8 Steps Of Starting An ERP Project
A brief introduction to Enterprise Resources Planning (ERP) System
ERP, which is mentioned by many businesses lately, is a multifunctional and multi-departmental management software solution.
With the purpose of assisting organizations to collect, store, manage and analyze data, ERP was established comprehensively after the development of production resource planning (MRP) application and computer integrated manufacturing (CIM) system.
Data can be anything related to business operation activities like product planning, costs, production, marketing and sales, delivery, and payment etc.
ERP can perform various business operation functions in any industry. For example:
Accounting and Finance:
- General Ledger
- Accounts payable
- General Journal
- Trial Balance and Financial Statements
- Cash flow management and forecasting
Production and distribution
- Buy, track and sell
- Lot and Serial numbers tracking
- Tracking quality control
- Warehouse management function
- Track delivery, delivery coordination
- Tracking labor, investment costs, and other production costs
Food and Beverage:
- Order management
- Planning and scheduling
- Supply chain
- Shop floor control
- Quality management
Generally speaking, a typical ERP system may include: an integrated system, a database that supports all the applications, a consistent look and feel across modules, installation of the system with elaborate application/data integration, and implementation options like on-premises, cloud-hosted, or SaaS. It can operate in real-time or near real-time.
Now ERP seems like a perfect solution since it helps in many aspects, but starting and implementing an ERP solution is a whole different story.
Starting an ERP Project
At the beginning of anything, there are always difficulties: a set of questions and concerns about the readiness, the success, the practicality, the effectiveness, etc, and starting a whole new software solution for your company is not excluded.
Because the ERP system includes almost every business activity function, it is almost a distressing task whether you do it from head to toe or just simply replacing the old ones with the latest ERP software.
The team can be easily pulled away from the right course since there are a variety of directions and options.
It is essential that the project manager look at the genesis of ERP projects. The fact that many businesses still use manual methods, standalone spreadsheets, and other patchwork systems to track data can affect how you approach this whole new aspect.
As often as not, the reason leading to this change is a company’s outgrowing legacy systems and being burdened with manual and standalone processes.
It can also be because one company is in a poor position to react to change, optimize business processes, or because that one company wants to improve relationships with customers or their supply chain partners.
Start looking at Value
Before giving you 8 steps on how to start an ERP project, we’d like to emphasize on this point first. When starting an ERP project, take a look at the current value of your business, the value of your current solution, and the value that this technology solution will bring to the table.
Start by asking yourself these:
- What is the value that our current system is providing?
- What will be the value of the new ERP system?
- Can the old one match the new one?
- Are we being held back by the current one?
And considering specific features, and functions supported by the ERP system as well as the solution’s integration with applications, customers, suppliers, and external systems.
Take a look at the end-user experience as well. Is it easy to use? Is it possible to adapt to screens? How robust are business intelligence capacities? What about real-time visibility information areas? Etc.
By investigating the value that the new ERP system brings, you don’t have to struggle with legacy, and user-unfriendly ERP solutions anymore. But if you’re still not sure, maybe it will be a good idea to find a consultant.
8 starters and suggested steps:
#1 Executive support
It’s essential to have support from the C-level. In a successful ERP project, it is critical that the key decision-makers understand the business requirements and use cases in which require an ERP system and allocates resources accordingly. He or she should also provide support for the integrated project plan, from the beginning until the end.
#2 Develop a comprehensive and phased strategy
You can speed up the ERP implementation’s rate of adoption by developing a comprehensive and phased approach. The business process improvement is the ultimate goal of the process therefore, the strategy must keep the focus on business process improvement.
Typical measurements should be included in the phased approach like expense, time, resources, ROI, and other important business metrics of predicted operational disruptions, level of ERP adoption across the organization, and its impact on productivity. These measures help the strategic approach and reduce the chance of implementation problems.
#3 Create a project management plan
Project management is integrative, it is found to be the most influential factor in distinguishing the successful projects from the rest. A project management plan should follow these steps: identify requirements - establish clear and achievable goals - balance competing demands for scope, time, cost, and quality - adapt to different concerns and expectations of stakeholders.
#4 Identify the project team
Just like any other project, an ERP project depends heavily on the team assembled to design, deploy, and maintain a new project. The team is a set of executive sponsors at the highest level of the organization’s chain, a project champion, a project manager, a core team, and a site team.
#5 Project charter
A project charter is one of the most important pieces of a solid project foundation, maybe even before investigating or initiating conversations with vendors.
It is a governance document that provides a preliminary delineation of roles and responsibilities, which defines the roles of stakeholders, key goals, defines the authority of the project manager, and so on. Furthermore, the charter monitors the vendors’ performance throughout the implementation progress.
Since it provides tracking tools and leads to accountability to all involved parties, it can be deemed as a key part of an ERP project.
An ERP project charter should follow these elements: project mission, objectives, organization (resources), responsibilities, scope of work, problems, needs, alternative solutions, ROI, benefits of the new system, cost (over 5 years), expected returns (over 5 years), budget.
#6 Align business processes
By starting a new ERP project, this is the perfect opportunity to deeply understand and evaluate hơ your organization currently performs and find areas needed improvement. You can:
- Organize, marshal and align resources, establish governance committee, core team, and process owners.
- Review and document the current stage.
- Educate about what is possible, best practices, and technology.
- Identify future state.
#7 Harness the power of the ERP data
ERP data can track quality issues, optimize supply chain operations, and improve material flow, production scheduling, inventory management, plant layout, and so on. By analyzing ERP data, you can find critical insight and provide valid reports.
#8 Identify project governance
Project governance includes organization, policies, culture, and practices that offer oversight and transparency of a major initiative like an ERP project. Solid governance methods help in keeping management stays in focus.
What you can take with you
What you can take with you after reading this post is the 8 recommended steps on how to start an ERP project, but keep in mind that you should always look at the value: why do you want to make this change?
It is hard to find the perfect ERP solution for you and your business, you can do it with or without help from the third party; but if you need help, the right strategic ERP implementation partner can ensure you make the right decisions to maintain and establish a competitive edge over other companies in the marketplace.