Before implementing an ERP system, you should know in advance about the nuances of this process and the pitfalls that may befall you along the way. Our experts talk about the main difficulties companies face and the mistakes they most often make. They also advise how to minimize errors and, as a result, get the maximum benefit from implementation.
What is ERP? This is a system that allows you to automate and combine all key business processes of an enterprise on one platform. Accounting, finance, marketing, sales, production, purchasing, warehouses – all parts of the organization are aligned, obeying the logic established in the system and using a universal database. All this has a positive impact on the interaction between departments, the efficiency of processes and, as a result, on financial performance. But provided that the company takes a responsible approach to the ERP implementation process, enlisting the support of a reliable and competent integrator partner.
If you would like to receive personal consultation on the best practices for implementing and using an ERP system, please submit a request.
What ERP implementation models exist?
Organizations providing services for the implementation of ERP systems usually offer customers several models depending on the business request and the depth of customization. For example, SMART business, which is a certified partner for the Microsoft Dynamics 365 Business Central implementation, has four models. Let’s look at each of them.
1. Self-service deployment of an out-of-box solution
Under this model, the customer masters and customizes the standard functionality of Business Central on its own. This approach is possible under two conditions. The first is that on the customer’s side there is an analyst who has experience of implementing such solutions, or simply a motivated employee who is ready to invest their time in understanding the product. Second, the company’s business processes are not very complex, so there is no need for significant modification of the system. Another possible option is that the company can hire a specialist to implement this solution and thus independently carry out the necessary customization.
In any case, in this model we are only deploying a system with standard modules and basic settings. Thanks to our SMART Localization, the system will be ready for management, accounting, and tax accounting in Ukraine. After this, the customer independently makes minor adjustments to the system to suit its processes, using the detailed training materials we have prepared: documentation, webinars, video guides, articles, etc.
The system is quite easy to use, since as you know, Microsoft products are distinguished by their intuitive interface. In addition, our team has prepared ready-made templates that make working with Dynamics 365 Business Central even easier. If the customer still has questions, we will hold a consultation providing comprehensive answers and explanations.
The main advantage of this model is cost savings. The main disadvantage is that someone from the company’s side must take responsibility for implementation, spend time on it, and involve colleagues. In a team, resistance may arise, not always obvious, from employees. When implementation is carried out by an external contractor with whom a contract has already been signed and whose services have already been paid, this serves as a fairly powerful incentive for staff to begin mastering the system within the agreed upon time frame.
2. Out-of-box solution deployment with the help of our company
The name of the model speaks for itself. This provides for the deployment of a standard solution with basic functionality, but with the support of SMART business. Support includes basic analysis of the customer’s business processes, additional system configuration, employee training, and assistance in data migration. In this case, the solution is either not modified at all, or only minor modifications are made. However, often during implementation the second model transitions to the third, which involves more significant customization of the product.
It also happens the other way around – when a company with non-standard and complex business processes decides to review them and bring them into line with the functionality of the out-of-box solution. And this often has a positive impact on business. The fact is that the basic functionality of international-class ERP systems is quite rich and reflects many years of global experience in building business processes.
Tip: Implementing a world-class ERP system is a good opportunity to review your organization’s business processes and try to apply international best practices.
3. Implementation with customization
This model involves a significant amount of modification to create custom functionality. This may imply developing additional system modules. For example, a billing module or a module for complex document flow processes. It is also possible to modify existing modules, for example production, taking into account the specifics of the company’s technological processes. Or a large integration with another system.
4. Implementation with deep customization
The main difference between this model and the third is that due to the complexity and non-standard nature of the organization’s business processes, it is difficult to determine at least the approximate scope of the project. Therefore, in addition to standard analysis, there is a need for preliminary diagnostics, sometimes lengthy, involving a number of meetings with the customer. Also at this stage, you can prototype the functional elements of the system to understand whether they will work as expected. Based on the diagnostic results, a document is drafted that describes the chains of all the company’s processes step by step. This document will be the starting point for planning further work.
Which companies is each of these models typically suited for?
The given distribution is conditional. Having started with one model, an organization can switch to another along the way. The size of the business is also not decisive. For example, the fourth model is usually suitable for very large enterprises, because they have very complex business processes. And at the same time, if the company has already diagnosed them, it can choose a third model. It can choose the first one if it has experienced analysts who can take on the entire burden of work associated with the implementation and customization of ERP. The first, second, and third models may be suitable for small and medium-sized companies, depending on business requirements. The first model can be a way for organizations of any size to save on implementation costs.
