ERP implementation is a two-worded process that is highly researched, discussed, scrutinized and stressed over. That is because the implementation stage of adopting a new ERP is arguably the most important aspect for changing your efficiency and business management. At first thought it seems straightforward – the installation of software. But dive in a little deeper and you will see how it involves configuration and the moving of data, processes and users to a new system. It is a different mindset and not one everybody is eager to adopt.
And why is that? After a successful implementation, businesses are positioned for growth, have better reports and analytics, operate more resourcefully and are technologically advanced. There are countless stories of triumphs and “should have done it sooner” statements. Yet, regardless of the promise of success, apprehension is high because changing an ERP can be time-consuming, expensive and disruptive.
How Time-consuming, Expensive & Disruptive?
You are probably asking yourself how to offset any negatives to achieve the most positives. You know the answer is “depends” right? Your unique situation, ERP system you have, ERP system you want, budget and the approach your organization approves all play key roles. Let’s break that down further. Look at three approaches outlined below and the pros and cons of time, expense and disruption.
1) The Hobble Along – Keep old ERP and make modifications as needed
(Typical of low mature, low growth companies.)
PRO: Little time is required to make modifications.
CON: Much time required as you continue to deal with the inefficiencies.
OFFSET: Making the effort to review the process, manage the disruption and make the change will pay dividends with increased efficiency.
PRO: Little additional expense for upgrades.
CON: There is an ongoing expense, most often unaccounted for, in the cost of rework, duplicate entry and inefficiency of data analysis.
OFFSET: Quantify the cost of rework, duplicate entry and inefficiency, then make the investment decision.
PRO: Little disruption because there is little change.
CON: Frustration displaces disruption because nothing changes, and nothing gets better.
OFFSET: Studies have shown patients would rather experience a single intense episode of pain, “tearing off the band-aid” than continued less intense pain, “gently removing the bandage”. Disruption is better than ongoing frustration.
2) The Piecemeal – A phased implementation approach
(Ideal for those with a solid tech stack and ERP platform, but whose business has changed since the implementation.)
PRO: Smaller projects take 1-3 months.
CON: Larger projects with advanced analytics, ecommerce integration and basic WMS take 3-6 months.
OFFSET: Things will never get easier and there will never be a perfect time. Tackling the bigger upgrades first will get you were you want to be faster.
PRO: Not departmental expense with the appropriate planning.
CON: A capital expenditure and needs to be treated as investment.
OFFSET: Quantify the cost of doing nothing and compare it to the value received.
PRO: Does not affect the entire organization all at once.
CON: Usually there are some departmental disruptions.
OFFSET: Once a department goes through the disruption and celebrates the win, it is contagious and breeds the desire to make the effort to continue improvement.
3) The Bells & Whistle – New and robust ERP rollout
(Needed for companies who are not keeping up. The time for change is now to set the foundation for growth.)
PRO: You are paying for the time now to get it back in the future. The time you will save in the future on all processes and deliverables is the return on that investment.
CON: Depending on business could be anywhere from 60 days to 9 months or a year. Could take 25-40% of the project lead's time and 10-20% of process owners time during implementation.
OFFSET: Leadership needs to paint the vision of a path to a brighter day. Promote the benefits and the vision.
PRO: You have to pay to play. The investment now secures substantial gains later.
CON: Total software and implementation expense could be 1-3% of annual sales with .5-1% annual recurring subscription expense.
OFFSET: This is an investment. Quantify the value and compare it to the cost savings to create your return on investment. Then drive to those results.
PRO: Change management and a vision from the executive team will help minimize the fear and get people excited about the better, more efficient and productive world ahead.
CON: The disruption is seen across the enterprise.
OFFSET: Complete commitment to the implementation process and testing eliminates disruption at go live.
When is the best time?
After looking at the breakdown above, you will have a better sense of what solution you want and when your solution should happen. But (and this is a big but) anytime you ask key players in your organization to choose the best time, you are not going to get a clear answer. That is because the best time is now.
