Implementing an enterprise resource planning (ERP) system has become a matter of survival for startups that want to scale fast or involve complex manufacturing operations, as the process efficiencies and data transparency ERP delivers can make or break such businesses.
If you’re headed down this road, you may be spending lots of time thinking about how to achieve a successful ERP rollout. You know your goal, but you might not know where to begin.
Here is what you need to know before jumping in.
Before getting into the specific phases of implementation, you need to give thought to a few big-picture questions.
First, what type of company is your startup—a sole proprietorship, an LLC, or a corporation? Most ERP systems can integrate all your operating and tax information to automate business processes, but you should ensure the solution aligns properly with the legal structure of your business.
Next, budget usually plays a critical role in the selection of a system. Some businesses only need operational support that streamlines financial data and processes. Manufacturers, however, likely need a system that can help coordinate and allocate resources for tracking materials, orders, and production.
Off-the-shelf solutions might be less expensive, allowing you to start slow with tools adequate for your startup and then scale up over time as you grow. But perhaps you need deeper customization out of the gate, and want to spend more time customizing from the start.
Finally, timing will impact your implementation. If an ERP is implemented too early, it could distract from the initial business formation and product launch phase. But if a startup implements ERP too late, the lack of a system already in place can slow down business growth.
The Implementation Process
You should approach implementation with an understanding of the following key phases. Keep in mind that some of them may take place concurrently.
In terms of time, expect your implementation to take between four months and two years depending on its complexity and the ERP solution you choose. A prepackaged industry solution that leans on best practices can be rolled out in as little as a few months, while an on-premise ERP implementation with many customizations could take up to two years.
1. Planning and Evaluation
Assuming that you have established a business case for the ERP system, at this point you should define specific needs and specifications so you can start developing an implementation plan that outlines timelines, tasks, dependencies, and resources.
The work plan should include evaluating different ERP solutions and associated system qualities. You’ll want to assess things like overall capacity, performance, security, real-time data access, scalability, and servicing (including upgrades).
For more on this process, we’ve developed a free workbook that can help make the planning process easier.
Once a system has been selected, you will be adapting that platform’s raw functionality to your workflows, preferences, and security requirements. While ERP systems provide streamlined business processes, you may need to tailor things like roles used in the system or the ways tasks are tracked and reported.
A typical ERP system setup has dozens if not hundreds of system configurations. At this stage, strive to make the software support your workflows, rather than vice versa, so that each business group can work with processes that are properly configured for their job duties.
You may find that the system you’ve selected doesn’t support all the particular needs of your business. While the configuration phase may address many of these issues, sometimes the ERP system will need some customization.
For example, you might want to build a custom integration with a solution that is not natively supported by the system, or add additional functionality to the ERP system with custom code. Your ERP support partner can help you decide what customizations make sense, and help you create them.
A word of caution, though: Customization adds time, cost and complexity. The less customization you choose, the better.
4. Data Conversion
An ERP system is only as strong as the data it holds, so the data import process is a major step during implementation. In general, there’s no standardized format for the data you’ll import, and reformatting exported data — or worse, manually inputting data — can be tedious and cost-prohibitive.
Many vendors have developed software utilities to help speed the data migration process, which is often one of the most time-consuming steps in an ERP implementation. Tools and data migration services can help mitigate the associated challenges of getting through this phase.
If you’re lucky enough to put an ERP system in place at the very beginning of your business journey, you likely will skip this step.
Even as a startup, you’re probably using software applications that will need to be integrated with the new ERP system. At this phase of implementation, you need to consider where your business will need automated, real-time updates so that changes in one system will be reflected instantly in another.
Real-time integration strengthens reporting, analytics, and overall business agility, and it reduces the chances of silos developing among other software systems in your operations.
Give time for this part of the process. While it can be made faster with out-of-the-box integrations or third-party solutions, it also can be a significant drag on overall implementation time if not handled correctly.
After installation, configuration, customization and integration, it’s time to ensure that your ERP system will work as expected and satisfy all critical needs. Testing will involve only a sample of your data, with the full data usually being imported after testing is complete and before the system goes live. Even if you don’t have data to import, you’ll want to test your new system before putting it into production.
During the testing phase, you’ll want to verify accessibility and functionality using different devices, too, be it computers, tablets, mobile phones or terminals on a shop floor. This is the time to ensure that user profiles are properly defined and set up with the correct access privileges, too.
As part of this step, you also will want to evaluate data throughput, backup and security, business processes, and system performance.
Training is critical both during the testing phase and after go-live so that employees understand the reasons for rolling out the new system and know how to use it. Glossing over this step could lead to slow adoption and, sometimes, the perceived failure of the system.
Your training plan, which can be aided by your ERP solution provider’s training resources, should encompass live training sessions (one-on-one, live web sessions, etc.), self-serve resources such as video tutorials and product forums for Q&A, and sandboxed play areas where employees can check out features without fear of impacting the actual operational environment.
The project is more likely to proceed smoothly if you go into the process with a good understanding of ERP and how implementation will go; ERP makes a big impact on a business. But setting one up also takes time.
For a more complete picture, download our free guide on the ERP implementation process.