You wish you could simulate the ERP implementation process.
A simulation, like the demos of the ERP systems you’re evaluating, would provide a valuable walk-through for the actual experience. After all, the implementation’s big investment of time, money, and energy makes it the riskiest part of an ERP project.
While implementation simulations haven’t been invented yet, you can benefit from the next best thing: being well-informed about the best practices for successful implementation and working with an experienced implementation partner.
Different experts will propose different roadmaps for implementing your ERP, but all of them have, or should have, one key goal in mind: reducing your company’s risk.
Based on our 20 years of experience successfully developing and implementing ERP systems, we can recommend the following nine steps to the prudent financial leader of a manufacturing SME.
Looking for more guidance on how to actually select your ERP software? Click on our article, “9 Must-Have ERP Software Selection Criteria for Your Growing SME“
1. Get buy-in from your leadership team
Your ERP system implementation will transform every single facet of the way your manufacturing business operates. So it’s essential that your president and executive team be wholeheartedly committed to the project.
Naturally, once your C-suite is on board, define and quantify what success looks like. What goals will you meet? What will your Key Performance Indicators (KPIs) be?
2. Allocate sufficient time and resources to the ERP implementation project
Your implementation team now needs the appropriate resources to properly carry out the project. That begs questions, such as:
- What will implementation cost?
- How long will it take?
- How much company time will we have to invest?
- Where do we start?
- Who should we involve?
- How can we minimize our risk?
We address these questions in the discussion below.
3. Cost out your ERP implementation
An ERP implementation is a team sport involving two teams: yours and that of your implementation partner.
To ensure you get the project ROI you’re targeting, it’s essential that you work with an experienced partner familiar with your manufacturing industry’s day-to-day needs and dynamics. For example, if you make food and beverage products, your implementation partner should have a positive track record in this industry sector.
Also, consider the business model your partner is working with. While both integrators and developer-integrators may have similar implementation processes, their business models are different.
An integrator, for example, is in the business of selling hours. In contrast, the developer is looking to sell their software. Thus, their incentives in closing a deal will be different.
On average, an implementation project for a manufacturing SME would take about 400 to 500 hours of partner work. Given that hourly rates vary, that time would cost about CA $50,000 to $75,000.
A second costing approach
There’s another way of getting a good ballpark cost. Assume that for every dollar you spend on ERP software licensing (for a cloud-based solution), you’ll invest two to three dollars in implementation. Thus, $20,000 in annual licensing fees would result in an implementation project of about $60,000.
Remember, when making this calculation for your business case, you need to include your employees’ time. To avoid employee burn-out, their ERP tasks should be part of their regular work hours, and not scheduled after business hours. Assume about three to four hours of employee time for every hour of your implementation partner’s work.
4. Be clear on the roles and tasks each team has.
An ERP implementation cannot be set on auto-pilot. So it’s critical to be clear about the roles and responsibilities of each team.
A professional implementation partner needs to do the following:
- Act as a good teacher in your learning process so your team becomes autonomous in its ERP usage.
- Deliver expert support when needed.
- Challenge the status quo, i.e., call into question the “old way” of doing things in order to bring best practices and insights to the table.
- Offer solutions that match your needs.
Meanwhile, your employees need to do the following:
- Define the requirements for system configuration.
- Ensure data integrity, testing, and well-prepared data migration.
- Document processes.
- Develop and manage all communication.
- Manage the evolution of the project.
- Spearhead the change management process.
5. Follow a well-defined implementation process
As we noted, every implementation partner will have varying approaches to the process. The following is the process Fidelio puts in place with our customers.
Define the technical environment. Our team works with your IT people to identify the parameters of your hardware and software.
Identify the processes to be implemented. Each business function that is part of the implementation project needs to work with our team to define which of its processes will be included in the ERP and how they will unfold in the new system.
Set up and configure the application to support them. Based on the new processes you defined with us, the ERP software is configured to meet your requirements.
Integrate the master data. The master data, such as details of the vendors, customers, and products, are created centrally and are valid across all modules. For example, vendor master data is used to create purchase orders or pay invoices. Before integrating the master data, delete what's obsolete and fill in what’s incomplete.
Learn how the ERP application works. We guide your team leaders through the ABCs of the software. They in turn will train your users. Test and validate the operation of your processes in the application. Your experts in various business functions work with us to ensure the right results are being delivered.
Customize your reports and forms. Your team gets to format their reports and forms so that the data is presented the way they like.
Train all your users. All employees authorized to access the ERP will be trained by your team leaders on how to use the application. Then your users will be tested on how well they’ve retained their training.
Switch your operations and accounting to the new system. Data migration from your old system to the new one requires a lot of planning, data preparation, and testing. Without this upfront work, you expose your business to the risk of costly project delays.
Once the accounting and inventory data are imported, we carry out the final validations before the first official transactions in Fidelio.
6. Involve your A-team
Given the high stakes of your ERP implementation, you want legitimate company experts on your implementation team. How do you identify them?
They understand your business processes and the impacts they have on other functions of the company. Your experts will play a major role in validating the data and processes, configuring the system, and training all your users.
They can foresee how old processes will work out in the new system because they have the open mind needed to imagine themselves and others doing things differently while they keep their eye on the goal.
They will add value to the implementation. Do not choose people simply because they are volunteering.
7. Determine and communicate your objectives
A project of this magnitude requires that, from day one, you maintain an honest on-going dialogue with all your employees, not just your implementation team.
Schedule a kick-off meeting where you explain your project, your objectives, and the role your team will play in it. This is the time to get everyone on board.
Issue regular newsletters and provide responsive support and training. After all, your people will work with the system every day.
8. Plan, plan, plan
From the start, create an accessible planning document that will identify your project’s scope, phases, key dates, communication tools, and frequency of communication.
9. Minimize project risk by avoiding common errors
Common mistakes in ERP implementation include the following:
Losing sight of your objectives and requirements. If this happens, the project may be strangled by “scope creep.” In other words, as more and more modifications and adaptations are made, the project gets bigger and more expensive and demoralizing as the finish line recedes into the distance.
Not safeguarding data integrity. Clean up your data. Dump what’s obsolete. Complete the incomplete. Keep it all cyber safe.
Not testing sufficiently. Testing is a preventive measure. The old adage, “An ounce of prevention is worth a pound of cure,” should be your guiding principle.
Not training users enough. If your users don’t feel comfortable using the system, your ERP system will become the equivalent of the unused home-fitness treadmill, only hundreds of times more costly.
Replicating your old system. If your implementation partner has done their job properly with your team, the processes you designed together will reflect the best practices and insights of the industry. Did your old system have such a foundation? Probably not.
Skip steps and continue to move forward without the prerequisites. You may be tempted to speed up the implementation by skipping steps. Don’t. You’ll end up taking two steps forward and three back.
Do not underestimate your involvement. Think of our involvement in the ERP implementation as the equivalent of learning to ride a bike: you are the rider who pedals, steers, and balances the bike/project while your ERP partner, running by your side, offers a steadying hand and expert advice.
We hope you’ve found these nine steps to successful ERP implementation helpful. For more in-depth detail on the successful implementation of your ERP system, download our guide, “MY ERP Concise Implementation Guide: Your Fidelio ERP Implementation Tool.”
And please feel free to contact us for any questions you may have on your ERP system and implementation.
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