Implementing an ERP – some best practices has been saved
Implementing an ERP – some best practices
A new ERP system is a big opportunity to transform your company digitally. You will be able to move past the hindrance to business caused by outdated technology with limited functionalities. Moreover, you will be able to leverage ERP system capabilities to gain new business opportunities.
ERP implementations that are not done correctly run the risk of accruing extra costs and risks. This article will help you avoid common issues faced by many during an ERP implementation to ensure yours goes smoothly.
Firstly, it is important to acknowledge that many start their ERP implementation project based on their desired technology and potential new features. However, new technologies or features will not solve the problem. Businesses require modern business processes in order to grow. It is only with effective business processes that a business can be agile and competitive.
Many times, current processes are outdated, inflexible and do not fulfil company needs. Even in cases where processes are cost-effective, they need to be mapped and regularly updated or enhanced to meet changing company needs, e.g. business intelligence (BI), mobile access, etc. This is where the ERP implementation journey begins (or at least, this is where it should begin!).
During an ERP implementation, your biggest success factor is your implementation team. This has been proven numerous times in a multitude of case studies. No matter how good a software is, it is only great if a great team implements it. Projects with team members who do not have the skills or time to carry out the implementation effectively will not be successful. It may suffer from extra costs and delays and end up failing to meet business needs. A good way to prevent this is by assigning people to the project that ‘you can’t do without,’ not just staff who were available to work on it at the time.
Staff assigned to ERP implementation projects need to have a good understanding of the business processes, work well in teams and have the respect by upper management. Leading ERP provider, SAP, recommends that staff should only be assigned to work on ERP projects if they can spend at least 25% of their time on the project. Team members who spend less than 25% of the time on ERP projects will not be able to keep up with project tasks and can easily fall behind.
Lastly, it is essential that ERP implementations have the support of upper management. ERP projects require businesses to make decisions about priorities and manage trade-offs with staffing. The commitment must be strong from the top in order for the implementation to go smoothly. Remember that this project will affect your CORE business processes…that is a pretty big deal!
Planning an ERP implementation
Here is a list of activities you need to carry out in order to have a successful implementation. You will need to create a plan and decide on KPI’s based on your individual business requirements, as every business is different. However, these suggested activities are components of all successful ERP implementations.
- Select a trustworthy software as a service partner
- Detail all tasks in an activity plan
- Estimate working hours/man days for staffing
- Develop a schedule
- Carry out a pilot
- Cleanse all data and consolidate into one database as much as possible
- Maintain good communication with your team
It is important to prioritise your needs and start with the processes that are the most important. All business have different needs but a few areas are listed below for your consideration.
- Business intelligence
- Customer relationship management (CRM)
- Finance and accounting
- Supply chain management
- Human resources
Minimising implementation risks
As mentioned before, ERP implementations have a risk of going south. So how can you mitigate these risks? Here are some ways of boosting your chances for a successful implementation on time and within budget.
- Always choose an implementation partner with industry experience, and get references too!
- Get rid of outdated technology and systems. Collect all your data in a single database with in-built BI.
- Make sure that you have the capability for cloud integration. In the digital world, businesses frequently need to integrate systems across service areas and with customers and suppliers.
- Be prepared to manage change and manage it effectively! It is not unusual to discover business needs during an implementation.
- Ensure that you have expertise in all locations – you will need training, implementation and support – many times this will be from a combination of software distributors, management, consultants and your software as a service partner.
Avoiding extra costs
An ERP implementation project requires you to keep costs in control. Your business’ time, your business processes, consultants, software, cloud services and equipment (laptops, tablets, phones etc.) are all part of the project. Below are some important areas to keep track of. Don’t forget that an ERP implementation will have a significant impact across your business.
- Focus on managing your total costs of ownership (TCO) and benefits – this will help minimise expenses while maximising the return.
- Work with the business direction in mind. Do not feel pressured to change your operating model to fit the new software – making unnecessary process changes can lead to higher implementation and operating costs.
- Focus on business processes that are routine and create value for your company, e.g. onboarding new clients, managing customer services and orders, adding new products, etc.
- Limit customisation to reduce costs. Instead, make the most of a configurable user interface (e.g. BI, workflows, mobile capabilities, dashboards etc.). This will allow you to make cost-effective modifications and streamline processes across departments.
- Use a secure cloud solution to avoid data breaches and hacks. This requires you to first ensure that your software as a service partner offers a variety of secure software deployment choices.
An ERP system has been implemented – is the project done?
Yes and No! You still need to maintain flexibility so that you can add capabilities to your business depending on changes and future events e.g. new products, a new location, acquisitions, etc.
You will need to continue being flexible when it comes to adopting new technologies e.g. machine learning and artificial intelligence (AI) and Internet of Things (IoT). Every implementation has unexpected issues but they can be minimised by following best practices to avoid additional costs and risks.