- May 23, 2018
- Posted by: Dimple
- Category: News
ERP implementation life cycle is the process of deploying enterprise resource planning software—from planning through go-live and beyond. The typical implementation cycle is six to 12 months. But don’t think it’s all about software. Make sure you’re prepared for these eight stages of ERP implementation.
One question that always comes up very early in the process when considering an ERP implementation is “How long will it take?” While there is no general answer to that question – ERP implementations proceed at their own pace – the process can be outlined by way of a timeline or life cycle. Just for perspective, an ERP implementation can take anywhere from a few months to several years, with the majority ranging from six-to-12 months from kick-off (project planned and funded, team organized and ready to go, ERP technology and ERP system software delivered – if appropriate – and installed) to a live system in full operation.
However long ERP implementations take, the result is the use of cloud-based ERP technology that makes end users’ jobs easier, efficient, and effective. And advanced understanding of the life cycle phases gives you a head start on experiencing a successful ERP implementation.
The 8 of the ERP Implementation Life Cycle
Planning and organization – In this commentary, we’re not counting this phase as part of the time it takes to implement the system as it all occurs before the start of spending money or real physical activity. Nevertheless, a team can be assembled and a decent plan developed in a matter of a few weeks, for a motivated company. More typically, the planning stage might last up to six months or more.
System selection and installation – Selecting the ERP system software and ERP technology can be a challenging endeavor, given its importance to the project and the vast array of choices. From requirements definition and early market surveys through determining the “short list”, gathering proposals, holding demonstrations, final selection and negotiation, this phase typically consumes anywhere from 3-to-6 months.
Installation – Sometimes there is a lead time for delivery of hardware and software, installation of infrastructure components like networking facilities and data collection / display devices, and installation of software that could be anywhere from several days to several weeks or more. Cloud-based ERP may have little or no installation lead time and no software installation requirements.
Data conversion and loading – Once the ERP technology and ERP system software is ready, data must be entered and/or moved into the system’s database. This includes “basic records” like customer, vendor and item master files, bills of material, production facilities and routings, general ledger chart of accounts, and the like. Just before going live, active transactional data is converted or transactional activity is transitioned into the new ERP system software. Some of this activity can be completed in parallel with other tasks like training and validation. IT resources and consultants/contractors can primarily accomplish some of this activity, as well. While a significant amount of time and effort is required, this requirement will not add significantly to the implementation timeline.
User training and procedure development – This is arguably the most important part of ERP implementations; procedure development (and documentation) and user training should take up the majority of the timeline. These requirements consume considerable time and effort from operational employees (actual future users of the system) who are also expected to do their existing jobs at the same time. The duration of this phase depends on the size and complexity of the ERP system software being implemented (number of modules or functional areas involved, number of users, how different the new procedures will be from existing procedures), and how much time users can dedicate to the implementation each day or week. Some companies bring in temporary help but these outside resources should be devoted to maintaining old procedures rather than working on the implementation per se.
Testing and validation – IT resources will be heavily involved in this task, working with the users to compare and examine both basic records and transactional data to verify that the data is exactly as it should be (and at least as accurate as in the incumbent system) and that the new ERP system software is producing the expected results. Testing and validation occurs over an extended period as each functional area loads data and starts processing (test) transactions by the users during training and procedure development. This is not necessarily parallel operation; in most cases, it is more of a “pilot” testing situation. Testing and validation do not add much to the timeline explicitly but must be considered in planning the duration of the training and procedure development process.
Cut-over and “go live” – This can be instantaneous (sometimes called a ‘big bang’ approach), phased in piece-by-piece, or parallel operation where users are expected to keep the old system and the new system in operation simultaneously for a specified period of time (typically one or two accounting periods).
Follow-through and project completion – Implementation is not complete once the new system is ‘live’ and the old system is turned off. Users and technical support resources must continue to validate and verify proper operation; user training should continue to enable a more extensive use of what the ERP system software has to offer and expand the benefits of the system.
ERP technology represents a continuing opportunity to improve performance.
ERP Implementations Pave the Way to Continued Success
As your company grows and changes, as markets evolve, as people come and go and work their way up through the company structure, as technology continues to offer new challenges and opportunities, your ERP system will change and so will your use of the system. Be sure to keep the user community involved and informed so that your new ERP system will continue to provide the data management support you need for continued success.
