Enterprise Resource Planning (ERP) software is one of the most complex software systems within an enterprise organization but also one of the most valuable. Successful ERP deployments bring together a suite of integrated applications that allow organizations to streamline and automate processes, providing a single source of truth across the business. A well-executed ERP implementation plan ensures these benefits are realized.
However, the Enterprise Resource Planning implementation process is fraught with potential pitfalls, including poor data migration and a lack of training for end-users. According to a study by Panorama Consulting Solutions, 74% of ERP implementations exceed their budget, and 61% exceed their planned duration. Additionally, only 26% of respondents reported that their ERP systems delivered at least 50% of the expected benefits. Successfully implementing ERP systems, therefore, requires alignment, rigorous planning, and cross-functional collaboration.
We provide an overview of how organizations can apply a clear methodology to the ERP implementation planning process to mitigate the major risks associated with large-scale software implementations successfully. We will delve into the intricacies of ERP systems, enterprise resource planning, and ERP solutions, offering insights into best practices for ERP business processes, ERP applications, and ERP planning.
By understanding the nuances of ERP implementation, organizations can achieve seamless software adoption, fostering digital transformation and enhancing technology adoption across the enterprise.
What is ERP?
Enterprise Resource Planning (ERP) is a type of software that organizations use to manage and integrate essential parts of their businesses. An ERP software application can incorporate planning, purchasing inventory, sales, marketing, finance, human resources, and more.
The primary purpose of ERP systems is to provide a centralized platform for all business processes, thereby enhancing efficiency and decision-making. By consolidating data from various departments into a single ERP solution, organizations can eliminate data silos, reduce manual data entry, and streamline business workflows.
Key features of ERP applications include:
- Integration: ERP systems integrate various business processes into a cohesive system.
- Automation: Automates routine tasks, reducing the need for manual input and minimizing errors.
- Data Analysis: Provides powerful tools for data analysis, enabling better business insights and informed decision-making.
- Scalability: Can scale with the growth of an organization, accommodating increased workloads and additional users.
The adoption of enterprise resource planning software has been steadily increasing. According to a report by Fortune Business Insights, the global Enterprise Resource Planning (ERP) software market size is projected to grow from $81.15 billion in 2024 to $238.79 billion by 2032, exhibiting a CAGR of 14.4% during the forecast period. This growth underscores the importance of ERP planning and ERP implementation in modern businesses.
Digital adoption of ERP systems is crucial for achieving a successful ERP implementation plan. Ensuring that all employees are proficient with the new technology adoption can significantly improve the overall efficiency and return on investment for the ERP system.
What are ERP Systems?
ERP systems are comprehensive software platforms that manage and integrate an organization’s core business processes. Within a unified system, these systems encompass various functions, such as finance, human resources, supply chain management, manufacturing, services, procurement, and others.
The primary objective of ERP systems is to provide a centralized repository of information that all departments can access and utilize. This integration ensures that data flows seamlessly across the organization, eliminating silos and enhancing overall efficiency. The key components of ERP systems include:
- Finance Management: Tracks financial data and processes, including accounts payable, accounts receivable, general ledger, budgeting, and forecasting.
- Human Resources Management: Manages employee data, payroll, recruitment, training, and performance evaluations.
- Supply Chain Management: Oversees the flow of goods and services, including procurement, production, and logistics.
- Manufacturing: Supports production planning, scheduling, and quality control.
- Customer Relationship Management (CRM): Manages customer data, sales, marketing campaigns, and customer service.
Adopting ERP systems can significantly benefit an organization, including improved operational efficiency, better decision-making, and enhanced collaboration. According to a study, 95% of businesses reported improvements in their processes after implementing ERP systems, with 93% saying their ERP implementation improved collaboration within their departments.
Furthermore, ERP systems play a crucial role in digital transformation by enabling organizations to leverage data analytics, automation, and advanced technologies. Implementing an ERP system is a significant step in an organization’s digital adoption journey, facilitating the seamless adoption of new technologies and business practices.
ERP systems are vital for modern businesses, providing a comprehensive and integrated approach to managing enterprise-wide processes. Organizations can achieve greater efficiency, scalability, and market competitiveness by investing in an ERP solution. Effective ERP planning and ERP implementation plans are essential to maximizing the benefits of enterprise resource planning software.
