Like most enterprise resources planning (ERP) solutions, NetSuite has been developed to support a company across almost all aspects of its business operations, with a centralised data source and by automating business processes. NetSuite controls most internal processes including business planning, financial management, vendor management, procurement, warehousing, goods, services, customer relationships and human resources. In practice, this means that employees across different departments and even different locations utilise a single database providing the same information for their business process needs.
What is the ERP implementation process?
As every company is different, every ERP implementation is also slightly different with no standard template to follow. However, the overall implementation process has core similarities in each case.
An ERP implementation strategy includes similar phases to get from selecting and purchasing the ERP solution to installing licenses and software, transferring financial and transactional data, and mapping business processes and system access for each department, user group or business role.
ERP implementation methodology stages
The methodology of an ERP implementation can be simple or complex, based on factors like the size of the organisation, the project’s complexity, and whether you’re implementing an on-premises or cloud solution.
Opting for an on-premises solution means having the added steps of including hardware infrastructure installation and adding IT staff to maintain the infrastructure which can change and often prolong the implementation.
A cloud-based ERP implementation – such as NetSuite - can skip some of the steps that an on-premises deployment involves, allowing businesses to focus on data migration, process changes and employee training.
ERP project team
The ERP project team is responsible for the overall success of the implementation project, managing the day-to-day activities and timelines that guides the ERP implementation checklist. Depending on the size of the company and complexity of the project, the team will obviously look different.
In general, a cloud-based ERP project team will consist of consultants and project managers from the implementation partner, together with a project manager from the customer side, as well as key users from the organisation.
More complex implementations for larger companies will often have steering committees made up of the business’s executives and management, to establish the big-picture items like the strategy and priorities that justify the investment.
ERP implementation budget
The success or failure of an implementation project can hinge on establishing a realistic budget, and the main reason companies go over budget is because of ‘scope creep’ where new demands are made of the implementation after the project budget has been set. A good implementation partner can head this off at the start of a project, breaking down the budget into three categories: technical costs, workforce costs and data migration costs.
Technical costs incorporate all the software, licenses, hardware and technical implementation costs. With an on-premises solution, this part of the budget is usually higher as there is a need for infrastructure hardware and software, database configurations, maintenance and support, customisations and hosting. With a cloud-based solution these costs are reduced, with no need for up-front hardware and staffing costs.
Workforce costs include internal and external people-related costs, which include education and training costs, project management costs, consulting costs and other change management costs.
Data migration costs will include areas such as legacy system data extraction and sunsetting costs, as well as transferring clean data to the new ERP solution.
How much does an ERP implementation cost?
There isn’t a simple number for the cost of an ERP implementation, but it can be estimated based on factors like business size, number of users or licenses required, training, customisations needed, app and data migrations, and whether the ERP is an on-premises or a cloud-based solution.
On-premises solutions demand a larger capital expenditure because they require large upfront and ongoing costs for purchasing and managing the perpetual license fee. In addition, on-premises solutions have added costs related to maintaining the solution’s IT infrastructure with the necessary hardware, servers and facilities, as well as additional personnel to maintain these systems.
Initial costs are typically much lower for cloud ERP systems like NetSuite, because you only need to focus on the software requirements and connectivity to the system, as the ERP provider hosts and maintains the IT infrastructure for the organisation, which minimises demands on time and resources.
It’s for this reason that almost half of all ERP deployments are cloud-based ERPs.
ERP change management plan
Implementing a new ERP system is a large project for any company, with one of the biggest considerations being the successful adoption of the system by employees. They will need to transition from the old established processes and adopt to a new system, with new rules and new ways of working. A solid change management plan is essential to ensure a smooth transition.
The change management plan should have a detailed roadmap of activities to ensure the successful deployment of a new ERP system, and should include the following:
An analysis stage to assess the new platform using a SWOT analysis.
Assessment of roles within the organisation to identify any personnel gaps.
Development of a communication plan that defines objectives, milestones, deliverables and transition processes.
Employees transition and training plan to help staff adapt to the new system
Design and development
During an ERP implementation plan’s design and development stage, the customer and their implementation partner will develop and document new procedures and processes that govern how the new ERP solution will manage data. After this is defined and agreed with the customer, the implementation partner will develop a database framework that meets those new requirements and procedures. In many cases, the project team will need to design and develop customisations specific to the company and the industry it operates within before migrating any data to the new system.
Data migration is crucial to the successful implementation but transferring data from an older legacy system to a new one can be challenging. The ultimate goal is to move clean data that has been correctly mapped to the corresponding location in the new system. A good implementation partner with deep experience of data migration will make this process easier by performing a data analysis and mapping analysis.
To fully exploit the benefits of the new ERP system, its essential that the end-users understand how to use and leverage the new system. Staff training should be comprehensive and available to employees through a combination of in-situ, classroom, and online learning opportunities. Some solutions can be especially complex and providing continuous learning beyond the implementation phase helps to ensure long-term user ownership.
Customer Acceptance Testing
After installation, the implementation partner go through a thorough testing phase with key members of the customer’s team to ensure that the systems and data are performing as expected.
Developers, engineers and other users from the project team test connections and validate data migrations, fine-tuning adjustments so the ERP solution runs optimally before the final data transfer and go-live date.
This is also a chance to troubleshoot any problems or establish remedial actions for any part of the system that isn’t performing as expected. This is an expected stage of any implementation as the system affects all parts of the business and is thus extremely complex!
Go-live and deployment
With any implementation, even though the system has been fully developed and tested, most data has been transferred, product training and onboarding activities have occurred, and testing is complete, there will always be a need for some last-minute activities.
This is by design as some data, and in most cases, transaction-based data, such as inventory, orders, POs, AR/AP, and balances—is dynamic and changes frequently, and so by its very nature has to be last minute. The system will be temporarily frozen and dynamic data transferred, before the system is quickly unfrozen once more. After some fine-tuning, the system is ready for use.
Once the system is up and running, evaluation should only take place after a sufficient amount of time has passed, say from a few months to a year. This allows time for the system to bed in and the organisation and its employees to get fully up to speed with it. To determine return on investment, there are a number of questions to ask, including:
Has workforce productivity improved and are employees using the system to its fullest potential?
Has automation resulted in noticeable efficiency gains or improved customer satisfaction?
Are there higher or lower retention rates for customers?
Are referrals and sales metrics improving over time? How about customer relationships?
Are there reduced levels of inventory and better workflows through planning and control?
What does production throughput look like?
Although measuring intangible metrics can be difficult to evaluate, an ERP’s automated processes should lead to improved workflow efficiency with fewer errors throughout the organisation, resulting in increased revenue over time and saved costs.
Once the ERP has been successfully implemented and employees have adapted to new ways of working, you should plan for ongoing post-implementation support. A good implementation partner should be able to offer a range of support options to meet the demands and aspirations of the business.
At the lowest level of support, there should be assistance with unforeseen issues, ongoing and refresher training and for a system expert to be on-hand to answer questions. More ambitios companies may wish to opt for a more comprehensive support plan where they can rapidly develop and extend the ERP system as the business grows.
Regardless of the type of business, implementing an ERP solution is a critical project that demands careful planning and commitment from the entire organisation. ERP implementations are a large undertaking, but with proper planning and execution – and the right implementation partner - implementing a system will lead to increased revenue with fewer resources involved.