To implement an Enterprise Resource Planning (ERP) system like NetSuite is a massive project that will change how things are done within the organization. By choosing the implementation strategy that is the best fit for your organization, you increase the chances of a smooth and successful implementation.
Deciding what approach is the best fit for your company includes considering a lot of variables. At Staria we often advise the customer based on their processes, countries, and our experience in order to find the best-suited approach. In this process it is important to factor in both complexity and non-complexity, as well as the customer’s focus – is it vital to change systems fast? Is budget a key factor? Is automation from day one the focus? And so on.
Keep reading for a break-down of the different phases of the ERP implementation project followed by 4 key implementation strategies and how to select the correct strategy for your organization.
What is part of an ERP implementation project?
An ERP implementation project consists of 6 phases:
- Discovery and planning, where a project team is appointed and tasked with identifying the needs and requirements of different business groups, researching different ERP systems and suppliers and choosing the best fit, and laying out a solid ERP implementation plan.
- Design, where the project team analyses the organization’s current workflows and uses this analysis as a basis to design new and more efficient workflows. Design is also the phase where any customisations of the ERP software to better fit the organization are decided.
- Development, where the project team works with the implementation partner to configure and customize the ERP software to enable the new workflows. The project team also creates training materials and starts the data transfer from old to new system.
- Testing, where employees try using the new system for their everyday work activities to uncover any issues before going live. In this phase, the transferred data should also be tested and validated to ensure that it has transferred correctly.
- Going live, where the system finally goes live. Here, the implementation partner and the project team are prepared for and on stand-by to deal with potential issues, both system-wise and due to employees being unfamiliar with the new system.
- Support, where the project team is available for support when needed and regularly monitors the system to fix issues that arise and to evolve the system to support new needs of the organization. The project team also gathers feedback for future improvements of the system.
4 ERP implementation strategies
An organization can approach the ERP implementation project in a number of different ways. 4 common ways are:
1. The big bang – transition all users in a single step
With this strategy, the organization completes all the system configuration, testing, and training before the go-live date and moves everyone onto the new system at the same time. There is no transition phase where old systems run in parallel with the new ERP system. The advantage of this strategy is that the benefits of the ERP system, such as improved productivity, can be accessed quickly. However, it is critical to get things right as the old systems will be out of use and unavailable. A temporary drop in productivity may also occur as everyone gets used to the new system.
2. Use a phased approach
With this strategy, the system is taken into use over an extended period of time such as a number of weeks or months. The phased approach carries less risk than the single-step strategy. It also enables the organization to learn from and address issues that appear early on so that they don’t affect later parts of the process. However, because it takes longer, the benefits of the new system are not accessed as quickly, and there will be costs from having the old and new systems running in parallel during the implementation time. The phases in this strategy can be based on functions (for example starting with the core functions), business units, or geography.
3. Use parallel systems for a time
With this strategy, the organization goes live with the new ERP system but keeps their old system running in parallel for a chosen length of time, even after the implementation of the new system has been completed. This strategy carries the least risk, since the organization can go back to using the old system if there are any issues with the new one. This approach protects critical functions, and also makes it easier for users to gradually get used to the new system. On the downside, this strategy is expensive because the organization are running and paying for two different systems at the same time. It also creates room for errors because data is entered into both systems.
4. Use a hybrid version
With this strategy, the organization combines different things from two or all of the three previous strategies. An example could be using the single-step strategy for the organization’s core functions and then using the phased approach strategy for other locations or business units.
How do you select the right ERP implementation strategy for your organization?
All organizations are different, and the same implementation strategy will not work for everyone. When choosing the ERP implementation strategy for your organization, make sure you evaluate these factors:
Size: The single-step strategy can be a good option for small and midsized organizations. This is because a smaller organization has fewer locations and employees to transition into the new system, which makes it easier to manage it all at once. For a large organization with many employees, business units and locations, a single-step strategy may carry too much risk. The same goes for organizations with complex structures. Here, a phased approach or parallel systems may be a better fit.
Risk: For organizations that rely on their systems to work perfectly non-stop and cannot have any glitches during implementation without it having a major impact on the business, a single-step strategy could be too much of a risk. Instead, using parallel systems for all crucial parts of the organization and perhaps a phased approach for non-crucial parts is better.
ROI (return on investment): The single-step strategy is the fastest way to access the benefits of the new ERP system: when everyone starts using the same system it improves productivity, enables better insight, and lowers operating costs, leading to a higher ROI. A phased approach may also be a good fit, as the organization can go live with the new ERP system first in the business functions that affect ROI more quickly than others.
Cost: Using two parallel systems for a time or through a months-long phased project may be expensive, both because of costs related directly to having access to the systems and because employees are using double the time entering information into two separate places. Organizations that want to avoid these costs may opt for the single-step strategy. However, it is then crucial to get things right the first time, to avoid costs due to later issues.
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