Through a well-structured ERP program, organizations can ensure that their ERP software application meets their unique business needs and supports their long-term goals.
What is an ERP Implementation?
An ERP system brings together discrete systems and information from across a business. This could be anything from staff availability via HR records to customer data in the CRM.
ERP software implementation describes the end-to-end process of gathering business requirements, selecting the right ERP solution, configuring the integrations, migrating legacy data, and deploying the new ERP system. This comprehensive approach ensures that all business aspects are integrated and streamlined.
Alongside ensuring the technical aspects of the system are implemented correctly, the ERP implementation process also focuses on successful change management. This involves considering user needs at each stage and ensuring all users are trained to use the system. Effective digital adoption strategies are crucial here, as they help facilitate the smooth technology adoption necessary for a successful implementation.
However, once the system is live, the implementation doesn’t end. As with all software platforms, ERP systems require regular updates and maintenance to perform at peak performance. Continuous ERP planning and ERP program management are essential to address evolving business needs and technological advancements.
Organizations that follow best practices for ERP implementations can achieve up to a 20% reduction in implementation time and a reduction in operational costs. This highlights the importance of meticulous ERP planning and strategic ERP software application deployment.
ERP implementation is a multifaceted process beyond mere software deployment. It encompasses thorough planning, seamless software adoption, and ongoing maintenance to support the organization’s long-term digital transformation goals. Organizations can achieve significant efficiencies and competitive advantages by investing in a robust ERP business solution and focusing on user-centric enterprise resource planning.
What is the ERP Implementation Process?
Implementing an ERP system is a significant undertaking that should be approached methodically. While the specifics of an ERP implementation may vary from one organization to another, the process generally follows ten essential stages. These stages form the core of the ERP implementation life cycle and are crucial for the project’s success.
The duration of each stage can vary based on the organization’s pace and priorities. Still, an ERP implementation can typically take anywhere from six months to a year from initial ERP planning to a fully operational ERP solution.
Following a structured ERP implementation process and focusing on digital adoption, organizations can seamlessly transition to their new ERP business solution, driving digital transformation and enhancing overall efficiency.
Why is an ERP Implementation Plan Important?
In an enterprise, multiple business functions are making decisions that affect the organization at any given point. ERP systems help manage all the business units and functions from a centralized location. An ERP solution is a repository of information and serves as a single source of truth for the organization. It simplifies the decision-making process for departmental managers, enabling them to trust the data to make crucial business calls.
Here are five reasons why an ERP implementation plan is essential for your organization:
- Seamless Collaboration: Different departments often use different systems, increasing the chance of duplicate information. However, if an ERP system is implemented, it eliminates the probability of duplication and provides centralized information throughout the organization. No department has to wait for another to receive data, reducing dependency, increasing transparency, and promoting collaboration. This is a crucial benefit of enterprise resource planning systems.
- Enhanced Employee Performance: Employees are hired to perform their tasks, but to ensure process compliance and data integrity, they are often burdened with admin tasks. This impacts their performance as most of their time goes into tedious admin tasks, affecting their morale. The right ERP solution can automate repetitive tasks, enabling employees to accomplish their tasks quickly and improving overall performance. This highlights the importance of effective ERP planning and software adoption.
- Improved Tracking Capacity: ERP systems are crucial for many industries, especially retail and supply chains. These industries must manage resources, transport finished goods, and handle demand until it reaches customers. Having a bird’s-eye view of the organization helps leaders identify problems beforehand and tackle them before they become roadblocks. Modern ERP systems come with active tracking systems, eliminating speculation and providing current status to relevant stakeholders. This functionality is a core aspect of enterprise resource planning software.
- Detailed Analytics: Since ERP is a central database, it also has reporting capabilities. It records every user action, helping business leaders make informed decisions. Without an ERP, creating reports might take days or weeks. Real-time monitoring and historical reports from ERP systems provide valuable insights, from finance to inventory management, enhancing the organization’s understanding and decision-making. This is why ERP implementations are critical for digital transformation.
