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ERP Implementation Success

Updated: Sep 22, 2023

How to Prepare For a Successful ERP Implementation

ERP Implementation in Australia

The implementation of an ERP system is a major undertaking and as such should get the required attention. Before you begin, you should be clear on what you hope to achieve and get out of this new ERP system. You should define your key objectives clearly and ensure they align with your organisation's strategic goals. If you choose to move forward, here are a few things you can do to prepare for a successful implementation.


Management Buy-In


Management buy-in is critical for a successful ERP implementation. It may sound obvious but I have seen countless examples where it wasn’t the case. The management team needs to be fully committed to this project otherwise your chances of success are greatly reduced. I do not have statistics on this but if I had to put a number, I would say that your chances of a successful implementation are reduced by 80% to 90% if management isn’t fully committed.


Management needs to establish clear and realistic goals for the ERP project. They also need to communicate, to the rest of the organisation, the benefits, the challenges and the strategy for the implementation. This helps in managing expectations across the organisation and measuring the success of the project.


An ERP system inevitably means major changes in how the organisation operates. Management buy-in is crucial to drive these changes, address resistance, and facilitate a smooth transition.


Project Priority: An ERP implementation project needs to be the #1 priority. If you make the choice to go through with the replacement of your ERP system, it is very unlikely the business will be able to take on another big project at the same time. The attention and resources it requires are significant to successfully implement such a system.


Resource Allocation: Again, the executive team needs to be fully committed and allocate the necessary financial and human resources.


Financial: A 2020 ERP Report by Panorama Consulting showed that the average total cost of ERP software implementation was $1.5 million. This will largely depend on the company size and the software selected but it gives a good proxy. In order to prepare and get an idea of the kind of financial resources you may want to reach out to similar size businesses and enquire.


Human Resources: You will need the correct number of people but also the right expertise. A successful ERP implementation requires the people with the most experience, the most knowledge of your business and the most knowledge of the industry you are in. That means your most senior people.


One way you can prepare for this is by hiring people to back fill the position of the people you will assign to the project. For a small to medium size business, the number will vary between 4 and 8 people. Again, this will largely depend on your business size but you can expect, as a rule of thumb, to have to assign 1 person from the finance team, 1 person from the operations team, 1 person from the customer service / after sales team and 1 person from the supply chain management team.


Data Cleansing: Last but not the least, ERP systems rely heavily on data to operate effectively. If the data migrated into the ERP system is inaccurate, incomplete, or not standardised, it can lead to significant operational issues, leading to project failure. Here's why data quality is so crucial:


Accuracy: ERP systems rely on the precision of the data they process. If the data contains errors, those mistakes can propagate throughout the system, leading to inaccurate reports, flawed decision-making, and potential financial losses. For instance, incorrect inventory data might lead to stock shortages, overstocking, or other supply chain issues.


Completeness: Incomplete data can hamper the ERP system's ability to provide a comprehensive view of the organisation's operations. For example, if the data on customer orders is incomplete, this could disrupt everything from inventory management to sales forecasting and customer service.


Standardisation: ERP systems often require data to be in a standardised format to function correctly. Inconsistent data or data not adhering to the defined standards can lead to inefficiencies or malfunctions. This is particularly critical when integrating data from different departments, each of which might have its own data standards and formats. Standardisation ensures that data from across the organisation can be accurately consolidated and analysed.


Data Migration: During ERP implementation, existing data must be migrated to the new system. If this process is poorly managed, it can result in data loss, corruption, or duplication. A well-planned and executed data migration process is essential to maintain data integrity and quality.


Improving data quality is not a one-time effort and should be an ongoing process. Implementing data governance practices, including regular data cleaning and validation, can help maintain high data quality. This ensures the ERP system can provide reliable, actionable insights that drive efficient operations and strategic decision-making and this is something you can undertake before the implementation to give you a head start.


Conclusion


As you can see, there are several actions that you can take to adequately prepare for your ERP project. The crucial factors for achieving a successful implementation include obtaining management buy-in, prioritising the project as the topmost priority, allocating sufficient resources, and ensuring the completeness and cleanliness of the data to be transferred. By diligently following these steps, you can position your organisation for a successful ERP project.


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