5 steps to ERP implementation outlines how mid-market businesses can plan, manage, and deliver successful ERP projects. An Enterprise Resource Planning (ERP) project integrates all your company’s core processes into a single system, finance, HR, manufacturing, supply chain, services, procurement and more.
ERP can transform your company. When it’s done right, a new ERP system will deliver savings, service improvements, better compliance, and provide a sound platform for digital expansion and future growth.That is precisely why these 5 steps to ERP implementation are critical before committing significant time and investment.
But ERP projects are large and expensive undertakings. They are a major exercise for the entire organization and will consume the attention of all key staff and leaders for months. So before you start your ERP journey, have a look at our 5 steps to ERP implementation.
You may also be interested in our blog post Do You Actually Need an ERP Project?
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5 steps to ERP implementation in practice
An Enterprise Resource Planning (ERP) project is when you integrate all your company’s core processes into a single system—finance, HR, manufacturing, supply chain, services, procurement, whatever else you need to run your business, back-end and front. ERP can transform your company.
When it’s done right, a new ERP system will deliver savings, service improvements, better compliance, and provide a sound platform for digital expansion and future growth. But ERP projects are large and expensive undertakings. They are a major exercise for the entire organization and will consume the attention of all key staff and leaders for months. So, before you start your ERP journey, have a look at our 5 steps to implementing an ERP.
1. Have clear and specific business objectives.
Many ERP projects derail because the company never worked out the key priorities. When the inevitable glitches arrive, they don’t know where to compromise. So, your very first step must be an honest boardroom discussion about business objectives. What are the outcomes that you’re looking for? Some examples:
- Redeploy four FTEs by avoiding any rekeying between the ERP and website
- Eliminate orders from customers on credit stop by eliminating the lag between finance and order processing
- Integrate with a new customer’s ordering systems within about two weeks of contract signing
Your very first step must be an honest boardroom discussion about business objectives. What are the outcomes that you’re looking for?
Of course, your own needs will likely differ. Just notice that the objectives above are (a) measurable and (b) can be readily assigned a monetary value. An ERP project typically has twenty or more such key objectives, and it’s crucial that the board have consensus on each of them. Because then there will be far less room for argument when the road gets bumpy. And later you’ll be able to point back to your requirements document and show that it was all there in black and white from the start, avoiding disputes internally and with suppliers.
2. Assign clear ownership of the project.
Too often ERP projects are run by a gaggle of people with vague roles. Instead, the CEO must absolutely appoint someone with the necessary technical knowhow, business experience, people skills, and leadership qualities to run a complex project. (We would, of course, suggest one of our fractional IT leaders join your team.)
The CEO and this leader must then be clear on who is accountable for which aspects of the project. These people must have the space to do their jobs—avoid interrupting them with day-to-day issues so they can genuinely focus on the ERP project.
This can be uncomfortable for mid-market companies with ingrained ways of working. But a combination of flexibility and accountability is critical to success—plus you can see it as opportunity to develop people for the long-term.
3. Have a rational system for choosing products and suppliers.
Some of the brightest minds in the IT industry devote their careers to marketing and selling the ERP dream. Margins on ERP products and consulting are immense, commissions are colossal, and the parties are legendary! Your only defense is to ensure you have a rational and systematic approach to selecting products and suppliers. And it can’t be rushed—ensure you have the time to do it right.
Start by getting a feel for the market. Create a shortlist of potential products and suppliers. Allow the suppliers to present their wares in their own way; learn about what’s happening in the market. With your business objectives already drawn up, you have a great framework for the discussions.
Don’t get drawn in by salesmanship! Some vendors will create stunning stories of what they can do for you and compelling reasons you should sign here right now. But these decisions will affect your company for years, so take your time.
Once you understand the available products and their capabilities, you can document the key features that you need and establish what your real priorities are—what’s mandatory, what’s optional. You can then issue this information to your shortlist, and they can document their proposals for satisfying your requirements. It’s then possible for your team to score the suppliers’ proposals in a rational way and make an objective choice.
Finally, price: it should of course make sense for your company. But suppliers need to make money as well. You want to be a valuable client, for whom they’re happy to provide service. If you gut the price to the point where there’s no profit in it for a vendor, don’t be surprised if they’re not so helpful down the line.
The CEO must absolutely appoint someone with the necessary technical knowhow, business experience, people skills, and leadership qualities to run a complex project.
4. Outsource basic IT. Insource data and ERP.
Too often we see companies selecting the precisely wrong insourcing vs. outsourcing strategy. They employ internal staff to maintain basic IT, whilst relying on expensive suppliers to configure their ERP, or create reports, or wrangle data.
But basic IT is readily available at low cost from reputable suppliers. Fixing laptops, helping people who’ve forgotten their passwords, dealing with connectivity… it rarely makes sense for these services to be insourced. Whereas understanding your own data and reporting tools allows you to make intelligent decisions, empower managers, and gain new insights into your customers.
The ability to configure your own ERP allows you to make changes quickly and inexpensively, as well as providing a deeper understanding of the system that will hopefully transform your business.
A large ERP project will inevitably involve an external provider. But part of the delivery can include transferring those skills to your own team to ensure that you can make quick and simple changes in-house. This can make the difference between long-term success and failure!
5. Get the data and processes right.
Two related reasons that ERP projects frequently go off the rails: data and processes. Both are complicated, and they require expert involvement from people who understand your business. But too often the new system is bent out of shape to fit existing processes, ‘because we’ve always done it that way.’ And there isn’t enough time to sort out data, so old information is shoe-horned into the new system, complicating your reporting and hobbling all that great new functionality.In practice, the final of the 5 steps to ERP implementation often determines whether the project delivers lasting value or ongoing frustration.
It is critical to see an ERP project as an opportunity to simplify processes and to standardise data management. And every aspect—from process mapping, to data cleansing, to training—will need careful project management. Some of your best people will need to be involved, and they may need time away from their regular duties to make it happen. But they will emerge as better and more productive employees, with strong ownership and buy-in to the new system.
Understanding your own data and reporting tools allows you to make intelligent decisions, empower managers, and gain new insights into your customers.
Following these 5 steps to ERP implementation gives organisations a clearer path to delivery and long-term value.
Do you have more questions? We can help. Our CIOs and CTOs are experts in all aspects of ERP products, providers, and projects. And we work entirely in the interests of our clients, with no commercial connections to any supplier or product. We use all our skills, knowledge, and experience to make our clients as successful as possible. If you need help implementing an ERP project, or if you have further questions, feel free to get in touch for a no-pressure conversation.