- Boost ROI: Organizations implementing ERP for the first time might consider it a significant expense. However, they will find value in their ERP investments once they are past the initial phase. ERP systems integrate all critical applications within an organization. Instead of juggling multiple applications for information, employees can access the ERP system as a single source of truth. This improves ROI by reducing training time, saving time, and providing better visibility. Successful ERP implementations showcase real ERP implementation examples where companies see substantial financial benefits.
The global ERP software market was valued at USD 71.41 billion in 2023 and is projected to grow to USD 238.79 billion by 2032, with a compound annual growth rate (CAGR) of 14.4% (Fortune Business Insights). This demonstrates the value of investing in robust enterprise resource planning software and focusing on effective digital adoption strategies to drive digital transformation and enhance technology adoption.
A well-planned ERP implementation is vital for modern businesses. By centralizing information, improving employee performance, enhancing tracking capacity, providing detailed analytics, and boosting ROI, an ERP system becomes an indispensable tool for organizational success.
ERP Implementation Failure Rate
According to McKinsey, 75% of all ERP projects fail to meet their goals, with 74% taking longer than expected. An ERP project is not just a technical change but a cultural one. ERP failures can disrupt the whole organization, and, in some cases, the results could be catastrophic.
A famous failed ERP implementation example came in 2019 when vehicle management company LeasePlan abandoned its migration to an SAP-based ERP system after numerous project delays and change management challenges. This caused the business to write off $100 million in project costs and start again from scratch. The project’s catastrophic failure was attributed to poor planning, which caused the company to develop software that would ” not be fit for purpose in the emerging digital world in which [it] operated.”
A survey conducted by Deloitte identified ten barriers to ERP implementation. The major causes of concern are resistance to change, inadequate sponsorship, unrealistic expectations, and poor project management. These factors highlight the importance of meticulous ERP planning and effective change management strategies.
It’s fair to say that the importance of a clearly defined plan in the ERP implementation process cannot be understated. The scale of most ERP implementations means that even minute misalignments can cascade into huge headaches, ultimately risking the project’s success. Organizations must create a plan to overcome these barriers and streamline their ERP implementation process.
ERP systems and enterprise resource planning software are designed to bring coherence and efficiency to business processes. Still, without a structured ERP program and robust ERP planning, the risks of failure increase significantly. Organizations must focus on digital adoption, manage resistance to change, and set realistic expectations to ensure success.
Understanding the high failure rate of ERP implementations emphasizes the need for comprehensive ERP planning, addressing cultural changes, and implementing strong project management practices. Businesses can mitigate risks and achieve successful ERP implementations by learning from past failures and focusing on effective software and technology adoption.
In a survey conducted by Deloitte, it was identified that there are 10 barriers to ERP implementation. Out of all these barriers, the major cause of concern is resistance to change, inadequate sponsorship, unrealistic expectations, and poor project management.
It’s fair to say that the importance of a clearly defined plan in the ERP implementation process can not be understated. The scale of most ERP implementations means that even minute misalignments can cascade into huge headaches, ultimately risking the success of the project.
Organizations must create a plan to overcome these barriers and streamline their ERP implementation process.
Bonus resource: 9 High-Profile ERP Implementation Failures
10 Key Phases in a Successful ERP Implementation Plan
A typical ERP implementation plan can be divided into ten key phases that cover the entire ERP software application lifecycle, from concept to deployment and support of the live system and its users.
Rigorously following these ERP implementation steps will ensure that your ERP implementation has the best chance of success.
1. Discovery
The discovery phase is an extensive research process that gathers information on an organization’s current systems and processes to detail the problem landscape before any ERP solutions are decided upon. This phase provides a solid foundation for the entire ERP implementation process by developing a shared understanding of what a successful implementation will look like.
The discovery phase includes developing technical specifications to inform the selection of an ERP system and whether this would be best delivered on-premise or using cloud infrastructure. The Discovery team comprises senior stakeholders, project managers, technical leads, external consultants, and representatives from across multiple departments. The team should represent everyone involved in developing or using the system.
2. Analysis
After the information has been gathered during the discovery phase, a detailed analysis will be conducted to determine the business case for implementing an ERP. Typically, the outcome of this is a detailed business case that outlines project objectives and how these will be achieved through the ERP implementation plan. Developing a business case allows an organization to evaluate the benefits, risks, and costs of the ERP implementation process.
