ERP systems are popular resources for modern businesses. But there is a lot to learn about what they can do, how to apply them to your business and how to implement them properly. To help get you started on these things, we have created this list of frequently asked questions.
What is an ERP system?
ERP stands for Enterprise Resource Planning. It is commonly used by medium-large enterprises as well as some smaller companies thanks to increased affordability. The platform integrates disparate business processes into a centralised, streamlined database and user interface. Modules are included for different business areas like financials, inventory, customer relationship management and sales, among other things.
Why do we use ERP?
The main aim of ERP software is to integrate databases and processes from disparate departments into a single data source. ERP brings together the data from all the different departments involved in each transaction so that it is compiled in a cohesive and accurate way. This enables you to get full visibility of the entire business and gain insights from the data. It also provides opportunities for automation, streamlined business processes, cost savings, efficiency gains and greater growth potential.
What is the difference between cloud ERP and on-premise ERP?
Traditionally, all ERP software was on-premise. This means the software is installed and run on a businesses own servers located within their own business premises. Businesses could also use managed third-party servers, whereby the software is installed and run on the servers of a hosting partner, and is accessed through a remote desktop.
As cloud technology has advanced, ,many ERP vendors now offer their products as Software-as-a-Service (SaaS). This means the software is run on the vendors own servers, and offered via the cloud on a subscription model. Businesses simply access their ERP software by logging into the software in a web browser, providing they have an internet connection.
Cloud ERP removes the need for business to invest in expensive on-premise hardware and infrastructure, and the IT resource required to manage it. This makes it an increasingly popular option for businesses. It also allows businesses to access the software from anywhere, at any time and on any device. Updates are also taken care of by the vendor.
Although on-premise ERP can cost significantly more, it generally has far greater scope when it comes to customisation. The system can be engineered to meet the exact requirements of a business or industry, which is why it’s still a popular choice for many.
How can ERP implementation be approached?
The most popular approaches to ERP implementation are as follows:
- Enterprise-wide installation, suitable for smaller businesses with fewer resources.
- Unit-by-unit implementation, which is a better fit for medium-large enterprises.
- Key-process installation, an alternative to the unit-by-unit method.
The implementation method should match your organisation’s needs. A great deal of planning and preparation goes into every implementation, with precautions like data backups as the process of data migration is prepared for. It can be helpful to work with an implementation partner with expertise and experience in this field.
What steps need to occur for successful ERP implementation?
Generally speaking, implementation involves the following steps:
- Selecting the right ERP solution.
- Formulating a strategy that maps how your business will interact with the ERP.
- Creation of a schedule and budget for implementation.
- Creation of an implementation management team with different roles in the process.
- Preparation of data to be migrated from old systems to the new database.
- Monitoring of the implementation process with training and swift troubleshooting where needed.
These steps can vary slightly in different verticals and industries, but the basic process follows the same general stages.
What is meant by ‘ERP implementation methodology’?
The steps towards deployment are always similar. But the methodology depends on factors like company size, industry requirements and the IT expertise that is available. Often, businesses choose to combine in-house resources with the ERP vendor or implementation partner. This collaboration can bring about a smooth implementation.
When implementation is company-driven, you rely entirely on the IT department. External consultants are often helpful in this. Other companies may choose to hire an ERP vendor or another service provider to manage the implementation. A joint venture is often regarded as the most expansive approach. Multiple companies work together to bring their expertise to your specific industry. ERP rollout methodologies include:
- Phased rollout.
- Pilot rollout.
- Parallel rollout.
- Software-as-a-Service rollout.
- Combination rollout.
What is the general lifecycle of an ERP implementation?
The life cycle of ERP implementation involves all stages from beginning to end. However, bear in mind that continual improvement is often necessary to fine-tune the technology on an ongoing basis. Some would say the life cycle only ends when you move on to a new solution. The basic lifecycle looks like this:
- System evaluation and final selection.
- Initial installation of software.
- Conversion and loading of data.
- Development and configuration of procedures.
- Training of users.
- System testing and validation.
- The go-live date.
- Adjustments to post-live implementation (ongoing).
What are some useful ERP implementation statistics?
It can be useful to know some of the key statistics about ERP implementation:
- ERP implementations take an average of 30% longer than initial estimates suggest. This can be avoided by working with a reputable ERP implementation partner.
- Without the help of an ERP implementation partner, nearly 50% of ERP implementations fail. The lesson here being you can’t do it alone.
- Modifications for improved usability cause 65% of implementation budgets to be exceeded This can be avoided by creating a foolproof plan in the beginning and sticking with it.
- Administrative costs for manufacturers decrease by 22% on average with ERP implementation.
- Operating costs for manufacturers go down by an average of 23% thanks to ERP.
What are change management strategies for successful ERP implementation?
An ERP change management strategy can help the organisation embrace the change and maximise ROI. The goal is to ensure new standardised procedures and methods are implemented for efficient handling of change. Any change-related implements will thus have a minimal impact on service quality and the day-to-day operations will be improved.
Are there templates for ERP implementation plans?
The methodology of ERP implementation varies greatly due to different rollout styles and many variables between businesses. A template is a basic starting point for ERP implementation but they don’t provide a full blueprint for the process.
You need to focus on your own requirements. A qualified consultant can help with this, creating a bespoke plan for success.
What are some common ERP implementation challenges?
There are several common challenges encountered when implementing ERP systems. They include:
- Data cleansing, conversion and migration into the new system.
- Purchasing new infrastructure for on-site implementation.
- Organisational resistance to change.
- Freeing up employee time for testing and review.
- Deterioration of the relationship with the ERP vendor.
This is why planning is important. You may need to come up with creative solutions to some of these concerns. An implementation partner can also help you navigate these potential pitfalls.
What are some best practices for ERP implementation?
Best practices for ERP implementation revolve around good planning;
- Mapping your journey from beginning to end is crucial.
- Comprehensive and honest monitoring of progress.
- Good communication across the board.
Your team and your strategy are everything so you must pay close attention to getting these things right.
How much does an ERP implementation cost?
The cost varies between different organisations. Software licences and subscription fees are part of the commitment. You also need to factor in implementation costs, maintenance and investment in new infrastructure. Cost variables include:
- Software customisation.
- Implementation of cloud/on-premise servers.
- Rollout type.
- Data cleaning and migration.
- Disruption to business productivity.
- HR costs like hiring specialists and cover for staff on the implementation team.
- Training costs.
- New security requirements.
- Hardware upgrades/configuration.
- Audits on current processes during the planning phase.
- Compliance work.
- New software integrations.
As ERP experts, here is a round up of some of our more informative articles when it comes to ERP;
- 10 Signs You Might Need ERP Software
- Cloud ERP vs On-Premise ERP Comparison
- ERP Implementation – A Step by Step Guide
- Top Benefits of an ERP System
- The ERP Selection Process Explained
- Building an ERP Implementation Team
- ERP Cost Benefit Analysis
- What is an ERP Consultant?
- Top 10 Tips for a Successful ERP Project
Why choose Eventura as your ERP implementation partner?
Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, and deliver a comprehensive ERP solution that works for you.
As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.
We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.