The ultimate challenge: after the final selection of the ERP system and your ERP provider, this is certainly the successful and complete ERP implementation. Errors in the project planning drawn up at the beginning can multiply as the project progresses and have a serious impact on the success, costs and timing of the project.
What is needed for a successful ERP implementation?
Putting together a project team from the right internal employees and suitable external service providers and consultants is a key factor for success. Professional, consistent and, above all, far-sighted project management ensures a smooth introduction and few surprises in terms of time and costs. Modern methods such as setting milestones, achieving many small goals at short intervals and recurring short meetings enable an optimal balance between speed and acceptance. Clear task definition for key users and training in role understanding protect against disagreements, demotivation and employees who are not properly addressed. Focusing on company processes and taking the entire value creation process into account ensures understanding among management and the successful development of future business opportunities. All of these points help with a successful ERP introduction for the company.
Easier said than done: actually implementing all of the aspects listed and countless others is often a major challenge even for experts. Even a really good consultant from the selected ERP provider often only knows projects with their own ERP program, has to adhere to the implementation methodology specified by the consulting firm, and is happy to push company processes that cannot be mapped particularly well with the ERP software into the background.
The solution: It is not uncommon to form a good collaboration between the ERP provider, an external, independent consultant or project manager, and the company’s own project team. This ensures the best possible balance between knowledge of the ERP software itself, feasibility taking into account time and costs, as well as the correct definition of priorities and know-how about the company processes.
The procedure for implementing ERP
Project preparation
In this phase at the beginning of the project, the aim is to set up the project together with the implementation partner. We help to get the team ready for a successful ERP implementation and to create all the necessary framework conditions and instruments. Important points here are:
- Project organization
- Definition of all relevant roles, functions and instances (tasks, competencies, responsibility)
- Setting up project governance
- Definition of the implementation strategy
- Budget, scheduling and resource planning
- Setting up quality assurance
- Setting up risk management
- Project controlling
- Data migration
- Scope management
- Onboarding of employees
Design phase
This phase serves to define and work out the scope of what is actually to be implemented. The result is a kind of specification from the implementation partner in which the target processes and all relevant interfaces are defined.
With our support, you can be sure that you do not lose your focus in this phase. This is on securing your process know-how, your unique selling points and your competitive advantages.
Realization phase and technical implementation
In this phase, we start configuring the system that was previously defined in the design phase. The result of this phase includes the implementation of the technical objects, the provision of the interfaces, the development of the processes, the introduction of user-specific extensions and the development of the quality system for testing the system. Other essential components are the development of the infrastructure, system tests and employee training. In addition, the data is migrated from the old system or the systems previously used.
As part of the project management, we support the implementation to achieve the goals of this phase. We do this through project progress monitoring and documentation, risk and issue management (overall and technical), budget control and as an interface to all third parties.
Provision of the system and go-live
If all tests have been successful and the employees have been trained, the switch can be turned on, i.e. the system has been put into productive operation.
Here, too, we keep an eye on the entire project in a classic project management function to ensure success on the home stretch.
ERP implementation checklist: The complete process summarized
Basically, the following process results when introducing ERP software:
- ERP readiness check
- ERP selection
- Preparation
- Strategy workshops
- Process workshops in the functional areas
- Creation of the longlist and the specifications
- Tendering
- Conducting provider workshops
- Decision-making
- Contract negotiations and conclusion
- Implementation
- Project preparation
- Project organization
- Governance
- Implementation strategy
- Budget, scheduling and resource planning
- Data migration
- Employee onboarding
- Design phase
- Implementation partner’s specifications
- Implementation phase and technical implementation
- Provision of the system and go-live
The individual steps and the focus of the ERP implementation process can of course vary depending on the project and depend heavily on your individual goals and the complexity of your system. However, our checklist will at least give you an initial impression of how an ERP implementation works in practice and what to expect. Our experts will be happy to advise you on your individual ERP project in a personal meeting.
ERP implementation: types of operator models
There are different ways to operate an ERP system. Operation in the “cloud” or “on premise”.
What cloud ERP solutions are there?
A cloud-based server uses virtual technologies – a company’s applications are hosted externally. There are no investment costs, data can be backed up regularly and companies only have to pay for the resources they use. This is usually based on a rental model.
A distinction is essentially made between the so-called “public cloud” and the “private cloud”. The main advantages of a cloud solution are:
- The customer does not operate the software themselves, but uses a service (SaaS)
- Own hardware (data center) is not required
- Own staff for computer and database operation is not required
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On-premise solution
On-premises solutions require a company to purchase a license or copy of the software in order to use it. Since the software itself is licensed and the entire software instance is located on a company’s premises, there is generally greater protection than with a cloud computing infrastructure. The company itself is responsible for maintaining the solution and all associated processes. The company itself is also responsible for the running costs of the server hardware, power consumption and storage space.
What should a properly implemented ERP system deliver, among other things?
- Reduced costs
- Increased profitability
- Reduced lead times
- Reduced delivery times
- Improved product quality
- Improved customer loyalty
- Data transparency (“single source of truth”)
Frequently asked questions about ERP implementation:
What ERP interfaces and connection options are available?