3. Planning
Implementing ERP software is probably one of the biggest digital transformation programs a business will undertake. It’s, therefore, vital that an ERP implementation plan is created to document the resources required, timelines for implementation, and how the change will be managed.
a. Resources: As part of the ERP implementation plan, you will need to select the implementation team that will be responsible for delivering the project. This team will comprise both technical and non-technical members who will be involved in developing the software and providing feedback on its viability. It’s extremely important to include stakeholders from across the organization in the implementation team, as you will need to involve software end-users in the design, development, and testing phases to ensure the final solution is fit for purpose.
b. Change Management Plan: Your change management plan will document the tasks required to successfully move from your current fragmented systems to the new ERP system. This will include tasks and milestones around data migration, QA and testing, budget forecasting as the project progresses, and end-user training once the new system is live. Alongside outlining the implementation roadmap, milestones, and tasks, your change management plan should also include guidelines around general communication, how urgent issues should be escalated, and how progress will be tracked.
c. Budget Forecasting: As with other large-scale software projects, it can be easy to go over budget when implementing a new ERP system. You must budget realistically and anticipate that some roadblocks may occur during the implementation process. It’s therefore advisable to set aside a reasonable amount of contingency in your budget from the outset to cover unexpected costs and delays. This contingency can be reviewed throughout the implementation process to ensure sufficient and adjusted upwards or downwards to reflect project progress.
4. Design
The design phase of the ERP implementation process takes the discovery and planning phases results to develop a detailed functional design that outlines how the ERP will enable new workflows and processes from an end user’s perspective. A key output of the design phase includes process maps, which visually describe the flow of work the system will allow and how the end-user will experience the ERP system.
This can be coupled with UX/UI wireframes to show how content and functionality will appear within the software. Again, getting feedback from end-users at this stage is vital, as any confusion over how they interact with or use the software may impact its successful implementation.
5. Development
Once the system and design requirements have been validated, it’s then time for the development phase to begin. Developers will configure the chosen ERP software to match functional requirements, process flows, and wireframes. Typically, this involves a high level of customization to meet an organization’s exact requirements.
Alongside writing new software, it’s essential that developers also write clear documentation throughout the development process. This ensures that no knowledge is lost after the development phase and that future changes to the ERP system can be made with a full understanding of how the system was initially developed.
6. Migration
During the migration phase, the implementation team will start planning the data migration from legacy systems into the centralized ERP system. This can be incredibly complex, as legacy systems store data in different formats and database types.
To ensure a successful migration from these older systems, the implementation team will need to develop clear protocols for handling incomplete or missing data and ensure that erroneous data is cleaned up or removed before migration.
7. Testing
Depending on the development processes used, technical testing of the system will occur throughout the development process either with each new deployment of the system or at key specified intervals.
The QA or testing team will check each part of the new ERP system for bugs and data integrity, alongside running user testing to ensure that end users are satisfied with the software. User testing is a good way to begin the training process and ensure the ERP system will succeed after launch.
8. Training
A successful ERP training program will make it easier for existing employees to adapt to the new system and should be considered a key phase in the ERP implementation process. Alongside training employees to use the new system, organizations should also consider how they can help employees adapt to more comprehensive business process changes. As one of the benefits of ERP systems is improved efficiency, organizations should also consider how they will retrain and redeploy employees whose workloads will be reduced by a successful ERP implementation.
Traditionally, training includes onboarding materials and peer support, webinars and live classes, e-learning platforms, written documentation, and newer and more effective means of training, such as a Digital Adoption Platform. It’s important to offer a range of engaging training materials to cater to different learning styles and skill levels.
9. Deployment
As ERP systems can range in scale, the process of “going” live may alter based on available resources.
a. All at once
An all-at-once, or major release, involves a mass switchover to the new system all at once. This typically happens on the same day and requires full alignment across the entire organization.
b. Phased
A phased approach packages up the transition into discrete modules or units that can be aligned around departments or business functions. While a phased approach can take longer, it does provide more flexibility to test individual parts of the ERP system as they are pushed live.
c. Parallel
In a parallel deployment, the legacy and new systems are run side by side to ensure that the new system is fully functional before the old one is depreciated. This reduces the risk of data loss; however, it is more expensive as resources are required to run and operate both systems.
