So you’ve decided it’s time to select and implement an enterprise resource planning (ERP) system for your business. A well-implemented ERP can help every department of your company run better, from finance to sales to manufacturing. Unfortunately, that means that to implement one, you’ll need to understand and modify nearly every technological process currently in place at your company.

Embarking on a lengthy, complex, and business-critical process like ERP implementation is daunting. That’s why we’ve put together this guide, including best practices and a step-by-step approach to ensure a successful ERP implementation.

What is ERP Implementation?

ERP implementation is the process of integrating an enterprise resource planning system into every department of your business. ERP systems replace many separate tools that departments, including HR, accounting, and customer success, have been using with a single source of truth, eliminating data silos and increasing efficiency. Of course, software alone can’t solve all the problems that create inefficiencies. The ERP must be selected and implemented well, and any underlying issues with data or workflows must be addressed.

Businesses of all sizes can use ERP systems, and some options are specifically designed (and priced) for small businesses. Smaller businesses can expect a quicker implementation process, but larger companies should prepare to spend an average of 6 months selecting an ERP and at least another 6 months on implementation. Budgeting the time to implement carefully from the beginning will increase the odds of successful adoption.

Breaking Down the ERP Implementation Life Cycle

A typical ERP implementation life cycle consists of six phases. Some of these phases may overlap (e.g. your team may be doing some of the “Testing” tasks at the same time as some of the “Design & Development” tasks), but they tend to follow this order.

1. Planning: A cross-functional team consisting of stakeholders who will be affected by ERP implementation is put together. This team gathers requirements from across the organization and defines KPIs and metrics for success.
2. Selection: The team researches potential ERP systems and sends RFPs to promising vendors. The team demos options on their shortlist and selects the ERP that best meets the criteria established in the planning phase.
3. Design & Development: The project team, together with IT and the vendor’s implementation team, configure the ERP for the company’s needs. Data is cleansed and migrated, and any necessary integrations are made. Additional stakeholders are brought in to work on specific processes as needed.
4. Testing: IT and the project team test the ERP thoroughly for all possible use cases. Superusers may be designated for an additional round of testing and feedback before full deployment.
5. Deployment: The ERP is deployed across the company. This may be done all at once or department by department.
6. Maintenance & Optimization: Ongoing changes are made to the system based on user feedback and learnings from the testing and deployment stages. This phase continues as long as a company continues using an ERP.

ERP Implementation in 6 Steps

1. Define Goals and Select the Right ERP System

The ERP selection step is key to setting your implementation up for success. Begin by assembling a project team of cross-functional stakeholders. You’ll want a project manager and at least one executive leader who can advocate for the team to get the time and resources necessary to do this job well.

Ensure every department that will be using the ERP is represented on the team, then begin gathering requirements. Consider both your pain points with your current processes and what your current systems do well that you want to make sure your new system can replicate. Determine how you will measure success for this project: time savings, cost savings, improved data accuracy, and increased customer and/or employee satisfaction are all good ROI metrics to consider.

Then, it’s time to research. Reach out to your network, read case studies and reviews from users with similar use cases, and reach out to promising vendors with RFPs. Demo a few choices that fit your requirements best. If you’re having trouble deciding between your top options, consider factors that are harder to list on a matrix, like customer support, user interface, or frequency of updates, which will continue to support new processes in the future.

2. Develop a Realistic ERP Implementation Plan

Once you’ve selected an ERP, it’s time to plan for implementation. Budget more time for this step than you think you’ll need, and you’ll be less likely to fall behind schedule. An average ERP implementation takes 6 months, but for large enterprises, you could be looking at a full year.

The speed of implementation will also depend on how much time your team has to devote to the project and what your current system looks like. Consult with IT and the project team about everything that needs to happen to get the company up and running on the new ERP. Make sure you budget time for testing, training users, and any potential surprises.

Compare your target go-live date, the available number of work hours per week, and the anticipated number of work hours required to implement. It’s possible you’ll find a mismatch and have to readjust, either by pushing your go-live date back, bringing in more team members, or taking some tasks off the table (make sure these are things you can live without if you go this route!). Once all your numbers match, you’re ready to create a schedule.

3. Prepare and Migrate Your Data

Your ERP should serve as a single source of truth, providing data for users across the organization and ensuring everyone has access to the same information. That means you’ll need to consolidate data from a lot of disparate sources to get it up and running. Your IT and data teams, with the project team’s support, will need to:

• Cleanse your data: Make sure that you’re starting with good, accurate data. This can be a time-consuming process if you have a lot of legacy systems to sort through.
• Set up the new database: Prepare the new database to store your data. Set up data structures and hierarchies, tables, fields, and procedures.
• Map data to new fields: Document which fields in the new database correspond to which fields in legacy systems. Make sure everything is accounted for and all data types are correct.
• Transfer the data: Extract, transform, and load all your legacy data to the new system. Set up procedures and ETL processes for regular updates.
• Test your data: Ensure all data is accurate, behaving as expected, and accessible in the places it needs to be in the ERP. This process will continue in the next step.

4. Configure, Customize, and Test the ERP System

Determine what your new processes will look like, and configure your ERP to accommodate those processes. Your team of cross-functional stakeholders is important in this step, as different departments will have different needs. You’ll also want to configure user roles and responsibilities and set up any necessary integrations at this stage.

After you’ve configured your system, it’s time to test it. You’ll want to test data quality and completeness again at this stage. The team should also test the ability to execute all necessary workflows, as well as security and permissions. Take your time during testing, as it’s easier to fix a problem now than after the ERP is deployed company-wide.

