ERP System Implementation
It’s time to elevate your organization with ARA CONSULTING, 95% of businesses have improved after implementing an ERP system. If you operate in manufacturing, retail, healthcare, or any other industry, we develop and implement solutions that go above and beyond standard ERP offerings. Our unique method for growth sets up your company for future scalability while also optimizing existing operations. This ERP system implementation guide will show you how to achieve efficiency and accuracy by providing you with the key phases and best practices for performance for ERP implementation.
What is ERP System Implementation?
ERP system refers to Enterprise Resource Planning Implementation, which is installing an Enterprise Resource Planning software system, configuring your business information and customized processes inside your organization. In addition, training your employees to use the ERP software. However, this process includes the integration of diverse business functions, such as finance, sales, marketing and human resources (HR), into one ERP system.
The main goal of erp system implementation is to improve the efficiency of your business organization process and to deliver real-time data and reporting qualifications. Generally, erp system implementation includes a sequence of phases, such as planning, design, development, support, deployment and testing.
The implementation process can be complex and take more time, depending on the size of your organization, and your requirements but it can help you to achieve the benefits of an ERP system implementation, such as increased productivity, cost reductions and improved data accuracy.
6 Top Phases of an ERP System Implementation Plan:
An ERP system implementation plan includes six phases, each phase has a specific objective. Every business is different, so the phases may differ depending on the company, and they also may overlap.
1. Discovery and Planning:
The first phase is the most important one and it guarantees the success of the following phases. Planning includes analyzing and choosing a system, establishing a project team and defining every detail of system requirements.
The project team will handle a wide range of functions related to the implementation, including the full layout of the project plan and specific dates and ensuring sufficient resources are given.
It is essential to plan the process well, for that you have to plan the timelines, resources, budget, and change management steps.
An executive sponsor, a project manager, and representatives from the departments using the system are usually included in the ERP project team. Senior management involvement is essential to guarantee the project receives the resources it requires and to give the support required to execute change throughout the company. To get assistance with system design and configuration, the team may also choose to work with an outside consultant or ERP system implementation advisor.
Boost your business organization with ARA CONSULTING we will help you to make your business reach the next level and elevate efficiency and accuracy.
2. Design:
To create a comprehensive design for the new ERP system implementation, the design phase starts with complex requirements and an understanding of the existing workflows. This involves designing new, more effective workflows and other business processes that benefit of the system.
3. Development:
After designing clear requirements, the development phase starts. This involves setting up the software and, whether needed adapting it to work with the updated processes. Creating integration with any other current business software used by the company that the ERP system won't replace may also fall under this category. If your company uses an on-premises ERP system, the required hardware and software must be installed.
4. Testing:
Thorough testing of the system's whole capabilities, including letting certain employees try it for all of their daily tasks, should come after the first testing of the software's fundamental features. In this phase, end users should receive basic training as well as testing the migrated data.
To start user training, the majority of providers can provide pre- and post-deployment solutions. However, the company should also make effective use of the training materials developed during the development phase, in addition to vendor support. Resources that are specifically designed to meet your end-user's daily tasks have genuine value.
5. Deployment:
Be prepared for possible issues in this phase. The project team should be available to answer all your questions, help your team understand the system and attempt to fix any issues. We can be your implementation advisor and help you with any troubleshooting if necessary. Users may need some time to become used to the system and realize the anticipated increases in productivity.
6. Support and Updates:
After deployment, maintaining your erp system implementation can help to maintain user satisfaction and guarantee the business realizes the anticipated benefits. During this phase, the project team may still be in charge of the ERP system, but their main focus will be on gathering user feedback and making necessary adjustments to the system. The addition of new functionality to the system can require some more development and configuration. It will also be necessary to teach new employees about the system.
The Effect of ERP System Implementation on Business Performance?
Behind every successful business, an ERP system revolutionized how businesses operate in today’s world.
An ERP system implementation can greatly enhance your business's performance by creating effective methods for resource planning and productivity optimization. Let's see how ERP system implementation enhances your corporate performance.
- Automate Business Tasks:
An ERP system implementation helps to automate diverse business tasks and processes, in addition to increasing efficiency in all departments such as human resources, sales and finance. It also helps to reduce repetitive tasks.
- Simplify Operations for Businesses:
An ERP system implementation facilitates better inventory management and task automation, which helps to optimize corporate processes. The implementation of an efficient ERP facilitates smooth and easy departmental communication.
- Finance Management and Compliance:
There are particular laws and guidelines governing corporate operations, including financial management, in every nation. ERP software aids in preserving and keeping to these rules.
- Transparency and Immediate Analysis:
The two main unique selling points of ERP software are transparency and access controls. It gives you complete visibility into every aspect of your company and gives you access to every department. An organization's departments can arrange their work based on real-time data access. This guarantees that you can watch everything as it happens.
- Better Customer Support:
An ERP system implementation benefits not just a business but also its clients. The sales team may focus on developing relationships with customers because client data is streamlined and centrally located. End-to-end tracking enables businesses to offer superior customer support.
