Enterprise Resource Planning (ERP) System implementation Process

ERP Software

The Enterprise Resource Planning ERP Software in Pakistan has advancements over the last two decades. By ERP, I meant a system with a user base of at least 2000+ companies with millions of dollars in financing.

The approach to implementation can be performed in a phased manner.

Phase 1:

Implementation of the ERP has its challenges from the conceptualization stage to actual use and beyond. I was thinking of sharing my views as to what could primarily contribute to the success of Erp system implementation.

These factors set out below are more relevant from a project management perspective, particularly in the implementation part of the software.

Management support and self-assurance:

This is the first and probably most important factor determining the success of the ERP project any entity or business must make the time and effort to evaluate the need for an ERP system before making decisions on the ERP system. An entity capable of investing more than a million dollars would have some kind of existing systems. They would perform the ERP function to some extent through legacy, so it is important to do the following as a first step.

1. Cost Vs Advantage Analysis.
2. Return on investment.

When considering implementation costs, apart from licensing and consulting costs, it is important to consider post-implementation maintenance costs and this also varies depending on the size of the implementation.

Both requirements to be worked out and I would suggest only if management is happy with the above estimations & expectations there is a necessity for a new ERP system.

Choosing an ERP product:

Once, the decision is taken in favor of ERP implementation, then the next step would be to find out the appropriate ERP product which would outfit the business. Some aspects, I believe that is important towards selecting ERP products are:

Product suitability to its business, support the seller provides, future upgrades & scalability, cost & availability of consultants to provide support in future needs to be considered apart from pricing before choosing the product.

Implementation Approach:

ERP’s can be personalized to suit business requirements, this is usually mentioned as ‘customization’. Customization can plug the breach from a business solution viewpoint. However, it is always better to avoid customization or at most keep customization to a minimum considering the following aspects.

• Additional cost involved in development and testing.
• Maintenance cost even after deployment in production.
• Any business process change might impact customization and this would require improvement of the customization and thus cost.
• When an upgrade occurs in the future, the customization has to be upgraded as well which would incur a cost.

On all the above factors, the organization needs to play an important role in the success of the implementation and they can be considered as an initial phase or phase 1 of the ERP project implementation.

Phase 2:

‘One Team’: Once decided to join the ERP, the next step is to have a steering committee that will play an important role in tracking the project towards the successful implementation of the ERP system and addressing risks proactively. Ideally, the steering committee should have proper representation from management, different vendors associated with the project. An ERP project can have different vendors like:

• Computer hardware
• Servers
• Operating systems
• Networks
• Software
• Licensing
• Consulting or IT service for implementation, training & support

It would be a good option for a Project Management Office (PMO) to look at day-to-day coordination reporting to the Steering Committee. Each of these tasks performed by vendors has a dependence on start on the other vendor. Hence, the PMO office should be in proper control of all tasks executed by Vendors.

Schedule, Budget, Scope: From this stage of the project, Project management plays a significant role in the success of the project. Budgeting would have been preliminarily done at the “Phase 1” of the project, but these would be more of a rough number (Variation of 20 to 25%). At this stage, a more precise estimation needs to be worked out.

ERP implementation has other streams as well, which has a dependence on the effective implementation of the project. Project management tools/ software can be used to track some of the key project-related parameters.

Project deliverables, sign off & change requests:

The project as such may have broken down into different phases with a work breakdown structure (WBS) with deliverables defined for each milestone or phase, a sign-off and a change request procedure agreed with all stakeholders. This should be brought about by the PMO team and decided with the ‘Steering Committee’

Till about phase 2, it’s more of setting up the ground rules towards the successful execution of the project. All these might take a significant amount of time.

Phase 3:

Business Process Engineering or Re-engineering: An ERP system has to be organized to work as per expectation. The business procedures have to be planned for the ERP product and set up have to be organized.

The process of requirement gathering towards set up requires a coordinated effort between the functional consultant and the business process area owners through workshops. An iterative method needs to be followed, meaning the system has to be set up 2 to 3 times to plan the requirement and distinguished if needed, before the actual execution of the set up in the production system. Such iterative methods of planning a business to systems are referred to as ‘Conference room pilots’ (CRP).

Data migration from existing systems and their strategy, feeder interfaces, needs to be defined and agreed upon and tested.

Training: At times, end-user training is neglected. Insufficient training is one of the causes of blockage in successful implementation. If there is ineffectual training, one can find more than 60 to 80% of problems post-Go-Live being explanation related, hence sufficient importance needs to be worked towards training feasible it’s better to work out a plan for containing the training effectiveness. There are some ideas that training can be done towards production move. But, it’s more suitable training is given from the stage of defining the business process, so that even if there is a change in the business process users can appreciate the changes.

 Support team & cutover planning. It equally significant, the plan is also worked out for the support team to be in place. Usually, the Implementation team would be handing over to the support team. The support team is either in-house or outsourced.

Cutover planning means the activities that would be carried out by the time users stops beginning into the legacy system and the time by which the user starts using the new ERP system. Energy also needs to put towards cut over planning especially, the activities as how the reconciliation of legacy and new ERP system would be implemented post Go-Live and as what are the exercises, which would be performed during the cutover period with the assigned owner to each task.

Go-Live and even beyond: Beyond goes – live, there is a specific period, which is required towards stabilization of the system. It’s also easier said than done. While these may be guidelines for a general scenario, each of the ERP projects has particular challenges and situational changes based on different factors, this is where project managers and PMOs can play an important role in steering the project towards safety and thus achieve the end goal of successful implementation.

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