10. Support
Once the ERP system is live, it will require long-term support and maintenance to remain fully operational throughout its lifespan. This will include fixing bugs and performance issues, fine-tuning data flow, and introducing new data sources. After a new system is deployed, organizations should also evaluate its success against the original business case by analyzing the return on investment, efficiency savings, and staff satisfaction with the new system.
Main Costs in an ERP Implementation
The largest cost in an ERP implementation is undoubtedly tied to the underlying cost of the software and hardware. This includes:
- Software licenses
- Cloud or on-premise infrastructure and networking
Alongside the technology costs, you will also need to factor in personnel costs for the duration of the project:
- Software development and integration team
- Consultants and system architects
- Testing & QA professionals
- Training professionals and platforms
- Project managers
After the initial implementation is finished, you will also have ongoing costs to maintain and support the new system:
- Ongoing software licensing fees
- Support staff for hardware maintenance
- Software developers to handle bugs and ongoing system maintenance
Before you start the implementation planning process, it’s extremely important to draw up a realistic budget that encompasses all of the costs above. This will help align stakeholders and ensure that everyone understands the scope and scale of the project.
Alongside drawing up a rigorous budget, it is also important to forecast the positive financial impact the new ERP system will have on the business, such as reduced operational costs or improved efficiency.
ERP Implementation Best Practices
Implementing enterprise resource planning (ERP) systems can be arduous, but organizations can take several steps to ensure that new systems are implemented successfully. Here are some ERP implementation best practices to follow:
i. Get executive buy-in
Successful ERP implementation requires cross-functional collaboration and reallocating budget and resources throughout the implementation process. Getting executive buy-in ensures senior stakeholders understand the long-term benefits and how this will impact top-level business goals such as revenue and profitability. Successful buy-in ensures executives are fully committed to seeing the project through, from planning to long-term support.
ii. Focus on business outcomes over technology
The primary focus of most technology projects is on the technology, not the wider impact, which leads to decisions being made through the lens of technology alone. This can result in the bigger picture being missed and misalignment between the technical solution and what an organization wants to achieve. Instead of looking at technology alone, companies should focus on the business outcome they are trying to achieve and make decisions through the lens of their ultimate goals, not software.
iii. Clearly define system requirements
One of the cornerstones of success in ERP system integration is ensuring that system requirements are fully understood and documented before a line of code is written. This is why the discovery and planning phases are so important, as they provide a rigorous process for gathering stakeholder input from across the organization on feature requests, current pain points, and potential future gains.
iv. Select the right team members
To ensure your system requirements are fully fleshed out, selecting a diverse cross-functional team that is representative of all departments across your organization is important. Alongside having varied input from various roles, it’s also extremely important to have capable project managers and project leads to ensure key milestones are met and that the project continues to progress according to schedule.
v. Devise a change management plan
Complex changes across an organization can result in disconnected employees and poor productivity as people struggle with new systems they don’t understand. That’s why it’s vital to have a robust change management plan that incorporates training, streamlined communication, and clear business rules.
Apty enables organizations to make large-scale changes while onboarding a new ERP system or migrating to a new system without forcing hundreds or thousands of employees to sit through cumbersome and ineffective training sessions.
Apty allows you to give your team the content they need, when they need it, through custom on-screen guidance. Additionally, Apty ties back to positively influence your business outcomes and shows you your true adoption rate, which is critical when rolling out large enterprise software, such as Oracle Cloud, NetSuite, ServiceNow, or other enterprise ERPs.
vi. Set a realistic timeline and budget
While it’s important for ERP implementation plans to progress at pace, budgets and timelines need to be realistic and reflect the unknown nature of some parts of the implementation process. Estimates for timescales should include contingencies at each stage that can be utilized, and budgets should include at least a 25% contingency for unexpected costs.
vii. Clean data before migration
It’s important to make sure the formatting of the data in a new ERP system is correct before importing data from your existing system. Cleaning legacy data before migration should ensure existing tables and databases are correctly formatted before they are imported into the new system, along with removing redundant data that provides little value.
viii. Test system before deployment
Testing your ERP system before deployment is important to ensure that it is fit for purpose and can replace your legacy systems. This will include unit testing for each part of the system, integration testing to ensure that these parts work together, and system testing to ensure that the system operates as expected. Alongside technical testing, it’s also important to develop a full UAT (user acceptance testing) plan that allows actual end-users to test the ERP system before it is fully implemented.
ix. Invest in employee training and adoption
According to recent surveys regarding ERP budget calculations, 65% of companies require additional modifications to improve efficiency and usability. It’s, therefore, extremely important to determine a sufficient training and adoption budget upfront to support users in transitioning to the new system.