A) 2020 obliterated the playing field. It built a gap between those who were prepared and those who were not. Those who were not prepared are figuring out how to survive and catch up. Also, remote access and a distributed/mobile workforce made old tech a liability, which erased any previous competitive advantage.
B) Cybersecurity has never been more important. A good cloud ERP knows that and enables so much more. AI and ML, blockchain would not work without cloud technology. Being on a cloud platform gives you the foundation to take advantage of these technologies as they become applicable to your business.
Cloud is more than just being cool and running in a browser:
Managing access - Manage users, privileges, and clients, with strong identity and access controls and fraud prevention.
Protecting data - Protect databases, workloads, and other content. This includes training your employees about cybercrime and how to avoid ransomware attacks.
C) Your customers expect more transparency, self-help and timeliness. Not to mention, multiple communication and access points now that omni-channel is becoming standard in business operations.
Tips to Successfully Implement ERP
Have you heard of the 5 P’s of Success? “Proper Planning Prevents Poor Performance” It is a motto worth living by when you’ve decided on your approach, set a budget and are making the time. To be effective and avoid pitfalls, look at the below tips to help your implementation go as planned.
Set Realistic Goals
The first step of a successful ERP implementation begins before the implementation. You need set goals that are realistic. Plan accordingly, evaluate your goals and how capable you are of them with a new ERP system.
Choose the Right System
Rather than just jumping in, you should weigh all of your software options. Demo products and truly evaluate what is best for growth. Don’t go with the first system that you see that checks all the boxes. Dream big and see what system gets you the closest within your budget.
Select a Knowledgeable Team
When you begin to work on an ERP implementation, you will need a high-quality team to implement the software. This means you will need to hire a variety of experienced individuals or use the employees you have. ERP Implementation is not an easy task, make sure the team you put together is up for the challenge and has the knowledge they need to succeed.
Allow Enough Time
Be sure to give your team enough time to complete the project of implementation. You do not want it to be another project on the backburner. Instead, this should be something that has full focus, as it typically requires a lot of work to kick off. Many ERP implementations suffer because there is not enough focused effort or time to get the job done precisely.
Select Data for Migration
Migrating your data from your old system to the new system is the biggest part of the ERP implementation. The data that you are migrating is essential to the success of your business because it means that you will be able to fully utilize the software after implementation. Bringing over your data is expensive, so it is important to pick and choose which data is essential to migrate.
Test the System
Test the ERP system before you buy so you know if it's a right fit for your business. Then run test scenarios while you are implementing to begin the training process and identify areas that need to be built before going live. Then, test again.
Improve Operational Efficiency
When implementing an ERP solution, you can investigate your company and see where you can improve. Focus on the key weaknesses until they become strengths for your business. Implementing Cloud ERP will make your company more efficient.
Begin Training Before Implementation
Before beginning an ERP implementation, you need to focus on training. It is imperative that training begin early, before the implementation starts, so you can prepare your staff and make the transition go smoothly.
Include a Plan for Phase 2
The most important features of a new ERP are often the ones that have more complexity. When employees are more comfortable with the software and feedback is coming in about utilization, it is time for Phase 2. This is highly recommended because chances are you selected your software for the powerful time-saving features. Make sure you get everything you are paying for and complete any adjustments needed to fully utilize the strength of the system.
Common Reasons for ERP Implementation Failure
If you need any more motivation for implementing ERP correctly, here is one last thing to mull over - a list of what you do not want to see:
● Poor change management execution
● End product doesn’t achieve the desired benefits
● Poor planning or poor project management
● Non-functioning software capabilities
● Poor data quality
● Resistance to change
● Lack of executive commitment
Successfully Implement an ERP System with Algorithm Inc.
Do you know why we put ourselves at the end of this article? Because you come first. At Algorithm, we stop at nothing to make sure you are successful. If you are looking for a new ERP system, custom applications, process evaluation, upgrade, add-on, or managed/cloud/network/IT services, it would be our pleasure to partner with you and assist with your progress. We are a certified partner of Acumatica ERP Solutions and an industry leader in cloud ERP software. If you would like to find out how we can make your business more efficient, schedule a demo or ask a quick question, contact us or check us out at algorithm.com.