy, order backlogs, costs and downtime. For a retailer, KPIs might include total sales, profit margins, sell-through rates, average purchase value, sales per square foot, inventory turnover and customer conversion rates.
4. Project Management
An ERP implementation can take three months up to a year or more in big companies. It’s important to establish a project management framework that will guide your ERP deployment to success over the entire implementation period. At a high level, project management should focus on aligning the ERP initiative with business needs, keeping the project on track, and ensuring that key senior managers and other stakeholders are able to provide input. Scope creep, or a desire to add more and more functionality as a project progresses, is a common problem with ERP implementations. Strong project management can help to identify which enhancements can wait until later and which cannot.
Project management should also cover technical details of the ERP implementation such as how to configure the system, adapt specific business processes to take advantage of the capabilities of the ERP system, manage security and privacy concerns and implement training.
5. Collaboration and Communication
Successful projects revolve around building a mutual understanding of the goals and objectives of the ERP implementation. It’s crucial for everyone—from the CEO to end users—to be in sync. Everyone needs a clear understanding of why the company is implementing the ERP system, what the system will do, the benefits it will bring and what to expect during the ERP implementation process.
Clear communication and a collaborative approach are essential to build this mutual understanding. The CEO and leadership team should be involved, to emphasize the importance of the project. Communication may involve presentations, charts, graphs and ongoing letters or blog posts from the CEO. It may require regularly scheduled meetings and calls to coordinate efforts, identify problems and issues, and communicate successes.
Since the ERP implementation may also affect business partners, supply chain members and customers, it’s good practice to keep them informed during the project and help them understand how the changes may affect them.
6. Data Migration
Migrating data to the ERP system is a critical step in the implementation, and one that requires careful preparation and planning. With any migration, there’s a risk of losing or corrupting data, especially if you are consolidating and standardizing data from a variety of different applications.
A primary consideration during an ERP implementation is whether to transfer data manually or use specialized tools to automate the process. Each can offer advantages. Manually entering information into a new system provides an opportunity to cleanse obsolete data, such as suppliers that have gone out of business and customers that haven’t ordered for many years. Automation, on the other hand, can make the process much faster and less tedious. Whichever method you use, it’s important to validate the data after migration to ensure that it was transferred to the new system correctly.
It’s unrealistic to expect that workers will immediately be proficient with the new ERP system. Targeted, ongoing training that matches the needs of different groups and roles can help users accept the system and get the most benefit from it.
One approach is to provide customized content such as videos and tutorials and allow employees and others to select the most relevant content for their jobs. It’s also important to provide hands-on training to help workers learn the system. Some organizations have found that a best practice is to select some users for early, extensive training and use them to mentor others by sharing their experiences and skills.
A go-live date is a reason to celebrate. But once people begin using the system, it’s more than likely they can come across issues and begin asking questions. It’s wise to prepare by providing several resources. First, there’ll be a need for technical support. This may include help desk support as well as an online knowledge base and forums to help people get up to speed. Secondly, the project team should monitor for potential problems and identify issues. If many users are making the same error, it’s often an indication that there’s a problem that needs to be addressed by additional training or a system fix.
9. End-user Feedback
Gathering end-user feedback can be extremely useful throughout the entire implementation process. In the early stages, it can help you gain deeper insights into how people work, how they interact with other employees and customers, and the obstacles they face daily. Those insights can help to guide the ERP implementation so that it addresses real user needs. Then, as an organization rolls out the ERP system, user feedback can identify problems and provide ideas for further improvements.
Choosing the Right ERP System
Depending on your organization’s needs and budget, you’ll likely have a variety of ERP systems to choose from, including cloud-based and on-premises solutions. Many organizations select cloud-based ERP systems, which can be easier and faster to implement and don’t require capital investment in hardware. But the results that you achieve will depend on how you implement the system, as well as which product you choose. Applying best practices throughout the process, from requirements definition to support, can help to ensure a successful implementation that delivers the most value to your business.