Companies often have high expectations and a whole range of different requirements for the system landscape, which has often grown over time. The interfaces between the ERP solution and other important applications play a central role. Such ERP connections are always required, for example, when several programs are used within the company and data must be exchanged between them.
Interfaces often have to be created to systems such as
- Customer Relationship Management (CRM)
- Human Capital Management (HCM)
- Supply Chain Management (SCM)
- Operational data and personnel time recording (BDE)
- Product Lifecycle Management (PLM)
- Computer Aided Design (CAD)
- Manufacturing Exeuturing System (MES)
- Business Intelligence (BI)
- Electronic data exchange (e.g. DATEV or ELSTER)
- E-commerce and online shop connections
- Electronic payment transactions
What methods of implementation are there?
As a rule, there is no one right method for implementing ERP systems. It is always necessary to agree with the implementation partner what the right approach is for the company. Basically, two main methods of project management can be differentiated, the “classic” or “traditional” variant, also known as the “waterfall method”, and the “agile” method. Both methods have advantages and disadvantages, depending on the application.
Traditional project management / waterfall method
This refers to a plan-driven project process. At the beginning, goals are defined and plans are drawn up to achieve them. It is characterized by clearly defined project phases, each of which is run through once and is often graphically represented in the form of a waterfall. The waterfall model is suitable for projects in which the requirements are clear and complete from the start and in which few changes are expected.
Agile project management
Agile project management is not a specific methodology, but a collective term for various project management methodologies such as Scrum or Kanban. These follow an iterative approach in which (partial) results are delivered at short intervals and quick feedback is obtained from stakeholders. These manageable sections make it possible to react quickly to changing requirements.
Hybrid approach
When implementing ERP systems, many providers are now moving to a “hybrid solution”, i.e. they combine the best of both worlds due to the usually large scope of such projects. The planning and conception phase then usually starts in the classic approach and becomes increasingly iterative as the implementation progresses.
Schedule: How long does it take to implement an ERP system?
Not every ERP solution offers the same advantages and is suitable for your company. Therefore, every ERP implementation is unique and the implementation time depends on different factors:
- Company size and number of users
- Diversity of business areas, locations and languages
- Status and existing system
- Number of interfaces to other systems
- Resource availability
- Maturity of the processes involved
- Level of qualification and experience of employees
- Willingness to cooperate of key users
- Dependencies on other companies, e.g. parent company
- Willingness and ability to invest
- Existing data quality
- Clearly defined scope
In our experience, however, it can be said that the implementation of an ERP system usually takes between 6 months and 2 years, depending on the above factors.
What happens after the ERP implementation?
The “go live” has taken place and the system has been successfully implemented? The users are satisfied and the management’s goals have been achieved? Then we’re done, aren’t we? NO, you’re not! Don’t worry, you don’t need to introduce a new system every 4 years. You can say that you have a system in use for a period of 10 – 15 years.
This system and especially the processes must be maintained. This means that on the one hand there has to be someone who takes care of the maintenance of the system, installs updates, adapts reports and forms, programs workflows or connects new systems. On the other hand, the processes must be maintained, i.e. that over the course of these 10 – 15 years mentioned above, something will definitely change in your company. Be it new departments, products or simply adjustments to market developments. But all of this also has to be changed in the system. This requires a “translation” from the process to IT.
Another, almost existential factor is data quality. Quality assurance should be established for the master and transaction data. An ERP system can only be operated effectively and used efficiently with correct, clean data.
What are the main reasons for the failure of an ERP implementation?
- Poor requirements specification and specifications
- Weak project management (methodological and/or human)
- Inadequate change management (organizational, cultural)
- Lack of commitment from management
- Employees were not taken seriously and included
How much does an ERP implementation cost?
The total costs of an ERP implementation are largely based on the size and complexity of your ERP project. Nevertheless, the costs are often greatly underestimated in advance and not considered in their entirety.
On the one hand, a distinction must be made between “internal” and “external” costs. Internal costs include the not insignificant expenditure in the planning phase (process analysis, definition of requirements, selection process, contract design with possible legal advice and decision-making), as well as the internal resource expenditure for the entire implementation.
The main costs are in the purchase of the licenses, the number of modules, configuration and migration and of course in the advice of the implementation partner.
Expenses that are often not taken into account, however, are costs for individual adjustments to the system, training of staff, maintenance and system updates, other consulting services, change management and a project management office (PMO).
Visible: hardware, licenses, migration, configuration, generally consulting costs of the implementer (depending on the contract structure, fixed price vs. time & material)
Invisible: customizing in the ongoing project, training, maintenance, manufacturer support, external consulting, working hours of the project team, project management, IT support, updates, performance, energy costs, costs for data protection and security, infrastructure, interfaces, other acquisition costs (e.g. rental of conference rooms, equipment for project offices, etc.).
We help our customers to avoid unnecessary costs
Our ERP specialists have already accompanied many projects and therefore know exactly which wrong decisions companies make when introducing an ERP system often lead to avoidable costs. In a personal conversation, our ERP consultants will be happy to show you how we can support you with the ERP implementation and in the previous paragraph you will find reasons why budgets are often insufficient.
With our experience, we help you avoid hidden costs so that you can always keep a transparent eye on your budget. This includes:
- complete budgeting (visible/invisible costs),
- budget progress monitoring and
- scope management.
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