The 6 ERP implementation strategies are:
Adding an ERP software to your business can provide many benefits, such as automating time-consuming manual tasks and streamlining back office operations. But before you can roll out your new ERP system, you must have a good strategy to prevent problems.
Keep these three factors in mind:
ERP implementation strategies offer distinct advantages and challenges, ranging from cost-effectiveness and adaptability to complexity and resource intensity.
The big bang implementation approach is when an organization adopts and deploys the ERP across its entire operations in a single, comprehensive implementation event.
Unlike big bangs, phased rollouts occur slowly. Also sometimes referred to as the “mini big bang approach,” this strategy eases the ERP learning curve as much as possible and smooths the transition.
By Module: Implementing the ERP system one module at a time, starting with the most critical tools.
By Business Priority: Prioritizing ERP implementation in areas that align with specific business needs.
By Department: Implementing the ERP system in specific departments or teams first.
By Geographical Location: Implementing the ERP in different geographical locations one at a time.
Parallel adoption involves running the new ERP system alongside the existing legacy system for a certain period. This method provides users a familiar fallback while transitioning to the new system.
The pilot plan strategy involves setting up the ERP system for a limited area or department as a trial before considering a full-scale rollout. It provides a practical opportunity for a select group of users to test the software, identify potential issues, and collaborate with the vendor to develop solutions or workarounds.
Hybrid strategies combine any of the above to create a completely custom implementation plan. For example, “mini” big bangs are part of a phased rollout implementation. Entire departments can adopt a new ERP without disrupting work in another area of the company. And a pilot plan might work if there are several offices and corporate wants to run a trial on multiple options.
Software as a Service (SaaS) ERP implementation involves deploying an ERP system hosted in the cloud and accessed via the internet. This model has gained popularity due to its ease of access, scalability, and reduced need for in-house hardware infrastructure. SaaS ERP solutions are typically subscription-based, with the software vendor managing, maintaining, and updating the software.
Create a successful implementation strategy by addressing each of these six factors:
Industry Requirements: Different industries have unique requirements, such as specific safety regulations or compliance standards. Understanding these nuances helps companies prioritize an ERP system that adequately meets these industry-specific needs.
Organizational Size: Organizational size greatly influences the implementation strategy. Smaller and mid-sized firms often benefit from a “big bang” approach where the entire ERP system deploys at once. This method is usually more manageable in smaller settings due to fewer employees and locations. In contrast, larger companies with more complex structures may prefer a phased or parallel adoption strategy.
Cost Considerations: The implementation budget is a critical factor. A big bang approach might be more cost-effective as it avoids the expenses of running old and new systems simultaneously. However, ensure that your budget can accommodate the necessary resources for a successful one-time implementation. If budget constraints are a concern, phased implementation allows for spreading costs over time.
Risk Tolerance: Assess the impact of potential issues arising from the new ERP software, such as data loss or disruption in operations. Businesses reliant on 24/7 system operations may opt for a less risky strategy, like parallel adoption. This involves running the old and new systems concurrently, reducing the risk of a complete operational halt.
Desired Pace of ROI: If immediate ROI is a priority, consider a phased approach where you can quickly implement modules that address current business bottlenecks. However, the big bang approach might be more suitable for organizations looking to gain the full benefits of integration and improved processes rapidly.
Risks of Software Adoption: Understand the risks of adopting new software, including data inconsistencies, duplication, or human errors during user training. Investigate potential pitfalls and plan mitigation strategies. Research what can happen if your ERP implementation goes wrong.
You can get the best return on investment from your ERP by taking all these factors into consideration.
ERP implementation typically involves a multi-stage process. The core stages remain largely the same, involving software configuration, preparatory steps like training and data migration, deployment, and ongoing support and enhancements.
This phase involves forming a cross-functional team to gather requirements from various business groups. The team’s responsibilities include:
Organizations analyze existing workflows and identify necessary adjustments with the new system. This phase is critical for deciding on essential ERP features, customization needs, and data migration strategies.
At this stage, the vendor or a partnering integrator tailors the software to fit business requirements. This phase also involves preparing for deployment, which includes training material creation and data importation.
Before going live, extensive system testing is imperative to identify and rectify any issues.
After configuration and testing are complete, the system goes live. However, companies only realize the full benefits when staff fully adopt the system, necessitating focused training and support.
Post-deployment, continuous user support, system upgrades, and troubleshooting are vital, especially for on-premises ERP systems that require dedicated IT resources for security and maintenance.
Once you’ve selected the best strategy for your needs, you can focus on the next 5 steps of the ERP implementation plan:
With all these elements considered, you can create the best ERP implementation strategy for your business.
ERP system implementation poses potential risks that organizations need to navigate:
Poor Planning and Project Management: Inadequate planning can result in delays, scope creep, and misaligned expectations. To counter this, organizations should establish clear goals, milestones, and a change management plan with specific, measurable objectives.
Data Quality: Data accuracy, consistency, and duplication issues can cause significant problems. A comprehensive data cleanup that rectifies inaccuracies and redundancies before migration is essential.
Internal Resistance: Employee reluctance to change can impede ERP adoption. Addressing this involves implementing change management strategies, providing comprehensive training, and fostering a culture of open communication.
Inaccurate Cost Estimates: Underestimating costs can lead to budget overruns. Organizations should conduct thorough cost analyses, including all associated expenses, and employ strict budget control mechanisms.
Poor Vendor Selection: Choosing an incompatible vendor can lead to system failure and financial losses. A detailed vendor evaluation process is crucial, assessing the vendor’s reputation, industry expertise, and alignment with organizational needs.
Organizations must proactively address these challenges with strategic planning and comprehensive analysis to ensure the ERP system’s smooth integration.
Read more about the risks in our ERP Implementation Challenges article.
How long does ERP implementation take?
ERP implementation time varies widely, typically taking 4-6 months in the best cases. Small SaaS solutions launch in weeks, and large-scale enterprise solutions could take over a year. The timeline’s key factors include business size, user count, customizations, project scope, data migration, and deployment method. Small businesses may complete implementation in 3-6 months. Medium businesses typically take 4-12 months, and large businesses take 12-24 months.
For more, read our article on ERP implementation time.
How much does ERP implementation cost?
ERP implementation costs vary greatly based on business size, software scope, number of user licenses, and additional services like data migration. Small businesses might spend $25,000 to $150,000, while mid-sized to large enterprises could see costs ranging from $150,000 to $500,000. Operational costs are just a fraction of total implementation expenses. Budgeting should account for licensing, basic services (implementation, training, data migration), potential customizations, and first-year support.
What are the differences between cloud vs. on-premise ERP implementation?
Implementing a cloud ERP is generally quicker and more cost-effective upfront, requiring minimal infrastructure. Maintenance and updates are handled by the vendor. It offers scalability and remote access but with potential limitations in customization and less direct control over data security.
Implementing an on-premise ERP involves significant initial investment in hardware and infrastructure. It allows for extensive customization and integration and gives complete control over data security. However, it demands substantial in-house IT resources for maintenance and is less flexible in scaling. The choice between the two hinges on an organization’s needs, budget, IT capacity, and strategic priorities.