ERP Implementation Planning: Key Steps to Success  

Implementing a new Enterprise Resource Planning (ERP) system is a transformative decision for your organization and marks a significant milestone in its growth trajectory. As with any major initiative, the journey begins with a strong foundation and strategic approach. This article provides a deep dive into the initiation and ERP implementation planning phases of your ERP implementation project, offering strategic steps to ensure your organization is set up for success from the very beginning.

An ERP implementation project starts by establishing clear goals and objectives to gain stakeholder alignment on the project’s success criteria. What are the main pain points and challenges you want to address? How will we measure success? What are the expected outcomes and benefits? These could relate to streamlining business processes, enhancing data accuracy and visibility, optimizing inventory management, supporting growth and sustainability or other outcomes.

It is critical to ensure that goals are S.M.A.R.T. (Specific, Measurable, Achievable, Relevant and Time-Bound). For example: enhance customer satisfaction levels by implementing this new ERP system with CRM capabilities, resulting in a 30% increase in customer retention rates within two years. Increasing order fulfillment efficiency by reducing order processing time from 48 to 24 hours within nine months of this ERP implementation is another S.M.A.R.T. goal.

It is important to clarify what will be included in the ERP implementation planning process. For example, will you integrate legacy systems into your new ERP? Will you implement purchase orders to optimize procurement procedures from the new ERP or add an AP Automation tool? What historical data will be migrated to the new ERP? Defining the project scope during the initiation phase is key to preventing scope creep and maintaining focus on goals and objectives, avoiding unnecessary scope deviations that could impact your people, timelines and budgets.

If your organization has decided to use an agile methodology, less time is spent defining and agreeing on scope at the early stage. It is an ongoing process that gets the right stakeholders working on the scope. It uses an iterative release cycle that allows your project to fail often and early instead of marching toward a magical “go live” date at the end of the project. The scope is refined throughout the implementation project as the ERP features are released to your environment.

Identify the people, groups or organizations (department heads, end-users, IT team members, external partners, etc.) that could impact or be impacted by the implementation. Analyze their expectations, interests, influence and impact on the project, and develop strategies to engage them in project decisions and execution. Engaging key stakeholders from the outset is crucial for aligning expectations and ensuring smooth project execution.

Effective project governance is essential for overseeing ERP implementation efforts and ensuring alignment with objectives. Consider appointing or hiring a project manager to lead the efforts and provide direction, further enhancing the implementation’s chances of success. A steering committee comprising senior leaders can also offer valuable direction and support throughout this process. The most successful projects contain discipline and focus time.

Ensure adequate funds are available to cover implementation-related expenses such as software licenses, hardware infrastructure, consultant fees, training costs and plan for a contingency to account for the unknowns. Contingency reserves are oriented back to overall project complexity.

Regarding human resources, determine the skills and expertise required and the number of resources by skill and availability. Ensure the right people are assigned to the project with the necessary skills and capabilities to execute tasks effectively. If needed, consider hiring external consultants, an ERP implementation partner or vendors with specialized expertise. Consider backfilling project resources for daily operational activities so they can focus on project task execution. Prepare a team directory (including team members’ roles and responsibilities, contact information, geographical location, time zones, etc.) and a resource calendar to specify when and how long team members are available during the project.

ERP implementations are complex processes, so it will be essential to simplify them by dividing the project into clear phases with specific objectives. During the initiation phase, select a methodology (i.e. agile, waterfall, etc.) and build a project plan outlining significant tasks/activities, resource accountability and duration.

Activities require thorough planning for dependencies, which means evaluating how they are intertwined and impacting the forward trajectory of the project based on their completion. This requires meticulous attention to defining the sequencing, lead times and lag times between tasks.

This project plan will serve as a roadmap for the entire implementation facilitating communication and alignment among stakeholders. It will also provide a baseline against which the project managers can monitor and control the implementation’s progress. Monitoring progress against the plan ensures timely identification of deviations, allowing for proactive corrective action to stay within budget and schedule.

Integrating Enterprise Risk Management (ERM) principles into the planning phase is crucial for assessing and addressing risks potentially impacting the project’s success. These risks can manifest in various forms, including technical challenges and complexities, resource constraints, organizational resistance to change, budget overruns, scope creep, third-party dependencies, regulatory changes, etc.

Prioritize the potential risks based on likelihood and criticality and develop strategies to mitigate them effectively. For example, if an organization anticipates resistance to change among employees, change management/user adoption strategies (communication plans, stakeholder engagement initiatives, training programs, incentives for adoption, etc.) should be considered to help smooth the transition and ensure employees embrace the new system.

Addressing potential risks proactively minimizes schedule, budget and scope disruptions, safeguarding the project’s trajectory. This includes timely communication of critical risks to key stakeholders. Always keep in mind that bad news doesn’t get better with time!

During the initiation phase, develop a communication plan, develop a communication plan that outlines how information will be shared and how feedback will be addressed throughout the project.

Communicate early and often, even at the very stages of the implementation. For example, organize a kickoff meeting to introduce key team members, clarify project objectives, scope, deliverables, roles and responsibilities, and build enthusiasm and commitment among team members and stakeholders. This meeting should also help foster a collaborative environment essential for the project’s success.

Prepare a change management/user adoption plan that outlines the methodical process for guiding your organization through the transition. The plan should address feedback mechanisms (surveys, etc.) and include training and development programs, pilot programs and identification of change champions/sponsors, among other things.

Although it may be tempting to plunge into your new ERP design and configuration as soon as possible, it is critical to take your time with the initiation and ERP implementation planning phases. Early planning sets the stage for success and ensures a smoother implementation journey, which paves the way for realizing the new ERP system’s full potential.

Author: Isabelle Filion, CPA, CSM | [email protected]