Getting Ready for ERP Implementation

Getting Ready for ERP Implementation

Getting Ready for ERP Implementation

By nature, ERP implementation is a very complex process, because, it involves establishing a single system that integrates all the important processes such as planning, purchasing inventory, sales, marketing, finance, human resources, and more. ERP Software Implementation is a long term activity and investment that impacts all areas of the business. It involves a considerable amount of time, effort, and cost. Therefore it is extremely essential to have the right preparation for ERP implementation. The objective of this article, to educate manufacturing companies and provide a definitive roadmap and step by step directions to Getting ready for ERP Implementation.

How to Get Ready for ERP Implementation?

Here is a brief outline of the points to be considered for becoming ready for ERP implementation. We will elaborate on the following topics in later sections.

1. Establish a Core Team for ERP Implementation
2. Prepare a Vision Document for ERP Implementation
3. Define ERP Implementation Goals & Objectives
4. Document Current Processes & Prepare for Standard Business Practices
5. ERP Software Selection & Vendor Evaluation
6. IT Infrastructure Readiness
7. Time & Budget Commitment
8. Change Management

1. Establish a Core Team for ERP Implementation

Setting up a core team for ERP Implementation is the first step in the journey of a successful ERP implementation. Start assembling your ERP Implementation Team even before ERP selection. Select your best, and most committed representatives from key business areas, who can pinpoint areas of business improvement. When the ERP team has a clear and defined agenda, is aligned for ERP implementation, and works in close coordination will ensure ERP implementation success.

2. Prepare a Vision Document for ERP Implementation

An ERP Vision Document is created to bring everyone from the core ERP Team to a common consensus regarding, what are the problem areas and pain points being solved and what results can be expected after ERP implementation.

ERP Vision Document clearly describes:

  • What the objectives of ERP? What does the company want to achieve in the future?
  • What are the specific needs & problems areas of the end-users?
  • What are the ERP product features, proposed solutions in ERP?
  • How will the problems be resolved with ERP?
  • What benefits will the company derive from ERP Implementation?

Read more about What should an ERP Implementation Vision Document looks like? What Points should be covered?

3. Define ERP Implementation Goals & Objectives

You must clearly define the purpose of implementing ERP Software. What changes do you want to achieve? What results do you expect to see? This will ensure that you can set up key performance indicators (KPIs) and monitor performance objectively based on defined criteria. Here are a few examples of how you can define the goals and success criteria at the department level, organization level, for the short term and the long term. These will become important aspects to measure ERP implementation success.

  • Department Level ERP Implementation Goals & Success Criteria:
    Reduce Purchase Order Cycle by XX days
  • Organization Level ERP Implementation Goals & Success Criteria:
    Reduce Operating Costs by XX%
  • Short term ERP Implementation Goals & Success Criteria:
    Implement Rules & Policies of Business discipline via ERP
  • Long term ERP Implementation Goals & Success Criteria:
    Reduce Inventory Level by X%

4. Document Current Processes & Prepare for Standard Business Practices

Prepare detailed documents that specify your current business processes and workflows

  • Define the Task/Activity being performed
  • Who will perform the task – roles & responsibilities of people involved
  • How the Task will be performed – with Clear Step-by-step Instructions

With this basic groundwork, it will be easier for the ERP experts to define the current AS-IS process and suggest industry-standard TO-BE processes, based on industry best practices.

Implementing Standard Operating Procedures for your business functions is a reliable mechanism to ensure consistency, standardization, increase efficiency, improve productivity, bring speed to your operations, and reduce costs.

All this is possible because Standard Operating Procedures :

  • Define the most efficient and effective way of carrying out activities
  • Ensure consistent, standardized, and person independent processes
  • Reduce chances of mistakes and errors
  • Ensure little or no idle time, minimize wastage of materials & resources
  • Improve communication & coordination

5. ERP Software Selection & Vendor Evaluation

Every company has its distinct requirements and specific needs for ERP implementation. Therefore, they should define ERP selection criteria that suit their specific business requirements.

