Have you had the surprise of seeing the line item for implementation services exceed software licensing costs for new ERP software? If so, you may have looked at it skeptically. You likely wondered if it’s worth the price tag. Whether you’ve had this experience or not, a key part of making an educated purchase and ensuring a successful software deployment is understanding what’s all included in the implementation process. By breaking down the components of implementation services offered by vendors, you’ll be better equipped to make the call on the value of each service to your organization.
The benefits of a well-managed ERP implementation
There are a number of top-level business benefits associated with a well managed ERP implementation:
- Shorter implementation timeframes. A poorly managed ERP implementation can and will take a long time to execute. Whether delays are caused by addressing hardware insufficiencies, managing for unexpected business process adjustments, or ill-planned training, delays put off the start date when you can begin reaping the rewards of the improved efficiency. Proper planning can shorten delays and ensure that key employees are not pulled away from their core duties indefinitely.
- Implementation cost management and reduction. ERP implementations require planning, employee input, and the allocation of resources to execute. Each represents an opportunity for costs to swell, if not properly managed. Contracting with a vendor offers a way to put a definitive cost on implementation services.
- Software support of corporate best practices. Appropriately identifying, defining, and preparing for software to support best practices is critical. Consider for example software offering strong purchase requisition capabilities. The approval, reporting, and review process must still be mapped and implemented to effectively levarage the software to identify cost saving opportunities in the purchasing process. Coupling the software tool to your specific processes is where the rubber meets the road in terms of project success.
- Preservation of data security. An ERP switchover comes with obvious business continuity risks. But, there’s also a data security risk. Generally, best practices to ensure data security have been worked out over time with existing systems. A well-executed implementation will make sure the right user permissions and security measures are carried over and improved upon.
- Optimization for reduction of future support costs. You don’t operate in a static business environment and neither will your new ERP software. Strong implementations of software can limit ongoing support costs with proper preparation. Identifying support workflows, setting up user accessible documentation, and considering the requirements needed for scalability can greatly reduce ongoing support costs.
Breaking down the components of an ERP implementation
There are obvious benefits to a properly executed ERP implementation. But what steps need to occur to maximize the chances of project success?
ERP software vendors offer a variety of implementation services, including:
- Pre-deployment business and technical consulting. Many companies will lean heavily on their ERP vendor or vendors to assist them with the requirements gathering process. One of the benefits ERP vendors can bring to the table is the advantage of visibility into industry best practices. Often the vendor assisted requirements gathering is simply part of the sales process. Many vendors also offer more sophisticated GAP analysis type services to identify opportunities for business process improvement. These analyses typically touch on both the application level and hardware systems (servers, network, workstations).
- Project management. We’ve used the term project a number of times already. The principles needed to effect strong project management definitely apply to your upcoming ERP implementation. Project scope needs to be clearly defined, project participants involved, schedules created, timelines monitored, and milestones accomplished. ERP vendors can provide a responsible party dedicated to ensure the success of deployment planning, cutover scheduling, continuous improvement monitoring, and even ROI analysis of the implemented system.
- System implementation and configuration. ERP vendors are frequently utilized to handle the technical installation. Beyond simply deploying software to the appropriate hardware, ERP vendors can managing user set up, including defining user-based permissions. Frequently, system configurations are required to map software functionality to specific corporate processes. ERP vendors can also help to configure common document templates and forms, and establish reporting structures. ERP vendors can also manage the data-back up setup and overall system testing.
- Customizations. There are many, many different ERP packages. There are even more add-on, task-specific products designed to extend ERP functionality. But in some cases you may have processes specialized enough that custom software development is the only option. Many ERP vendors offer custom programming services.
- Integration. ERP doesn’t operate in a vacuum. Even for ERP options that offer wide-ranging applications and functionality, there’s often some level of system integration. For instance, you may need to flow emails with customers into your CRM package. Or, perhaps you need to pass sales data from eCommerce channels to your core financial modules. Vendors bring the experience of familiarity dealing with their product’s API and their database structure to integration work. Because of this advantage in expertise and system familiarity, ERP vendors can often handle integrated systems much more efficiently and accurately.
- Data migration. In all but the rarest circumstances, it’s unacceptable to maintain legacy data only in that system, without migrating it to the new software. This presents a data challenge. Different ERP programs have very different database structures. Extracting data from your existing system and mapping it to the new program can not only be time-consuming, it’s a frequent source of data integrity errors that may not be discovered until much later. ERP software vendors bring an inherent understanding of their own database structure to the table. Additionally, many vendors will have the experience of moving system A to system B on numerous occasions and can leverage that experience to ensure efficiency in the migration process.
- Training. Making sure users understand how to use a new, sophisticated, and wide ranging software suite such as an ERP program is a critical step to getting the most out of it. C-level executives will require very different types of training than AR clerks, project managers, or payroll administrators. ERP vendors offer a variety of training resources including web, video, in-person, and classroom options to help make sure your organization has the knowledge to effectively utilize the new capabilities.