ERP: Overview, Implementation Life Cycle, Strategies & Limitations

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Regardless of your business type and size, every business needs to be organized and well-structured. A well-organized business makes it easy for a business owner to know what is happening from starting to end. For project management, accounting, supply chain operations, and compliance, everything needs to be managed properly. This is where Enterprise Resource Planning (ERP) system comes to play its role. Various ERP services providers are available in the market, so you can seek help from the best ERP services providers. To know more about ERP software, keep reading this blog:

What is ERP?

Many people search for ERP full form first before diving into detail. Well, the full form of ERP is Enterprise Resource Planning, which is software that is used by many organizations. It helps businesses to run their organizations efficiently by helping them in managing finance, supply chain, procurement, manufacturing, project management, budget, and reports on business’s financial result.

ERP system gathers the business’s shared transactional data from several sources and eliminates data duplication. ERP system provides integrity and consistency in an organization’s data. ERP architecture defines how ERP would look and its layout.

Nowadays, businesses are opting for smart ERP solutions, and it is becoming an important aspect for businesses.

ERP Implementation Life Cycle

Smart ERP solutions deliver various benefits to businesses from simplifying your business operations to minimizing the company cost. This is the reason why every business must-have an ERP system.

ERP system implementation can’t be done overnight because it has a long procedure. For people who want to invest in a quality ERP system, we would like to discuss 8 phases of the ERP implementation life cycle:

  • Package Selection

Selecting a package is the first step towards ERP implementation. In this phase, a company has to choose the package as per their business requirements.

  • The phase of Project Planning

In this step, you need to have a clear understanding and attainable plan for the process. This process includes making a schedule for timelines and deadlines for projects, addressing and assigning roles.

  • GAP Analysis

It is one of the most important steps in this process. The purpose of GAP analysis is to develop and complete a model to know the exact state of your company.

  • Re-engineering

In this phase, the human factor of the business comes to play its role. It includes several changes and modifications in the number of employees and job duties that need to be performed carefully.

  • Team Training

To boost efficiency, it is necessary to have a team who knows the system very well. This is the reason why this step is important in the ERP implementation life cycleERP services providers will help the company to start training for employees for the ERP system.

  • Testing Phase

This phase will include testing like system overload, data security, error detection, multiple user logins, and much more. This will help the company to recognize errors, weak links, and bugs before implementation.

  • Application

Once the data conversion and database work is completed, the new ERP system’s implementation will be done, and the old system will be eliminated.

  • Maintenance

Maintenance is the last step of the ERP implementation life cycle where constant ERP system maintenance involves. In this phase, employees learn how they can face and deal with system-related issues.

Evolution of ERP

In the 1960s, computerized business applications came into existence in the finance and accounting world by using mainframe computers. These innovative applications were reliable and accurate as compared to manual processes. However, those applications were expensive.

In the mid of 1980s, many manufacturers started making these applications, and new tools were needed. New MRP II application combined accounting and finance, inventory, sales, purchasing, manufacturing planning- giving integrated system to the manufacturers.

Near the year of 1990’s end, ERP was introduced. ERP served a wide range of industries, and by integrating MRP II, project accounting, human resources, and end-user reporting. In the 21st century, new development tools and faster internet speed again revolutionized ERP suites.

Nowadays, digital transformation has changed the world and way of working as well. Now businesses rely on artificial intelligence and other tools to stay up-to-date.

Advantages and Limitations of ERP System

The following are some advantages of the ERP system:

  1. Enable you to handle multiple tasks at a centralized location such as accounting, CRM, human resources, supply chain management, and much more.
  2. You can get accurate access to reliable information.
  3. It can remove unnecessary data and operations.
  4. You can share the information with other components of the business.
  5. Save your time and cost of litigation.
  6. It helps to remove redundant or duplicate data from the database.

The following are some limitations of the ERP system:

  1. The installation cost of the ERP system may scare you.
  2. The success will depend on how many years of experience you have in this field and much more.
  3. For an untrained person, it will be difficult to use.
  4. Limited customization of ERP system. The flexibility of the setup will depend on the brand of ERP system being utilized.
  5. While purchasing an ERP system, make sure to know the implementation price of ERP. This is because the implementation cost of the ERP system is high.
  6. If you want to migrate your data from one system to another, then it will be a time-consuming task. The longer data you have, the more time it will take.
  7. With lots of advantages and embedded operations, it is difficult to manage its complexity for businesses.

ERP Implementation Phases

The following are some ERP implementation phases that a company can follow:

  • Identifying and Planning

Basically, in this phase, a cross-functional project team will collect the business group’s requirements. Plus, problems or issues that the ERP system needs to solve. The team has to make a list of vendors, requesting proposals, selecting ERP systems, and managing systems.

  • Designing

The team will analyze the existing workflow to replace it with a new one. The team will customize the workflow to match the company requirements. They keep in mind every aspect related to company requirements.

  • Development

To match business requirements, the vendor will collaborate with the team to configure the software. Plus, performing other tasks such as preparing documentation and training material and importing data.

  • Testing

Test the system before going to live. You have to fix issues while testing, so nothing gets uncovered. Make sure to uncover all bugs before launching the system.

  • Deployment and Support

Once all issues are fixed, it is time to deploy the system. The project team will ensure that users possess the support they require. Plus, continue to upgrade the system and fix issues as required.

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ERP Implementation Strategies

The following are some ERP implementation strategies:

  1. Defining business requirements, developing UX prototypes, and following a design-led development approach so viewers or users can feel the UX navigation. It needs to be done before working on a real system.
  2. Analyzing business requirements to whether they match the organization or not.
  3. Proper documentation will help in understanding how users interacted with the system, analyzing and enhancing workflow, and furnishing users with the instructions to navigate a new working environment.
  4. ERP implementation strategies may include Big Bang, Phased rollout, parallel adoption, and Hybrid. Each business has different requirements.
  5. Make sure to consider the customization amount that is required
  6. Considering customization options is another thing that needs to keep in mind. This step involves alternative options if one thing fails.
  7. Make sure to choose the right and experienced implementation partner that will make you aware of any drawbacks or pitfalls.
  8. Ensure not to overlook mobile users when it comes to ERP system implementation strategy.
  9. Provide your staff enough time to get familiar with the ERP system and make sure they have access to various training resources.

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Conclusion

You can get your business organized with the help of an ERP system, so make sure your business has smart ERP solutions. Get your work done with ease without any mess. ERP systems integrate various business processes and allow the flow of data between them.

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