Your relationship with the ERP Vendor will play a crucial role in ensuring a successful ERP Implementation. ERP vendor having a good understanding of your industry and niche will be able to understand your business problems and resolve them more efficiently.

Here are a few criteria to consider during ERP Selection & ERP Vendors evaluation

  1. Does ERP have Industry-Specific Solution?
  2. Can ERP cater to your core functionalities?
  3. Does ERP Vendor have domain expertise to understand your unique specific needs?
  4. How many years’ experience does ERP Vendor have in your specific industry.
  5. How many successful implementations in your niche?
  6. Will ERP Vendor be able to establish standard business practices?
  7. What is the ERP Implementation Approach? How Flexible/Inflexible?
  8. What is the ERP Deployment Methodology?
  9. Have the ERP Vendors developed software themselves? How often do they update it?
  10. Does ERP provide mobile apps, business intelligence solutions, dashboards?
  11. Can ERP Software be easily integrated with your existing 3rd party software?
  12. Is ERP Robust & Scalable? Will it be able to accommodate your growing needs?
  13. Will ERP Vendor provide Post Implementation Support
  14. Does ERP Vendor provide extensive ERP training to end-users?
  15. What are the pricing options & payment terms?

Shortlist ERP Software and Vendors who seem to be performing well in your niche. Ask for recommendations & referrals from your industry. Check how satisfied the earlier clients were. Do your due diligence before finalizing the ERP Software and ERP vendor.

6. IT Infrastructure Readiness

ERP Software integrates locations and users across various company locations. To get ready for ERP Implementation, you must take into consideration factors such as how many locations to be integrated, how many users across each location, what type of integration to be carried out, and more.

On this basis, you must examine your current IT systems including your hardware, software, and network infrastructure. Audit your Workstations, Servers, Data Protection, Operating Systems, Database, Internet Bandwidth, Emails, Software, Network LAN/WAN, Security, Firewall, Antivirus, and more.

This is essential to determine whether you can leverage the existing infrastructure with the ERP Software or not. It will also help you assess how much you need to invest in new infrastructure or find out suitable alternatives that suit your budget. This will ensure enough time on hand to organize the appropriate infrastructure before the ERP Project commences.

7. Time & Budget Commitment

ERP Implementation requires a significant amount of Time, Effort & Cost. You must be prepared to commit to both aspects before embarking on a journey to implement ERP.

Depending on the specific business requirements, business processes, customizations, and other factors, ERP Software implementation for a small organization may take anywhere from 3 months to 6 months. For medium companies, it could range from 6 months to 12 months or more. For large companies, it may be a year or two or more.

Only if your core ERP team has the discipline, dedication, and determination to commit the necessary time and efforts required will you be able to carry out successful ERP completion.

ERP Software requires a sizeable Budget. You must ensure that funds are available at the right time to prevent the chances of delays due to budget in the ERP projects. Ascertain if you are ready to commit to the project financially and only then commit to ERP. Some important points to consider while setting up ERP Budget are

  • ERP deployment methodology
  • ERP Software licenses
  • Number of ERP users
  • Investment in Hardware & Software for ERP
  • Additional costs for custom development
  • Cost of ERP Integration with third-party software
  • Cost of Training ERP Users
  • Expenses for annual/ongoing maintenance

8. Change Management

ERP Implementation Impacts how employees, customers, vendors perform their tasks. It is important to educate and inform all users and stakeholders about likely upcoming changes. Change Management Individual or Team is responsible to obtain consensus and active participation of all stakeholders by openly communicating with them and eliminating their doubts/fears of changes. Their job involves explaining how the processes will change, how ERP will ensure savings in time & effort.

Senior Management should also propagate the benefits of ERP and create the mindset of employees to embrace ERP willingly for performing their routine activities.

Summary

Well Begun is Half Done! Make sure you do the right preparation for ERP implementation. Here we have shared all the important aspects that a company should take into consideration for getting ready for an ERP implementation methodically & systematically. If you follow these guidelines you can rest assured of a smooth and successful ERP implementation.

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