- Better Planning:
Better planning is one of ERP's main advantages. Businesses have a wide range of tools to examine every facet of their operations. This enables managers to plan more effectively and make wiser choices.
- Simplifies Customer Relation Management:
CRM features are included in the majority of ERP software. This helps to automate operations related to customer service. Transactions, orders, service requests, complaints, and much more can all be tracked by the software. The comprehensive customer analytics are the true benefit, even though these capabilities improve customer service. It facilitates more focused marketing, which boosts client acquisition and retention.
- Data Security:
Every company is concerned about data security. When you share data across several platforms, there is an elevated risk of data security. Data is safely stored in a central database using erp system implementation. This reduces the chance of failure while increasing safety.
How To Determine the Return On Investment of ERP System Implementation?
The return on investment (ROI) of ERP is the sum of the tangible and intangible advantages that result from its deployment. Metrics like revenue growth and decreased overhead are examples of tangible advantages, often known as "hard" benefits, which are easily quantifiable. Although harder to measure, intangible benefits nonetheless have a significant influence. Metrics like increased consumer trust and staff morale are among them.
The ERP ROI estimates are significantly impacted by the deployment model selection. The letter "I" of ROI stands for capital investment, and capital costs need more intricate accounting handling. On-premises solutions, which normally need an initial capital investment to buy the licenses as well as the computer hardware and infrastructure needed to run the program, do qualify for ROI. Nevertheless, businesses that employ cloud ERP apply ROI techniques to measure the benefits their ERP systems offer.
ROI can be used to demonstrate the project's cost-effectiveness and support the investment choice. The tried-and-true technique for calculating project returns and contrasting them with alternative possible investments a business can make is the return on investment or ROI.
Let’s take a look at the key points on the importance of calculating the ROI of ERP system implementation.
- It provides financial justification for your ERP deployment procedure.
- When choosing the best ERP for your business, ROI will be one of the most crucial factors.
- ROI allows you to calculate the potential ERP advantages following the deployment procedure.
The way to calculate ERP ROI is a simple metric calculated in this way:
- Add up the expected return from an ERP system.
- Subtract its expected costs.
- Divide the result by the expected cost.
Your ERP ROI is the resulting percentage, which is expressed as a percentage. The higher the percentage, the better the investment. But in practice, things are a little more complex than that, as certain expenses and sources of income are hard to quantify. For an ERP project, different departments and people may define and understand costs and returns differently. Financial employees must make sure that all departments' data collection and calculations are consistent.
Time and risk are two additional variables that can affect ERP investment choices but are not taken into account in the ROI calculation. For instance, two ERP investment options could have the same return on investment. On the other hand, one has higher upfront prices and a longer payback period, whereas the other offers charges that are spread out over time with an almost immediate payback period. Given that any future expense or revenue stream is unpredictable and therefore riskier, the second alternative is unquestionably a safer investment.
How Long Does it Take to Implement an ERP System?
It depends on the kind of your business. The length of time needed to deploy enterprise resource planning (ERP) software depends on the specifics of each implementation. It may require several months or perhaps years to complete. The amount of needed modules, the available resources, the deployment locations, customization, and data conversion all affect how long an implementation will take.
Reasons Why ERP Implementations Fail?
There are many reasons the ERP implementation fails, including the following:
- Lack of understanding of the system needs
How many companies have invested millions of dollars in new systems just to find out later that the software isn't really helpful in improving operational efficiency?
An attempt at an ERP system may fail if the processes that the new ERP is supposed to solve are not sufficiently understood or mapped out. All of the core team members ought to participate in the initial planning and decision-making stages.
- Insufficient finance and resources:
Unfortunately, ERP systems frequently generate expenses before and following their effective deployment.
Financial projections that are too optimistic are not unusual, and budget overruns occur frequently. Search for a solution that fits into your allocated spending plan while taking future maintenance needs into consideration.
- Absence of leadership commitment:
An ERP system implementation should be flagged down if there is internal resistance.
Even if a new software can be launched successfully without dedicated leadership, you run the risk of not getting the full rewards of your digital transformation. It is possible for end customers to feel demotivated and disheartened about transferring to the new software.
- Insufficient change management:
Large project expenses linked to significant software rollouts can frequently be reduced by downplaying the significance of efficient change management.
When change management is done right, it supports individual transitions and ensures that all desired objectives and results are achieved. This indicates that all employees who are supposed to utilize the new software can accept and use it in their daily lives for an ERP implementation to be effective.
- Insufficient end-user training:
How well end users can use the software to automate repetitive processes is a clear indicator of an ERP system's effectiveness.
You run the danger of having less accurate data and less staff productivity if the new software's end users aren't properly taught. Users of unfamiliar software that is difficult to use likely get even more discouraged and demotivated.