What ERP implementation stages may a company expect?
Let us now walk you through the stages of implementing an ERP system using the example of those that we practice in SMART business.
Project start
This is one of the defining stages. It is very important to form a team of specialists committed to achieving project success. Each of them must be motivated to perform their tasks in the best possible way within the framework of implementation. After the customer’s project team is formed, we conduct a presentation during which we introduce the participants to the purpose of the project, planned activities and the tasks of each team member. Next, we prepare the environment for developing and testing the system and provide access to the team.
Analysis
At the analysis stage, we provide initial training on using the system and demonstrate the standard functionality of the solution to the team in order to receive feedback from it and determine what improvements will be necessary. All deviations from the basic functionality and necessary developments are recorded in the relevant documents. Also at this stage, a document that describes the structure of role-based access to the system is drafted and approved.
Configuration
Based on the documents approved at the analysis stage, technical documentation is drafted, and the system is developed and configured. Then its functions are tested, and if the company has complex business processes, then integration testing is performed during which all chains in relation to other processes are covered from beginning to end. This way you can make sure that all functions work smoothly. After testing, the system is finalized.
Deployment
As part of system deployment, we prepare templates for data migration, teach users how to fill and upload them, and help carry out test imports. If data is migrated to Business Central from 1C, we recommend using our development – a direct connector. It simplifies the process of data migration, because in a semi-automatic mode it creates insufficient settings and maps accounting policies.
Tip: Use data migration to get your directories in order.
After the import, users learn to use the system using company data. This is a crucial stage. In fact, employees carry out their daily work in the new system according to their data. This is no longer just testing, but practical training. Based on the results of this test, the final decision on Go-Live is made, after which we prepare the production environment and load the final version of the system.
Go-Live
We are developing a system Go-Live plan, in which we indicate the timeframes for the transition stages, so that employees understand how to quickly, without stopping the operation of the enterprise, and in what order to ensure the closure of the previous accounting period, prepare data for migration and make the transition to a new system. We also provide operational support in posting primary documents, closing a period, and generating tax and financial reporting. Our consultants are always ready to provide practical advice on these issues.
After Go-Live, we do not leave users alone with the system, first providing operational support to the customer, and then administrative support of the project.
What difficulties do companies face when implementing ERP?
As practice shows, company employees do not always show interest and understand the benefits of implementing ERP. Employees, as a rule, are unwilling to invest time and effort into mastering a new system, even though they realize that it will open up new opportunities for them. Management does not always succeed in solving this problem.
Therefore, it is important that the specialists who implement ERP are not only experts in the system, but also have presentation skills and the gift of persuasion. Oddly enough, it is their ability to find a common language with people and inspire trust that can become a decisive factor in the success of the entire project.
Another common problem is the lack of clear vision among company management about what tasks the ERP system should solve and how the business process architecture should be built. The only possible solution to this problem is, again, the expertise of implementation partners. If they have extensive practical experience of successfully implemented projects, they can suggest how to build processes so that they better fulfill business objectives.
Another difficulty can arise with the ERP system itself. Even if the vendor positions it as customizable, it may still not be flexible enough. Many solutions use complex common programming languages such as Python, C++. In this case, when a business has new tasks, it will be very difficult and expensive, or even impossible, to modify the system.
Tip: Choose systems with simplified, specialized programming languages better suited to solving specific business problems.
When a product, such as Business Central, uses specialized languages, it makes it easy to add on to the system without having to rewrite all the code. In addition, on Microsoft AppSource, you can find thousands of apps and extensions that can solve the problem of improving the system.
What mistakes do companies most often make when implementing ERP?
ERP is not a panacea
One of the main mistakes is to assume that a system can solve all business problems. The solution can help optimize processes and build new ones, analyze the strengths and weaknesses of a business, and provide meaningful information for management decisions. But you need to be able to use this information. The system will not come up with a development strategy, will not solve the problem of chaos in the company, will not make employees more responsible, and the manufactured products of higher quality. It’s just a tool that you need to know how to use correctly.
Greedy pays twice
Trying to save money when choosing ERP implementation partners may seem logical. However, in the end, the project will most likely cost the customer a lot. The fact is that ‘favorable’ prices are usually explained by the fact that this company employs specialists with little experience and low qualifications. If you want them to essentially learn and practice while implementing your system, that’s up to you, but in the end, it can be very costly for your organization.
