10 Vital steps for a Successful ERP Implementation: The Crucial Role of Change Management
Implementing an ERP (Enterprise Resource Planning) system is a transformative journey that can propel your business toward greater efficiency and growth. However, the path to a successful ERP implementation can face multiple challenges. One of the most critical factors that can make or break this journey is change management. Without effectively guiding your team through the transitions, even the most advanced ERP system can fail to deliver its promised benefits.
The main goals for implementing an ERP system are to increase efficiency (35%) and reduce costs (29%). However, statistics show that 30% of ERP projects take longer than expected, and 64% go over budget, potentially leading to decreased profitability, lost revenue and operational disruption.
So, how can you achieve the benefits of a successful ERP implementation while avoiding the pitfalls? In this guide, we’ll walk you through the key phases of an ERP implementation plan and highlight how change management can make or break your project.
So What is an ERP Implementation?
ERP implementation is the process of planning, configuring, and deploying an ERP system. It’s a complex undertaking that can take months or even years to complete and fine tune, as it impacts nearly every aspect of your business. But when executed correctly, ERP implementation can lead to significant efficiency gains and cost reductions.
To ensure a successful implementation, it’s crucial to carefully define your requirements, redesign existing processes, configure the software to support these processes, and rigorously test the system before going live. Achieving all this on time and within budget requires a structured, phased implementation plan—and, above all, a strong focus on change management.
Here are the 10 essential steps for a successful ERP implementation, with a spotlight on the pivotal role of change management throughout the process.
1. Compile your Business Needs
The journey begins with a thorough discovery phase where you determine your business requirements. Many businesses make the mistake of focusing too much on the technology itself rather than the end goal and business outcomes. To avoid this, focus on identifying current issues and process inefficiencies. Change management plays a crucial role here by ensuring that the entire organisation understands the reasons behind the project and what it aims to achieve.
2. Engage Key Stakeholders From The Beginning
Involving stakeholders from the outset is essential. The ERP implementation project team typically includes an executive sponsor, a project manager, and functional leads (or super users) from across your organisation who know your current processes inside and out and will champion change. Early engagement ensures that all perspectives are considered and builds buy-in. Effective change management at this stage helps to identify potential resistance and address concerns proactively.
3. Verify Your Budget
When estimating your ERP implementation budget, its recommended that you add a further 25% for contingency costs. One of the major decisions is whether to use an ERP system that runs on-premises or in the cloud. On-premises ERP solutions can require a substantial initial investment in both software and hardware. In contrast, a cloud ERP system has lower initial costs plus ongoing subscription fees calculated by the number of users or resource consumption.
4. Identify Necessary Customisations
During the design phase, you’ll identify any customisations needed to align the ERP system with your specific workflows and design more efficient workflows and business processes that take advantage of the new functionality. Customisation should be approached cautiously, ensuring that it aligns with your business needs without overcomplicating the system. Gap Analysis will help identify processes that may require changing to work with the new ERP system or identify customisations of the ERP software that may be needed to fit your operations.
5. Configure the Software to Suit Your Business Needs
The development phase involves setup, configuration and, where necessary, customising the software to support your reimagined business processes. It may also include scoping or developing integrations with other business applications or processes such as websites, 3PL integration or enhances reporting. At this stage, change management involves building enthusiasm for the new system, basic training videos, preparing quick guides and training materials and ensuring that users are ready to embrace the change.
6. Clean-up, Format, and Import Data
In the migration phase, you’ll need to decide which data to transfer to the new system. Clean, formatted data is essential for a smooth transition, and your team know your business data better than anyone. Its critical to ensure that users are involved in the data preparation process, minimising resistance later on.
7. Test, Test, Test
Before going live, extensive testing is essential to identify any issues or gaps in the system. This should include both technical testing and user acceptance testing (UAT). Change management at this stage ensures that users are involved in the testing process, helping them gain familiarity with the system and reducing the risk of adoption issues post-launch.
8. Deploy The ERP System
Deployment is a major milestone when the business finally goes live with the new system. During this phase, the implementation team needs to support users, resolve and correct issues, address concerns, and ensure a smooth transition with minimal disruptions.
There are various deployment models that may be chosen:
Big Bang simultaneously deploys the entire ERP system. Though it costs less overall, this strategy has the steepest learning curve and the highest risk level.
Phased deployment assigns a higher priority to some modules or processes before gradually introducing others. A phased deployment methodology gives you more flexibility to test specific components of the new system as they go online, even though it may take longer.
Parallel Deployment. In order to guarantee that the new system is completely operational before the old one is retired, parallel deployment operates the legacy and new systems side by side. Although there is less chance of data loss with this strategy, it can cost significantly more because more resources are needed to run and manage both systems.
9. Train Employees
Training is one of the most critical aspects of change management. Ensure that all users are properly trained on the new ERP system, with ongoing support to reinforce their learning.
10. Go Live and Providing Ongoing Support
The go-live phase is just the beginning. Post-implementation support is crucial to address any issues that arise and to continue reinforcing the changes. Change management ensures that there is a structured approach to handling feedback, addressing concerns, and celebrating successes to maintain momentum.
The final phase involves handing over the day-to-day running of the ERP system to support and maintenance teams. Change management ensures that feedback loops are in place to continuously improve the system and address any issues.
ERP Implementation Best Practices
- Determine required Business Outcomes: Focus on how the ERP system will help achieve specific business goals, rather than just its features.
- Understand System Requirements: Document current and future business needs to guide the selection and customisation of the ERP system.
- Champion Change: Understand the impact that major change will have on the organisation, and plan your communication to succeed from the beginning.
- Don’t Underestimate Planning Time: Thorough planning is essential for success, including securing executive buy-in and allocating sufficient resources.
- Ensure the Right Team is in Place: Select a cross-functional team that understands both their business units and the broader organisational impact.
- Be Realistic About Timeline and Budget: Build in contingencies to account for unexpected challenges.
- Cleanse Your Data Prior to Migration: Ensure that all data is accurate and relevant before transferring it to the new system.
- Test the System Before Deployment: Rigorous testing is crucial to ensure the system is ready for go-live.
- Maintain Clear Communication: Keep everyone informed throughout the project, from executives to end-users.
- Invest in Ongoing Training and Support: Continual learning and support are key to sustaining the benefits of the ERP system.
Avoid These Common ERP Implementation Mistakes
- Failing to Ensure Executive Buy-In: Without leadership support, the project is unlikely to succeed.
- Failing to Consider Cloud ERP Solutions: Cloud systems can offer significant cost and flexibility advantages.
- Failing to Collect All Business Requirements: Missing critical requirements can lead to costly rework later.
- Failing to Set Milestones: Milestones help keep the project on track and within budget.
- Failing to Consider Future Business Needs: Plan for scalability and future upgrades from the start.
- Failing to Test Before Deployment: Skipping thorough testing can lead to disastrous go-live issues.
- Failing to Devise a Change Management Strategy: Without a plan for managing change, user adoption will suffer.
- Failing to Adequately Train Employees: Insufficient training leads to frustrated users and underutilised systems.
THE KEY TO SUCCESS
An ERP implementation is a big project that calls for careful preparation, an experienced partner, and a strong emphasis on change management. By adhering to a structured project plan, adopting best practices, and avoiding common pitfalls, your organisation may effectively establish an ERP system that boosts productivity, lowers costs, and supports long-term growth
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Acclaim Group
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Email: sales@acclaimgroup.co.nz