Selecting the right training platform is vital, and at Apty, we are proud to help organizations achieve 80% savings in software support and training costs and 300% faster adoption of new software.
Implementing these ERP best practices ensures that your enterprise resource planning systems are successfully integrated and adopted within your organization, driving digital transformation and enhancing overall technology adoption.
Apty’s Role in Successful ERP Adoption
Integrating Digital Adoption Platforms (DAPs) like Apty into ERP implementation strategies represents a significant shift in how enterprises approach user adoption. Apty streamlines and simplifies the user experience, addressing one of the most important hurdles in ERP projects: the steep learning curve associated with new systems.
A. Bridging the User Adoption Gap
DAPs act as a bridge between complex ERP functionalities and user capabilities. They offer real-time, contextual guidance within the application, making it easier for users to understand and navigate the ERP system. This in-app assistance is tailored to the user’s role and tasks, ensuring relevance and efficiency, which is crucial for effective ERP adoption.
B. Enhancing User Engagement and Competency
DAPs are designed to boost user engagement through interactive walkthroughs, tooltips, and task lists that guide users step-by-step through processes. This hands-on approach accelerates the learning process, leading to quicker and more effective user competency in utilizing the ERP system. Enhancing user engagement is a key component of ERP implementation best practices.
C. Customized Learning Experiences
DAPs offer the flexibility to create customized learning experiences that match the specific needs of different user groups within an organization. This personalization is crucial in catering to the diverse roles and responsibilities that interact with the ERP system, ensuring that each user receives relevant and efficient training. This approach supports enterprise resource planning and digital transformation efforts.
D. Reducing Resistance to Change
Change resistance is a common challenge in ERP implementations. DAPs mitigate this by providing a supportive and intuitive learning environment. This approach eases users’ transition, reduces anxiety and resistance, and fosters a positive attitude towards the new system. Effective change management is essential for successful ERP planning and software adoption.
E. Analytics and Feedback for Continuous Improvement
DAPs come equipped with analytics capabilities, allowing organizations to track user performance and identify areas where users struggle. This feedback is invaluable for continuously improving the ERP system and the training materials, ensuring that the system evolves in line with user needs and preferences. Continuous improvement is a cornerstone of ERP implementation best practices.
F. Aligning with Organizational Goals
Effective DAP implementation aligns closely with organizational goals and objectives. By improving user adoption rates, organizations can maximize the ROI of their ERP investment, ensuring that the system contributes significantly to operational efficiency and business growth. This alignment is essential for achieving the desired outcomes from enterprise resource planning systems and technology adoption.
FAQs
1. What is the ERP implementation lifecycle?
The ERP implementation lifecycle is the process for planning, creating, testing, and deploying a new ERP system. It can also refer to the ERP implementation steps and timescales involved in successfully implementing the system.
2. How long does an ERP implementation take?
The length of time it takes to run the ERP implementation process is highly dependent on the state of existing systems, the size and scale of an organization, the number of required integrations, and available resources to complete the implementation. An ERP implementation process can take anywhere from a few months to several years, with the majority of projects ranging from six months to a year.
3. When should a company implement an ERP system?
An organization should implement an ERP system when they are facing significant challenges with the use of different software systems across the business. Disconnected systems typically create issues including inaccurate reporting, departmental silos, inefficient processes, and poor customer experience. All of these will have a material impact on revenue and profitability and are clear signals that an organization requires an ERP system.
4. How can you avoid ERP implementation delays?
Organizations can avoid ERP implementation delays by developing a clear ERP implementation plan that outlines the resources, processes, and decisions at each stage of the ERP implementation process. This should be reviewed regularly throughout the project duration to ensure key milestones are being achieved on time, with clear escalation procedures for revolving blockers.
