ERP implementation plan: the definitive 7 step methodology
You're planning your ERP implementation.
You've selected your ideal ERP, now all that's left is to implement it. You know that implementing an ERP can be a challenging process.
Unfortunately, you also know that ERP implementation failure is common, and that for this project to work, you’re going to need to do a whole lot of planning.
First thing's first...
What is the ERP implementation process?
The ERP implementation process includes installing your software, transferring all your data, both financial and transactional data, mapping your processes, and training your users to actually use the software. This process will determine whether your ERP implementation is a success or a failure.
So, where do we start?
We’ve created this guide to help you plan your ERP implementation from start to finish. Packed with real-world advice, expert tips, and quick step-by-step breakdowns, we’ll cover:
- Creating an effective change management plan (and who should be helping you implement it)
- Hidden ERP implementation costs, and how to forecast them
- Migrating your existing data to your new ERP system
- Going live, and how to evaluate the success of your project
It won't (unfortunately) implement your ERP for you. It will, however, provide you with the information, resources, and templates to gain an in-depth understanding of the implementation process and increase your chance of a successful project.
And isn't that almost as good?
The stages of our ERP implementation methodology
First things first: it’s going to be pretty miserable planning this out on your own. Creating an efficient and dedicated ERP implementation team will make your job much, much easier.
To start off with, you’ll need the following ‘core’ members.
- Project manager: the leader. You, probably.
- Application analyst: responsible for data migration and cleansing
- Application developer: in charge of system customization
- QA test engineer: heads up system testing and performance efforts
Yet to ensure your implementation goes as smoothly as possible across all departments (and to avoid the entire workforce writing your carefully-laid plans off as ‘IT telling us what to do’) you’ll need a few more people.
These will largely depend on who your key stakeholders are - and given the nature of ERP these will vary from company to company depending on what functionality you’re implementing.
Here are some example stakeholders you should include when implementing various functions:
|Stakeholder||Function of interests|
|Senior management||Analytics, reporting, BI|
|Accounting||General ledger, accounts, asset & cash management|
|Engineers & shop floor staff||PLM, production scheduling, document management, designs|
|Shop floor workers||Document management, inventory, designs|
|Sales department||Forecasting, BI, CRM functions|
|Warehouse staff||Inventory, WMS, SCM, mobile device integration|
Should I hire an ERP implementation consultant?
Short answer: yes, if you don’t have the expertise in-house and you can afford it. An experienced implementation consultant will have seen it all before, and can circumnavigate problems before they arise.
It is possible to implement successfully without one though - don’t despair if your budget can’t stretch to it, or your accounts department are notoriously tight-fisted.
There are two sides to this, really.
First, you’ll want to plan out your ERP implementation in steps, and delegate these across your implementation team depending on expertise.
We’ve got an in-depth template ERP implementation schedule here - though you can use the checklist below to get a handle on what needs doing quickly. Before setting off on your implementation, you should have plans in place for:
- Forecasting implementation costs and drawing up a budget
- Creating an ERP implementation schedule
- Migrating data to the new system
- Training your ERP user base
- Testing your ERP and going live
- On-the-day go-live activities
- Evaluating the success of your project
Tools like Trello, Google Sheets and Wrike are excellent for collaborating on projects like ERP implementations - have a browse and choose the one that fits best with your company’s project management style.
Second, you’ll need to plan out ways to keep the company on-side during the implementation. Change always brings a degree of disruption, but this can be minimized by:
- Clear communication of any anticipated disruption
- Allowing adequate time for user training
- Taking key stakeholder needs into account (you’re halfway there with this already, having included representatives in your project team)
That’s a golden question. If it was easy to answer, there would be far fewer overbudget ERP implementations and far more people volunteering to project manage them.
According to a recent Softwarethinktank analysis:
- 35% of ERP implementations were over budget by 0%-25%
- 15% were over budget by 26%-50%
- 6% were over budget by more than 50%
This suggests that, overall, over half of ERP implementations run over budget. Needless to say, budgeting is a minefield and you’ll have to be very careful.
Still, there are some costs it is possible to define. A good starting point is to assume cost of an ERP implementation will require at least 1% of an enterprise’s annual gross revenue at a minimum.
