To implement an Enterprise Resource Planning (ERP) system is a massive project but by choosing an implementation strategy that fits your organization the best, you increase the chances of a smooth and successful project. Also, key practices help avoid pitfalls.

At Staria we have done over 300 NetSuite implementation projects, so we have a clear image on practices that are lifesavers and what implementation strategies companies should use.

4 ERP implementation strategies

An organization can approach the ERP implementation project in several ways. The 4 common ways are:

The organization completes all system configurations, testings, and trainings 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 is that the benefits, such as improved productivity, realize quickly. However, it is critical to get things right as the old systems will be unavailable. A temporary drop in productivity may also occur as everyone gets used to the new system.

The system is taken into use over an extended period of time, e.g. weeks or months. The phased approach carries less risk than the single-step strategy and lets the organization address issues early on. However, the benefits of the new system are not accessed as quickly, and there will be costs from two systems.

The phases in this strategy can be based on functions (for example starting with the core functions), business units, or geography.

The old system is kept running for a chosen period after the new system is completely implemented. This strategy carries the least risk, since the organization can fall back on the old system and allows users to gradually get used to the new system. On the downside, this strategy is expensive and having data in both systems creates room for errors.

This strategy is a mixture of the other 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.

What is the right ERP implementation strategy for your organization?

When choosing the ERP implementation strategy for your organization, evaluate these factors:

Size: The single-step strategy can be a good option for small and midsized organizations as they have fewer business units, locations, and employees to transition into the new system. For a large organization, 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 need their systems to work perfectly non-stop and any glitches would mean 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 gain the benefits of improved productivity, better insight, and lower operating costs, leading to a higher ROI. A phased approach might also work, as the organization can prioritize business functions that affect ROI the fastest.

Cost: Using two parallel systems might be expensive due to system costs and double work. Organizations that want to avoid these costs may opt for the single-step strategy. In this case, it’s crucial to succeed at the first time, to avoid later costs.

8 key practices for a successful ERP implementation

Below follows a list of key practices that will help you tackle the challenges of ERP implementation.

1. Have solid project management in place

The ERP implementation process usually spans several months, and each process phase has its own tasks and challenges.  For a smooth process, you have to:

  • Set realistic expectations, time frames and milestones
  • Align the ERP initiative with your business needs
  • Make sure the project is proceeding according to plan
  • Get input from key stakeholders

It is important to include all the user groups to the project. This may prove challenging as people will have to spear time from their usual tasks and responsibilities.

As the project progresses, be aware of “scope creep”. Adding more features and functionalities might be tempting but can blow the budget and schedule. With a strong project management, the project stays focused.

2. Appoint a strong project team

Usually, a strong project team consists of an executive sponsor, a project manager, and representatives of the different business groups involved in the implementation.

For companies lacking any expertise in-house it may be a wise choice to enlist the help of an external partner.

Read also: What Starship Technologies says about their ERP implementation and the project team?

3. Set clear requirements and KPIs

The requirements set for the project should align with your business goals. Look at the current key business processes, systems, and workflows – what do you want to accomplish and improve? Examples could be to achieve real-time reporting, to cut financial close time in half, or to automate a specific process.

After setting clear requirements, identify relevant KPIs. With them you can measure if the implementation project is a success.

4. Prioritize the transfer of your data

All the data from the organization’s old (often multiple) systems need to be transferred into the new one. There is a risk of ending up with lost, inaccurate, or duplicate data. It is vital to prioritize the transfer of data, which can be handled in two ways: manually or through automated tools.

Manual transfer gives an opportunity for data clean-up, but automated tools save time. Regardless of method, it is important to validate the data before going live. Emphasize the importance of data transfer and assign clear responsibilities around it.

5. Keep the costs in check

ERP projects are infamous for going past the budget. A common reason for this is underestimating the amount of time and work the project requires. Another reason is the above-mentioned “scope creep”, where the business wants to add features that weren’t in the original plan.

Setting up a clear and realistic plan and budget (with some extra room) and regular check-ins will minimize the risks for major cost overruns.

6. Invest in communication and change management

When undertaking an ERP implementation, it is crucial to include all stakeholders in the organization and communicate:

  • Why an ERP system is being implemented
  • What the new system will do
  • What benefits the new system will bring
  • What to expect during the implementation project

The leadership team must communicate the importance of the project and show their support for the changes to come. As the new system will change daily work, communicating especially with end users is crucial. Also, consider that changing systems may affect customers, business partners and supply chain. Keep these parties informed as well.

7. Offer training

Offer targeted training to different roles and groups in the organization. Customized content helps to learn the system in practice, and it can also reduce skepticism. Another approach is to select some individuals as mentors.

8. Remember the post-implementation work

When implementing a new business system, the work does not end at the go-live date. There will be a need to perform regular check-ups, fix issues, and modify the system to support new needs of the organization.

After going live, make sure there is technical support available, and monitor for potential problems. If many people make the same error, or have the same question, this indicates an issue that needs to be addressed either system-wise or through training. Continue to gather user feedback to identify problems and get ideas for future improvements.

Further reading: Checklist – 14 tips on how to successfully implement an ERP project

ERP Checklist

A successful ERP implementation requires a thorough analysis of current operations and processes. Change management during the project is also key to success so that the new processes and ways of working are permanently implemented within the organization.

The checklist includes the most important elements of a successful ERP project.