ERP Implementation Life Cycle: Understand the Phases of ERP

By Lexi Wood • Updated on June 1st, 2022
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Implementing an enterprise resource planning (ERP) software, an integrated suite of business applications, isn’t as simple as downloading some files and going live instantly. Depending on the system requirements, it can take weeks, months, or years to fully roll out an ERP software. And that’s if everything goes right. Understanding the ERP life cycle can help you prepare an effective implementation plan for your workplace.

What is the ERP Implementation Life Cycle?

The ERP implementation life cycle begins with selecting software. There are a number of ERP vendors out there offering on-premise, cloud-based, and hybrid solutions. The right one for your business will depend on your budget, number of users, and even line of work, as there are some industry-specific solutions available.

Next is planning how and when the ERP will be deployed. Cloud-based ERP software has grown increasingly popular over the years due to accessibility and convenience, especially as more businesses embrace remote work opportunities. However, this deployment method is not always appropriate, particularly for local or small businesses which perform all services on-premise.

Then it’s time to determine custom configuration options with the ERP vendor. At this point, optimization is the goal, as you’ll want to ensure your new ERP system offers all the functionality to fulfill your company’s business processes now and in the future. If you work within a particular industry, this is the time to bring up related concerns and any add-ons for extra functionality.

Finally, the ERP can be deployed and fully implemented at your business. Yet the process isn’t truly over at this point, as training, maintenance, and upgrades still need to be done.

What are the ERP Implementation Phases?

There are six main phases of ERP implementation, though depending on the exact system there may be fewer or additional phases ranging from four to twelve. Some steps have different names depending on the exact methodology, though they lead to the same overall process. The broad phases can be categorized as:

Five Main ERP Implementation Phases

Let’s delve further into each phase:

Project Planning

This is the step of implementation where your business recognizes the need for an ERP system. First, you or your employees need to identify which back-office tasks should be automated by software. You’ll want members of every department or area of your organization to contribute to avoid overlooking any key features.

Next, determine if there are any other software options available to handle certain tasks. This is also known as gap analysis, as it looks for gaps in coverage. For example, your human resources department might be more comfortable with a dedicated, standalone software than adapting to a new ERP.

Whatever your ERP implementation methodology, having the right plan in place as early as possible can streamline the entire automation process.

Design

After contacting a vendor, begin designing your ERP software package based on what workflows were found in the discovery phase. As mentioned earlier, you should know which features you want most and which are unnecessary for your needs. The vendor can help you see how different software modules can impact your day-to-day and long-term operations.

Is your company planning to expand? You’ll want scalability built into your ERP solution. Otherwise, you might have to go through the whole implementation process again when you reach the new user limit or want to increase business operations.

Development

During this phase, the vendor goes over existing data and programs to incorporate into the ERP project. They may identify the best methodology for combining your existing data system with their software. This is sometimes referred to as re-engineering since they are adding and removing elements from the base software to fit your needs.

Additionally, the vendor should come up with training materials for users based on their custom configurations. Some shrinkwrap software options will have generic training modules, so it’s important to specify if customization is necessary.

Testing

The testing phase is the opportunity for the vendor to locate any problems with the software and potentially the hardware. This is also the stage when the vendor can add in any extra functionality based on your operating needs.

Deployment

The fifth phase is when the software is actually implemented at your place of business. The application phase can mean installation onto physical workstations or the distribution of browser links and mobile apps for remote log-ins. If you select a hybrid system, it can mean all three.

With an on-premise solution, all existing data is migrated to the new system and configured for use by the vendor. Cloud and hybrid systems might rely on you or your IT team to handle the data migration if you want to expedite the installation process.

Once the software is live, there’s one final phase:

Support

Finally, the last phase is when you can try out the software and make any final adjustments. While this might not seem like a necessary step of the implementation process, it is vital for your long-term success with your new ERP software.

Post-implementation, end users will have to be trained on the new ERP system, which can take time depending on their familiarity with the old system or ERP packages in general. And you’ll need to have systems in place for adding new users as your company expands.

You’ll also need to address maintenance and upgrades during this stage. In essence, the support stage never truly ends as long as you continue using the ERP software.

Creating a Successful ERP Implementation Plan

Successful ERP implementation can take months or even years, no matter how much planning and research you do. Yet with a clear plan and the right vendor, you can significantly cut down on the time to completion.

For instance, you might have to rely on the ERP vendor for setup. Otherwise, you or your IT team might have to dedicate months of time on figuring out the new software rather than focusing on equally important day-to-day tasks.

However, while this can increase the total time for setup and costs, it provides a safety net for your business by getting as much vendor assistance as possible. Any installation issues can be identified and addressed by a professional rather than your overworked team.

End-user training can be another hiccup during implementation. How experienced are your employees with technology? Do they need multiple training sessions to understand the new system, or can they learn as they work? Ideally you’ll have answered these questions during the design phase, though the support phase is the final opportunity to make sure your ERP software is capable of growing with you.

The most important step of ERP implementation is deciding to get an ERP for your organization. Start today by reviewing ERP software options.

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