You should then include all of these factors in your implementation budget to avoid being hit by hidden costs:
- Hardware/network upgrades: these will be far higher if you are implementing an on-premise system
- Staff overtime pay: an important one to remember - “we didn’t budget for overtime pay, sorry” is not a line that will go down well with your team
- Vendor training, customization and consultancy fees: if you’re lucky your vendor may have included these in the initial software price, but this is definitely not a given. Always check
- Data backups and storage: these are often bundled with cloud ERP costs - but again - always check.
What you can expect to pay for an ERP will vary depending on a number of factors ranging from business size, requirements, and the number of users, but a 2019 Software Path report recently found that, on average, companies spend about $7,200 on average, per each user of a system.
Tip: For the most accurate results, you should also budget for productivity loss - because no matter how hard you try, you’re not going to be operating at maximum efficiency for the duration of the implementation.
So it begins.
You’ve planned as much as you can. Now it’s time to get down to the actual process of shifting your company over to the new ERP.
Data migration is the first step - if you get it right you’ll have built a solid foundation on which to continue your implementation efforts. Get it wrong, and things may start to crumble.
Your application analyst should head up this effort as it’s their specialty. Be ready to assist them in:
- Data cleansing and verification
- Database setup
- Mapping legacy data to new database fields
- Data transfer to the new system
- Testing and verification of legacy data
- Testing and verification of new data inputs
User adoption is key to the success of your ERP implementation project, and a suitable user training plan is essential in achieving this.
There are various ways of training your workforce; but most training methods can be divided into ‘in person’ and ‘e-learning’ methods:
|In-person||Ensures all employees attend through compulsory sessions||Difficult to coordinate across large workforces, especially with shift workers|
|E-learning||Easily customized to specific roles; easier to coordinate than in-person training||Encouraging employees to complete on top of regular work can be difficult|
A summary of the pros and cons of in-person and e-learning training methodologies
Regardless of which training method suits your workforce best, four features of all successful training programs include:
- Role-based training to streamline the process and keep time-poor employees on-side.
- Opportunities for trainees to offer feedback (and for the implementation team to act on it
- Clear communication channels with vendor support teams
Tip: identify promising, tech-savvy members of staff to train as ERP superusers. They can then deal with low level user issues, allowing you to focus on the task at hand.
For best results, why not try gamifying parts of your training plan? In a study by TalentLMS, 89% of those surveyed stated that a point-based system would boost their engagement, whilst 62% said that leaderboards and the opportunity to compete with colleagues would motivate them to learn. Use this to your advantage.
Small perks for everyone who completes training tasks on time (free food, extra hour for lunch), and larger ones (cash bonus, extra day’s PTO) for your top performers will make engaging with training that bit more appealing for busy employees.
This is it. Your Big Day.
If you thought getting married required a lot of arduous advanced planning, you’re going to be unpleasantly surprised by the ‘go-live’ stage of your ERP implementation.
Things to plan include:
- System testing (pre- and post-go-live)
- Staff scheduling including required overtime or temporary staff
- Identifying metrics for project evaluation
- Creating a communication strategy for system downtime
- Network speed and reliability checks
- Data backup processes
Communication is key here, both with your team and with the wider workforce. You’ll need to be clear on who’s doing what, when you expect it to get done and what sort of downtime hours
For more on the go-live stage of your ERP implementation, see:
Start off with these simple questions:
- Has your company gone bust?
- Are they suing your ERP vendor for breach of contract?
- Did you manage to keep the project anywhere near in-budget?
If so, you’ve probably not done terribly. Give yourself a high five.
To get a bit more in-depth about things, you should use a combination of the following metrics:
- ROI. Have you seen a return on the money you spent on your ERP?
- Decrease in human error: a well-implemented ERP should reduce data errors due to process automation. If your training plan worked, employees should be making the most of these features
- Increase in productivity levels: this speaks for itself. Has the ERP achieved exactly what it set out to do?
- Increase in client satisfaction: have turnaround times increased? Are you processing orders quicker?
We've now come to the end of our ERP implementation plan. A final word before signing off: all companies are different. You'll need to customize this template to the needs, schedules, and idiosyncracies of your own organization for maximum success.
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