Implementing Enterprise Resource Planning software, often known as ERP, is a vital step that helps businesses run more efficiently and spend less money. The ERP installation life cycle refers to the process of implementing it to streamline business activities. From the very beginning, it includes a number of phases and steps, such as project implementation planning, assessment, implementation, transition, and management. Small and medium-sized businesses must go through the implementation procedure. Business process management software is available, specifically made to target Small and Medium Enterprises (SMEs) and can be installed in a matter of minutes.
Did you know? According to studies, the average ERP failure rate is 21%? (Source: research conducted by Panorama). Although the number is large, it can be prevented with careful ERP implementation.
Enterprise Resource Planning (ERP)
An enterprise resource planning (ERP) software is comparable to an adhesive that holds together many computer networks for a large firm. Every department has a system customised to its unique tasks without an ERP programme. With ERP software, every department can still keep its own network, but it adds the possibility to access all of the networks through a single application from a single interface.
An ERP system is a piece of software that aids in managing all aspects of your organisation, including accounting, sales, supply chain management, human resource management, production, and more.
ERP Implementation
The implementation of an ERP system is a difficult task that involves changing numerous processes and dealing with a number of internal problems. Organisations require an implementation plan that covers both the pre-and post-implementation phases. Employee under-preparedness, implementation not aligning with the larger corporate plan, sub-standard business process redesigning, and schedule and expense overruns result from a bad strategy.
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Before beginning the actual implementation, the following concerns need to be thoroughly considered and expressed as part of the implementation strategy:
Business Process
Theoretically, those who work inside a corporation should have the most knowledge of its workings. However, people are frequently forced to operate in departmental bubbles and cannot see the bigger picture. Sometimes, standard business procedures are not well defined, and there are no "as-is" flow charts accessible to record current operations.
An ERP system may be a perfect opportunity to evaluate and improve current business processes, chokepoints, dividing lines between departments, and trade partner connections. However, because of departmental influence and dislike towards transformation, ERP deployment is frequently seen as a project to automate outdated techniques. This can result in little changes to the underlying business processes and a negligible return on investment.
This may lead to even the best-fitting ERP software only matching up to a maximum of 85% to 90% of legacy processes. Sometimes, automation of existing manual operations unique to a firm requires extensive source code adaptation. Modifying data models and changing software components will be necessary when source code is customised.
Such modifications require major development, testing, and documenting work. Future maintenance and upgrading expenses will be high and impact the system's life cycle.
When the practice of Business Process Mapping and Gap Analysis is undertaken during implementation, demand will rise in the future for more and more customisation unless a reasoned perspective favouring process modifications is adopted as a part of an implementation strategy.
ERP systems include several architectural trade-offs and are highly flexible to accommodate different variations of the same economic cycles and operations. This should take care of necessary procedures. Occasionally, modifying the source code to consider some fundamental organisational processes could be necessary. The plan document should also include the permission process for such modifications.
Implementation Methodology
An essential part of an implementation strategy is the choice of implementation technique. In the "big bang" strategy, the complete system is implemented throughout the business on a set deadline.
Manual or old systems are abandoned when everyone switches to the new one. Compared to a phased implementation, the integration is quicker and less expensive. On the other hand, vulnerability is significantly increased, and expenditures for testing, training, and support are required at a considerably greater level, albeit for a shorter time.
"Phased implementation," which involves rolling out changes over time, is another important implementation approach. This approach takes longer, is less concentrated, and requires ongoing maintenance of outdated systems. However, the gradual introduction is safer, gives users more time to get to know it, and has simpler back-up plans.
The several options for phasing include:
- The location-based phased rollout for a multi-location firm
- Gradual implementation by business unit, such as human resources
- General Ledger module-based phased rollout
The implementation methodology should be a key component of the implementation strategy. It should be created after considering the available resources, the level of readiness, the perception of risk, the timeline for execution, and the financial limits.
Other important strategy issues:
- Collecting, filtering, and deletion of duplicate data related to legacy data
- Software and hardware upgrading and adding to already existing resources.
- Compatibility with the current database and operating system
- Project advocates and a competency centre
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ERP Implementation Life Cycle
You must have a thorough understanding of the ERP implementation lifecycle in order to deploy ERP software. ERP deployment is a process that takes between 8 and 10 key phases. Therefore, it doesn't happen in a single day or week. Although the life cycle of implementation is more organised than the timeframe of ERP implementation, the latter is flexible.
The ERP installation life cycle refers to the process of implementing it to automate business activities. From the very beginning, it encompasses a number of phases and steps, including project implementation planning, assessment, design, implementation, transitioning, and management.