In addition, implementation is a good opportunity to acquire not only an ERP system, but also the experience of the experts implementing it. For example, our team has dozens of implementations in its portfolio, we know the specifics and intricacies of doing business in different areas and will be happy to share our experience.
Tip: Look at implementing an ERP as an opportunity to purchase the expertise of an experienced team that will handle the implementation.
Gradual approach is important
Another common misconception is the desire to build your digital enterprise as quickly as possible, by immediately implementing all the possible functionality of an ERP system or even a full set of IT solutions. This is risky, because the project stretches over time, there is a possibility of not taking into account and missing something, implementation processes become more complicated, and the number of errors increases. It is better to create a general plan for the necessary implementations and implement it step by step. Regarding ERP, you can, for example, start with key modules like finance, accounting and production, then expand the capabilities of management accounting, add artificial intelligence, modules of budgeting and document flow, then various tools such as a demand forecasting system or, say, a solution for building HR brand.
Don’t underestimate basic functionality
When implementing a modern ERP system, you should not try to immediately redesign it, adjusting it to existing business processes. This is a fundamentally wrong strategy. Try to first study the standard functionality, understand its logic, figure out why certain functions are implemented in it this way, and try to apply them to your business. After this, determine what is missing and move on to improvements if there is a real need. As we have already said, world-class ERP systems incorporate the best international business practices. Start from what they provide at a basic level and then move on to customization. Among other things, this approach is justified from the point of view of cost savings.
What should you consider when choosing an ERP solution provider?
Consider the ecosystem around ERP
When choosing an ERP, it would be very frivolous not to pay attention to the ecosystem surrounding it. Companies typically require a range of IT solutions in addition to ERP, and this range is likely to expand over time. It is desirable that all the organization’s tools are well compatible and there is no mismatch of systems from different vendors with different operating logic, interfaces, and different approaches to organizing processes. This is a question not only of simplicity and cost of integration, but also of user perception of these products and ease of use.
Tip: It’s best to choose an ERP vendor that can provide the tools for all your business needs, both now and in the future.
It is desirable that the company that will implement ERP also have different competencies, can implement and support a wide range of IT products, supporting you comprehensively, and, if necessary, can develop custom applications or extensions of existing systems.
Vendor’s reliability
Unfortunately, it often happens that an ERP system vendor may leave the market for one reason or another. In this case, all your investment in its IT solutions will be useless, you will have to look for a new partner and implement the necessary products again. Such risks can be minimized if the vendor is a large corporation with a long history.
What should you consider when choosing a partner?
It is very important that the contractor’s work on implementing an ERP system meets generally accepted development standards. In other words, other programmers should easily understand the code they wrote to be able to immediately continue working with it. This is a business security issue. After all, if cooperation with one partner is interrupted for some reason, you should be able to start working with another.
It is for this reason that leading IT solutions vendors, such as Microsoft, set strict coding standards and oblige all their certified partners to strictly follow them. In addition, the solutions developed are subject to rigorous quality testing procedures. And most importantly, all developments are accompanied by high-quality documentation. It ensures that any other contractors can easily continue to support your systems if needed.
Of course, it is also important to consider the qualifications of the specialists who will directly implement your ERP. They must not only be experts in the product itself, but also have a good knowledge of how the business works, how the system will affect processes and how this will be reflected in the customer’s financial performance. After all, when you buy a product, you also purchase its business analytics from the contractor. Therefore, it is important, even at the pre-sale stage, to communicate personally with the consultants who will be involved in your project, make sure of their experience, ask about successful cases, and, if possible, collect feedback from existing customers.
Also pay attention to how responsible your potential partner is in terms of diversifying their resources to minimize risks. It is desirable that its employees are located not only in Ukraine, but also abroad. The system itself must also be deployed in a secure environment. If it is dependent on servers located in our country, unfortunately, this is now quite risky.
Open up to new experiences
To get the most out of implementing an ERP system, you should consider a number of factors: from choosing a reliable vendor and development team to a clear understanding of the business problems that the product should solve. But, perhaps, the main condition for successful implementation is maximum involvement in the process, motivation and unity of staff, and a responsible attitude towards all stages of implementation. It is wrong to hope that the success of implementation will depend solely on the implementer. Become a fully-fledged co-author of this project and be open to the new experiences that the new system can give you, to the best business practices embodied in it. After all, only new experiences can bring new results.
If you would like to receive personal consultation on the best practices for implementing and using an ERP system, please submit a request.