- Absence of testing:
There might be serious consequences if software testing is rushed or ignored during software implementation. After launch, a lack of testing can lead to internal disarray, particularly if supply chain-related issues arise.
- Insufficient transparency inside the organization:
Two crucial errors can be made by a team in any software rollout procedure.
For every department to be aware of when to anticipate moving to the new ERP, the implementation team must first clearly explain the objectives and schedule of the project within the organization.
Second, a complete and visible log of the entire process should be kept by the team. This is keeping project updates, meeting minutes, and other pertinent data easily accessible internally. If the core team changes during the project, this aids in bringing others up to speed.
- Failing to map, import, and clean up historical data:
When considering an ERP system, it's extremely uncommon for a business to be without data.
It's critical to comprehend the sorts of data that already exist and how they have historically been categorized and managed to get the full benefits and receive a return on the initial software investment.
You run the danger of having skewed data in your new system and not having historical insights on things like purchasing trends or previous sales figures if legacy data isn't taken into account throughout the ERP deployment process.
Cloud ERP vs. On-Premise ERP:
The deployment strategies of these two systems differ greatly from one another. Software-as-a-Service (SaaS), another name for cloud-based software, is accessed via a web browser and is housed on the vendor's servers. On-premise software is set up locally on the PCs and servers owned by the business.
Additionally, some vendors provide "hybrid" deployments, in which cloud software is housed on private servers owned by an organization (more on this later).
The cost distinction between cloud and on-premise systems is another significant distinction:
Although there are many exceptions, cloud software is often charged as part of an annual or monthly subscription, with additional recurrent costs for upgrades, support, and training. The cost of on-premise software is often determined by a single, perpetual license charge that is dependent on the size of the company or the number of customers using it at once. Updates, training, and support all have ongoing costs.
As a result, on-premise systems are generally seen as capital expenditures, which need a sizable upfront commitment. On the other hand, a cloud ERP solution is usually regarded as an operating expense (an extra overhead cost the company will always have to pay).
Cloud software has become widely used because of its low entry cost, which is particularly advantageous when contrasted to expensive upfront perpetual license payments.
A recent survey found that 93% of businesses today employ cloud-based software or system architecture and that in just a single year, the percentage of businesses using hybrid cloud systems rose from 19 to 57 %. On the other hand, system costs tend to converge with time. The total costs of ownership (TCO) for both on-premises and cloud-based software over ten years are displayed in the chart below.
Advantages and disadvantages of cloud ERPs:
For a lot of prospective ERP buyers, security is their main worry. It makes sense, given the vital data such as client lists, personnel profiles, corporate trade secrets, and financial records of the company that is kept in an ERP system. However, many consumers are becoming less doubtful of cloud-based software's security these days, despite their prior misgivings.
Strict guidelines are in place at reliable cloud providers to protect customer information. Prospective customers can request a third-party security audit of a company they are thinking about to reduce even more worries. This is particularly helpful in cases where the vendor is not as well-known.
The majority of cloud services make mobile accessibility simple, and many of them even include native mobile apps. However, there are more security concerns associated with this accessibility, particularly if staff members are using their own mobile devices to access company files.
In the same way, greater accessibility leads to less customization, and cloud ERPs give enterprises that want to customize their systems more limited options. However, general consulting companies and other organizations with less specialized demands can make good use of a cloud system's out-of-the-box capabilities.
Therefore, small and medium enterprises looking for reduced upfront expenses, system stability, and ease of access are most suited for cloud ERPs.
Advantages and disadvantages of on-premise ERPs:
Generally, an on-premise ERP system has many of the same capabilities. Nevertheless, the two deployment methods differ in a few significant ways. On-premise solutions are generally simpler to alter. Customization to specific needs and criteria is critical for many firms, particularly those in specialized industries like manufacturers with distinct processes.
With on-premise ERPs, the organization has better control over everything, even data security. Because the most sensitive data in an ERP is often the target of hackers, a company must be able to secure this data. One potential problem for on-premise implementations is mobile accessibility. These frequently call for communication between a mobile device and the on-premise software through a third-party client. Although it's not an insurmountable issue, it might cause discomfort.
Therefore, larger businesses with larger budgets, a desire to modify system operations, and the infrastructure already in place to host, maintain, and secure ERP data are the greatest candidates for on-premise ERPs.
Conclusion:
When it comes to ERP system implementation, ARA CONSULTING is here for your organization.
Our mission is to provide you with innovation, starting from SAP implementation solutions into your business, and consulting with our professional expertise for strategic guidance.
Further, our Support and Service Level Agreements are tailored to your company's specific requirements, offering responsibility and clarity. Enhance your SAP experience by working with us, which puts your long-term success and operational continuity first. Improve your team capabilities with ARA CONSULTING as your go-to advisor for SAP training and user enablement.
Our ERP implementation process is based on years of practical expertise and industry best practices. We support you through the entire process, from strategy planning and system configuration to data migration and training. Explore our services, contact us now and let us be your support and success partner with our ERP system implementation.