Strategy for successful ERP implementation
Before we delve into the Strategy for successful ERP Implementation, let us understand why manufacturing companies need an ERP? What are the goals of an ERP implementation, how to define the success of an ERP Implementation, and what are the components of a successful ERP implementation strategy
What is ERP?
Enterprise resource planning (ERP) software applications integrate all important processes of an organization such as planning, production, purchasing inventory, sales, marketing, finance, human resources into a centralized system. ERP automates functions, efficiently connects business verticals, provides real-time data insights across departments to make informed decisions.
What is the Goal of ERP Implementation?
The ultimate goal of any ERP Software Implementation is to create the digital backbone of a company and a single source of accurate data. It establishes a platform for standardization of processes in order to achieve speed and efficiency in business processes. This will eventually result in shorter cycle times, reduced costs, improved bottom-lines and help manufacturing SMEs to scale and grow their businesses
What is ERP Implementation Success?
ERP implementation success is said to be achieved when goals and objectives defined for an ERP Software implementation are completed on time, within the fixed budget along with an adequate Return on Investment (ROI).
What is an ERP Strategy?
An ERP strategy outlines the steps to take before, during and after implementing an ERP software. ERP strategy is designed by keeping in mind, the business goals, requirements, current processes, technical capabilities, deployment strategy, etc. An appropriate ERP implementation strategy ensures that you are well prepared, stay focused on the scope of your ERP implementation and ensure that staff is properly prepared and trained.
What are the components of an ERP Strategy?
A good ERP Strategy is at the heart of a successful ERP Implementation as ERP impacts all areas of business. Let us now understand each ERP Strategy component in detail.
1. Active Participation of Stakeholders
They say, that ERP Software implementation is 90 percent about people, processes, culture. Hence Senior Management should wholeheartedly support and middle-management should be involved in ERP right from the beginning so that ERP implementation will get proper visibility, priority, and significance among all employees. All Employees must clearly understand their roles and responsibilities in ERP implementation.
2. Proper Planning
Manufacturing SMEs must prepare a rational estimate of the time and costs involved in the ERP implementation, including software, hardware and training resources, etc. Form an ERP plan with minimum assumptions and accurate data.
3. Clear Business Objective
As explained earlier, it is important to clearly define business objectives as well as your organization’s definition of ERP success. This makes it easier to compare the before and after results, measure the change in terms of tangible numbers to calculate Return on Investment. Some typical examples of how ERP Implementation Success is calculated are:
- 95% orders delivered on time
- 18% faster cycle times from project start to invoicing
- 22% growth in operating margins
- 14% reduction in operational cost
- 13% reduction in admin cost
4. Sufficient Resources
The core ERP project team should comprise of a project manager and process owners who will play the role of subject matter experts. ERP Project team will interview employees across all departments to understand their day-to-day tasks and pain points. This will ensure that you configure ERP software as per your specific business requirements
5. Realistic Expectation
Don’t expect ERP to perform miracles. You will not see any magical results overnight with ERP implementation. Setup realistic expectations and timelines for achieving the objectives defined.
6. Minimize Customization
You should think about the level of customization required to configure and implement a new ERP Software. Over customization can lead to higher deployment and operation costs.
7. Training of Employees
Employees should be well trained to know the ERP Software basics, an overview of the system and its working. Allocate sufficient time for employees to get trained and acquainted with the new ERP during migration and roll out. Ensure you have proper user instruction, user documentation, and user training.
8. Proper Testing before GO Live
Design Test phase for extensive testing of ERP to ensure it meets your business needs. The final go-live should take place only after tracking the tests, data migration, data integration and managing the fixes or customizations.
9. Management of Transition phase
This transition phase while migrating from an old system to new ERP has to be handled carefully and properly as there can be a temporary dip in performance after ERP implementation. Stakeholders should be clearly aware about this possibility
10. Post Implementation Services
ERP requires frequent reviews and corrections for the ever-changing market. After the go-live, ERP Project Teams must meet to discuss what was successful, where they are still facing challenges, and what they would like to change.
An ERP impacts all aspects of a business, hence, having an ERP strategy for successful ERP implementation, is critical to an organization. It will reduce the chances of problems by maintaining laser-sharp focus during implementation. It will prevent the ERP implementation from going over and beyond the estimated timelines and budgets. Thus it will ensure successful ERP implementation along with significant savings of time and money for manufacturing SMEs.
Read more about Spectrum ERP for Manufacturing SMEs