ERP implementation is a necessary first step but is only just that – a first step.
Contact us as you begin to move forward and let us collaborate with your team through every step – or phase – of the way.
The Rapid Shift to the Cloud
In 2009, 80% of midmarket companies preferred an Enterprise Resource Planning (ERP) solution installed on premises, but that has changed drastically.
In the 2014 report “The Pros and Cons of SaaS ERP”, Mint Jutras wrote about the decline in the willingness of companies to consider traditional on-premises deployments. That decline began in 2011, and between 2011 and 2013 that percentage “literally dropped off a cliff”. Most SMB’s are now considering Cloud ERP applications.
The market research firm Aberdeen found that the “Best-in-Class midmarket organizations” representing the top 20% of companies surveyed were over twice as likely to have a cloud ERP solution. Clearly, the top midmarket performers have already made the move to the cloud for their ERP applications.
SMB Group, an analyst firm that specializes in small- and medium-sized businesses, issued a 2016 Report on “The Business-Technology Performance Connection for SMBs”.
Since 2010, adoption of cloud computing has been on the rise in the SMB space, with more and more businesses seeing it as the most cost-effective, flexible, and fastest way to deploy and support their IT infrastructure and business applications without the need for significant capital investments and staffing increases.
Business Reasons to Make the Move to Cloud Computing
For many small- and medium-sized businesses, the move to the cloud is done for obvious business reasons—the first one being lower up-front costs.
But another significant benefit is speed to implementation. A 2014 survey by the industry analyst firm Mint Jutras reported that “respondents with SaaS implementations reached their first go-live milestone 19% faster than those with on-premise solutions”. Both of these benefits are possible because cloud computing eliminates the need for purchasing and installing hardware and software.
Other Business Benefits Include:
- Anywhere, anytime access to information by staff, customers and partners, since all applications are designed to run on mobile devices
- No staff time required to maintain or upgrade hardware as the company grows
- Most current functionality is always available since the cloud vendor maintains and updates the software
- The SaaS cloud vendor will typically have the best security available, a fact which has been verified by the news of data security primarily affecting on-premises systems in large and medium sized companies
- Data is safely backed up with a disaster recovery plan
- True cloud applications are designed with an intuitive user interface to speed time to productivity
Remember, not every ERP Cloud provider is True Cloud and can offer all these benefits.
Success with the Cloud
Because cloud solutions have been used to run ERP applications for some time now, the industry has access to documented results of the benefits.
One example is from the report “Improve your Midmarket Business Operations with Cloud Applications” by the Aberdeen Group:
The benefits of the Cloud provide tangible business benefits in operating costs, schedule compliance, and on-time delivery”. Aberdeen reported that the average improvement of profitability over the past two years for midmarket companies that are not in the Cloud was 9% profitability improvement. However, midmarket companies who were Cloud-enabled reported a 17% improvement in profitability over the past two years. This is a staggering 8 point difference. By providing the technology tools their people needed, these market leaders saw an ROI that improved their overall bottom line.
Also in that report they wrote about integration with other technologies:
“For midmarket organizations, the flexibility that cloud environments provide actually enables these organizations to implement more technology that can improve processes across the organization. Results include
- 13% more likely to have Customer Relationship Management
- 43% more likely to have Business Analytics”
Finally, they touched on one of the most important areas for a small or mid-sized business, keeping track of business activities and visibility across the organization:
“Since a cloud solution is accessible to employees no matter where they are, it is easier to share the functionality included in the solutions. Ultimately, this improves visibility, impacts collaboration, and enables efficiency and agility. In fact, midmarket organizations with cloud solutions are
- 41% more likely to have real-time visibility in to the status of all processes
- 47% more likely to have automated notifications empowering business leaders to react immediately”
Improvements will be made in a company whether they have cloud ERP or traditional systems; however, cloud implementations result in significant ROI improvements over on-premises ERP systems. A few examples include:
- 8% improvement in operational costs as a result of cloud ERP
- 8% improvement in profitability as a result of cloud ERP
Get the details of the benefits listed in the Aberdeen Group “Improve Your Midmarket Business Operations with Cloud Applications” report and read how others have realized significant results with Cloud Computing.