ERP or Enterprise Resource planning refers to the use of software by an enterprise to automate all parts of its business to enhance its efficiency. The use of ERP has increased and it is now predominant in all industry sectors. Organisations of all sizes are implementing ERP to benefit from it. Implementing an ERP is challenging since it calls for integrating all systems in an organisation. We look at all the steps involved in implementing an ERP system.
ERP Implementation – Steps involved
Implementing an ERP requires effort and every department or function needs to be involved in it. Since the ERP system would be used throughout the organisation, a structured approach is needed. In general, the implementation is done through seven different steps. These steps or phases are usually done one after the other, but some steps may overlap.
Step 1: Discovery & Planning
The first step involved making a decision on going ahead with the ERP implementation. This is the phase when the ERP software is chosen. Usually, a project team is formed with a team lead who has responsibility for the entire implementation. There would be members from all departments.
The team would evaluate various software and present a comparative analysis to the management. Once management approves the budget, a contract is signed with the vendor. In some cases, the help of a consultant may be taken for implementation.
The project team would then make a detailed plan for implementation in consultation with the vendor. The plan would outline how the ERP would be implemented – cloud or in-house. The phases of implementation and deadlines are worked out. Resources needed are also planned. The detailed plan of action is communicated enterprise-wide.
Step 2: Design
In the design phase, the vendor would understand the requirements of the business and design the ERP system. Usually, organisations don’t get an ERP system created for them. They use an existing system that the vendor would customise for their needs.
The design phase would involve letting the vendor know the specific needs of the organisation. The modules required, the processes, and the workflow are all finalised at this stage. A gap analysis may need to be carried out. It would help the vendor understand the gaps between their software and the organisation’s processes.
Based on this gap analysis, the design of the new system is worked out. There would be multiple rounds of discussion between the vendor and the project team to work out the design. When the project team signs off the design document, the next phase commences.
Step 3: Development
The development phase is when the ERP system is actually developed. It also refers to the vendor completing the customisation work. At this stage, integration with other software or apps needs to be planned. Migration of data is required during implementation, and this would be planned at the development stage. The planning should decide which data has to be migrated and which can be left alone.
While development is happening, the project team needs to start preparing for implementation. A key activity is training where everyone in the organisation needs to be trained on using the ERP. A detailed training plan needs to be worked out. For a large organisation, master trainers may be trained by the vendor. They would in turn train others.
Step 4: Testing
Once the development is completed, the ERP system is ready. But before implementation, the system has to be tested. Once the ERP is implemented, the organisation would be going live. Any mistake at that stage would be costly. Hence detailed testing is important to identify any issues, so they can be fixed.
Individual modules would be tested. The integrated system would also have to be tested. Load testing is important at this stage. The testing has to be done by the vendor and the project team together. The testing may be done through a pilot implementation.
Step 5: Deployment
The core phase of the ERP implementation is deployment. This is when testing is complete and the project team is satisfied with the results. The data migration would have started, as would the integration with other apps. Training on the ERP would also be completed. Documentation would be ready and available for all users.
Once all this is ready, all that remains is to go live. This is a big step since the ERP would be used by all departments/teams/employees from that date. Work would be done through the system instead of doing it manually or using different tools. Some companies may first implement important modules and then deploy the other modules.
It may be required to run the old system in parallel for some time. This may be required in case there is a problem with the new system. All this is planned and deployment is done as per the plan.
Step 6: Ongoing maintenance and support
Once deployment is done, it is possible issues are identified. Some may be critical, while others minor. All issues need to be fixed and the project team would work on them in conjunction with the vendor. Any fixes done are usually uploaded to the system as a patch.
Support is needed at all stages and most vendors offer support either online or offline. The support would ensure users can implement the system without any problems. Any queries or problems would be resolved by the support team. Apart from software support, support may be required on the hardware end as well.
Once the implementation is successful, ongoing support is needed. Also, maintenance would be required. Since organisations are dynamic they may change their work processes. This would call for changes in the ERP. The change needs to be planned well.
ERP implementation takes a lot of effort, time, and of course money. It is very important that the implementation should be planned and done in a structured way. The process explained above would have helped you understand how the implementation is done. You can now successfully plan ERP implementation in your business, so you can reap its benefits.