5. Train Employees and Ensure User Adoption

Training employees well and preparing them for the transition is a good way to make sure employees use your ERP and you achieve your ROI goals. Communicate with employees throughout the selection and implementation process so they know what to expect and when. Train users on functions relevant to their role, and make sure you allocate adequate time in their workweek for them to complete the training.

If your company is larger, consider training a select group of superusers from across all departments who will use the ERP first. This will give you an extra round of testing and feedback. These superusers can help train and troubleshoot issues for other employees as implementation continues.

6. Go Live and Provide Ongoing Support

You’ve done everything you can to make sure implementation goes smoothly. Now you’re ready to go live. Roll out the ERP to all users, either one department at a time or across the organization. First, celebrate a job well done! Then, take note of any feedback or pain points from users. Even with all that work and careful testing, there are bound to be a few bumps in the road.

As long as your organization continues to use the ERP, you’ll need to continue updating and configuring it to account for pain points and accommodate new work processes. Ongoing support is how you keep users happy, ensuring adoption and continued use. Once your ERP is live, it’s time to start tracking those success metrics you defined in step one. It may take some time to start seeing a return on your investment, but monitoring these metrics early helps you track trends.

5 ERP Implementation Best Practices for Long-Term Success

ERP implementation is a complex and lengthy process with lots of potential points of failure. Here are a few things you can do to ease the journey.

1. Secure executive sponsorship and form a cross-functional team

Without buy-in from executive leadership and every department that will be using the ERP, your implementation is doomed to fail before it gets off the ground. You’ll need an executive champion who can ensure that you’re allocated the budget and resources you need to complete this project. You also need an executive champion to get the rest of the executive leadership on board. A cross-functional team ensures every department’s needs are solved for and all users are kept up to date.

Put together a solid pitch early on about what you think your company can gain from implementing an ERP and find the people who are willing and able to invest time in making your plans a reality. 

2. Define clear business objectives with measurable KPIs

Define your goals upfront. Without clear goals, it’s easy to solve the wrong problem. Your KPIs should inform every decision you make, from requirement prioritization to how you configure the system to your go-live process. Some metrics for success when implementing an ERP system include:

• Total cost of ownership (TCO): TCO includes the cost of the system itself as well as training and ongoing support. Compare this number with cost savings from consolidating legacy systems and increase in revenue from efficiency gains to determine the measurable, monetary ROI of your system.
• Increased productivity and efficiency: Perhaps harder to measure than money, increased productivity is a common goal and outcome of ERP adoption. You might measure how long specific processes take before and after implementing your ERP or how many units your teams produce in a week.
• Improved data quality and access: You may set a goal of increasing access to data across the organization, eliminating data silos, or improving data accuracy. Measurements include time spent on reporting or data processing before and after implementing your ERP.
• Increased employee and/or customer satisfaction: Simpler processes and more accessible data can lead to happier internal and external users. You can think about this more informally, measuring stats like retention, or more formally, tracking employee or customer satisfaction scores from surveys.

3. Clean data before migration and establish governance

If your data isn’t complete and accurate, no amount of configuration and training can make your ERP work. Combining data from a lot of legacy sources introduces a lot of potential for duplication or errors. Check and solve for duplicate, inconsistent, or missing values during the migration stage, and determine what business rules you want to follow going forward regarding governance.

Research and interviews indicate that data scientists spend about 80% of their time cleaning data. Spend some time cleaning your data up front, and your data teams will save a lot of time later on.

4. Implement strong change management with thorough user training

Getting users on board with a new system can be one of the biggest hurdles of any implementation process. Some users may be worried about the time that training and learning a new system will take, and some might be worried about being unable to replicate all of their current processes in the new system.

The best way to assuage these fears is to communicate early and often throughout the ERP selection and implementation process and to train users thoroughly on the new system. Prepare users for the fact that a new system is coming, let them know that you’re taking their requirements into account, and allocate plenty of time during their workweek for training. This means accounting for fewer productive hours during training weeks and decreasing metrics accordingly.

5. Consider a phased implementation approach

Some organizations do a “big bang” implementation, where a new system is rolled out and all legacy systems are deprecated on go-live day as soon as the training stage is complete. This approach can work, but if there are any unforeseen issues, it also risks endangering user satisfaction or even critical business functions. Phased implementation options are more gradual and allow you to test the waters and implement fixes step-by-step. 

You could consider the superuser route, where a group of users in each department are trained and start using the system after the project team, but before the rest of the company. These users can provide feedback and report issues, allowing you to solve problems and implement improvements before rolling out to the whole company. They can also help train and answer questions for other users when you’re ready to go live organization-wide.

Another phased implementation option is to go live one department at a time. This makes the volume of feedback and potential problems less overwhelming than a full, company-wide launch. You can apply learnings from each department to the next, gradually introducing the new ERP to the whole company.

6. Consider hiring an expert consultant

If the ERP implementation process still feels overwhelming after reading all these tips, we don’t blame you. Companies often hire outside consultants to help with ERP implementation and/or selection. If no one at your organization has the expertise or willingness to guide this process, working with someone external who has helped a variety of companies through ERP implementation can help take pressure off your team and make the process smoother.

Learn More About ERP Implementation and Selection

ERP implementation is a major commitment with a lot of moving parts. Thankfully, these best practices can ease the journey. Set your goals and requirements up front, communicate with leadership, your team, and all users, get your data and processes in order, and don’t be afraid to ask for outside help if you need it.

If you’re ready to take the first steps toward ERP system implementation, including requirement gathering, research, and selection, TrustRadius can help. Read reviews for ERP systems from users like you, and check out lists of features you can compare against your requirements to get your shortlist started.