- Pre-assessment Screening
- Package Selection
- The phase of project planning
- Analysis of gaps
- Re-Engineering
- Customisation
- Training the Implementation Team
- Testing
- Going-Live
- End-Use training
- Post Implementation
Pre-evaluation screening
- When the business agrees to use an ERP system, this step begins. This includes the search for a beneficial ERP package begins.
- It takes time since every product must first be examined before making any decisions.
- Services that are unsatisfactory for the corporation's business operations should be eliminated through this approach.
- Uses the previously discussed issues to address and clarify the reasons that were taken into consideration while selecting a certain ERP package.
Package Selection
- It is the stage of implementation that matters the most. The requirements of every organisation is unique.
- Picking the best solution for your company's operations might be challenging given the wide range of possibilities on the market.
- With package selection, this phase determines the overall project's success or failure.
- To choose the optimal structure, you must have concrete evidence that the system satisfies the necessary business standards.
- ERP elements that don't meet your requirements are removed in this stage.
Project Planning Phase
- Any undertaking starting out must be meticulously thought out to avoid complications later on.
- The implementation procedure is planned and designed at this phase.
- This stage establishes the utilisation strategy. At this step, the straightforward elements of the execution strategy are chosen. The itinerary is created, the components are identified, and the responsibilities are distributed.
- This stage will plan what preventative measures to propose and what constructive actions to encourage when activities run out of resources.
GAP Analysis
- This phase of the implementation is the most important. Here, differences between firm practice and those provided by ERP programmes are studied.
- When necessary, GAP analysis is done to assess and contrast the organisation's existing system with where it wants to go in the future.
- These contain several prepared tasks such as upgrading, finding an external item that may fill a gap, creating a special method, if required and altering the ERP core program.
- In this manner, you can quickly pinpoint the critical processes that your ERP needs to focus on.
Re-engineering
- Improvements are made by fundamentally reevaluating and completely redesigning company procedures.
- Re-engineering is used to improve the process efficiency and value since it entails several adjustments and modifications based on planning and gap analysis.
- As technology becomes more automated and profitable, every execution will include minor changes to work obligations.
Customisation
- It is ERP Implementation's primary functional domain.
- It is essential for the success of ERP usage that individuals outlining the system can explain where the problems that cause aggravation occur and don't fit into the setup.
Implementation Team Training
- Following the mentioned procedures, the system installation team can now proceed to train the employees.
- For staff to utilise the technology effortlessly, they will need to receive sufficient training.
- This training will also depend on the requirements of each business and may therefore vary from one to another.
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Testing
- This is yet another critical phase of the ERP deployment life cycle. In essence, the aim is to identify faults and try fixing them just before launching the process.
- The development team tests the entire system during this stage.
- The organisation will test difficult real-world situations, including data security, user error detection, system congestion, and more. This will assist the business in discovering mistakes, defects, and weak points before deployment.
- All details are addressed at this point, and the system is formally declared to be operational.
Going Live
- A selected user group most likely tests and successfully uses the system for a considerable time.
- Once the functional and technical aspects are working correctly, the testing is complete. The subsequent step is "Going Live." After going "live" the old system is taken down, and business is conducted using the new system.
End-User Training
- The admin user will receive training on how to utilise the system at this phase.
- The end-users of the system will then be instructed on how to utilise it in the most effective way possible.
- The capabilities of the professionals who will use the new program are taken into account. They may be classified into groups as per abilities.
- The ERP system's success rests in the end users' hands, making this preparation all the more advantageous.
Post Implementation
- It is both the most crucial and significant component. Following implementation, the system must be operated and maintained.
- When the execution plan is complete, this is the really crucial step.
- The organisation must have particular members who can improve the system when necessary.
How do you choose ERP software?
Irrespective of size, a business must handle a number of tasks, including sales, purchasing, inventory tracking, financing, accounting, and payroll. An integrated ERP software solution would be helpful because having a separate system for handling each of these responsibilities would be a hassle.
By enabling all of the features or modules to interact together, you may acquire a complete understanding of the business. More importantly, it gives your team access to and consumption of data from a single database, minimising inconsistencies brought on by many data sources. The following are some key criteria to consider while choosing ERP software.
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Conclusion
Using a central database, ERP makes managing all departments straightforward. This is a quick and easy technique of working that requires very little time. A foundational system for domestic and international operations, enterprise resource planning (ERP) serves the majority of working departments in their everyday operations. The process of implementing enterprise resource planning in any firm is known as the ERP Implementation Life Cycle. From the very beginning, it encompasses a number of phases and steps, including project implementation planning, assessment, implementation, transition, and operations. The ERP implementation lifecycle highlights the many stages of installing an ERP system.
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