ERP Implementation Steps: The Be-all and End-all Guide Curated by Experts

Without well-thought-out ERP implementation steps, businesses are bound to face the consequences, such as violated project timelines, high operational costs, and overall process inefficiencies. Gartner indicates that the chances of hitting it big versus hitting the skids are three to seven. Check out our spot-on guide on how to make it to the success cluster. 

When it’s time, it’s time. But when is it for your business?

Businesses without previous experience with ERP usually feel the need to turn the page and adopt new software when scads of disjointed data, overall document chaos, and manual execution of tasks with high automation potential paralyze their processes and ability to move forward. 

For organizations that already have an enterprise resource planning system, the tipping point is marked by a lack of vital functionality, increased downtime, and the inability of a current ERP to handle the amount of data a business operates. That’s when they start considering an upgrade or replacement.

Both groups coincide in what they are after: 

• Real-time visibility into your company’s data
• The highest possible level of enterprise process automation to decrease the manual workload on employees
• Business processes systematization at the company scale

What comes first: the processes or the ERP? The ins and outs of two fundamental approaches 

There are two options to choose from: adjust an ERP to fit your business processes or align your business processes with standard practices at the ERP system’s core. 

In essence, it’s a basic, age-old question of software customization vs. process standardization. But the answer is not that straightforward: there are a lot of pivotal nuances to it. Let’s get to the examples to figure out which scenario works best for you. 

Process-first approach

The most popular ERPs are modular ones, and while some ready-made modules can be used right away, others may call for customization. The latter scenario is especially relevant for industry-specific and regional regulations-enforced processes. 

For instance, the accounting module usually requires at least minor adjustments to seamlessly integrate with your already-in-use accounting tools and match local tax rules and restrictions. Accounting standards and tax procedures in different regions may vary so much that a cookie-cutter solution just won’t cut it. 

In such a case, you may need a tailored module customized in line with the local legislation and accounting principles, such as GAAP for the US, IFRS for the EU countries, and a whole spectrum of them for Asian countries (KASB for South Korea, ASBJ for Japan, HKFRS for Hong Kong, etc.).

ERP-first approach 

Modifying your business processes in accordance with the proven standards is relevant for:

• Small and midsize companies that can fine-tune their operations without big-deal investments
• Organizations of any size from low-regulated industries 

Let’s say, if a company manages inventory mostly manually, adjusting to the process of goods scanning in an ERP of their choice won’t be a tough move to pull off. There’s no need to reinvent the wheel by changing the inherent process, considering that you can lighten your team’s workload without major financial infusions. 

— Heorhi Karavaiski, Senior Business Analyst, *instinctools 

The sweet spot: balancing both

In reality, you should aim for the golden middle between process-first and ERP-first approaches. The share of standardization and customization for each ERP project depends on multiple factors, including the company’s size, the complexity of its business processes, and specific regulatory compliance requirements, to name a few.

Well-trodden path: follow these 9 steps when implementing an ERP system 

Any software adoption initiative is fraught with challenges, so mastering the waves at each of the ERP implementation steps can help ensure smooth sailing for your project. 

Failure being common for up to 75% of ERP projects* doesn’t make it unavoidable. 

*According to Gartner

Here’s our guide on how to implement an ERP system step-by-step and sidestep the common pitfalls along the way.

1. Budgeting 

Take into account all the possible expense categories. It’s safer to plan the budget with a margin for flexibility at the onset and enjoy completing the project with less cost than anticipated than to save up first and tighten your belt later.

The list of expense categories to be factored in your ERP implementation budget includes:

• Initial purchase price
• The cost of system configuration, customization, and integration with your software ecosystem
• Data migration costs
• Data backups and storage
• Staff training 
• Overtime for staff
• Hardware and network upgrades 
• ERP software ongoing maintenance and future upgrades cost 

2. ERP partner selection

Actions speak louder than promises, and trustworthy tech allies go along with this principle. 

Our quick initial assessment helps gauge the reliability of ERP consulting and implementation companies:

• Start by checking reviews on reputable B2B platforms such as Clutch, GoodFirms, TopDevelopers, etc. 
• Verify if the company’s case studies showcase its hands-on expertise in ERP implementation.

These are table stakes to sift the wheat from the chaff. Moving forward to clarification calls with the candidates from the filtered list, see how they act at this non-commitment stage. A solid tech partner will put a premium on identifying your needs regarding the processes you want to cover with an ERP, visualizing them, and demonstrating how they align with the system modules to suggest the best-fit software.  

We also suggest looking for not just a software implementation partner but a business transformation advisor who sees your business as a whole, as ERP implementation is usually a fundamental change for a company. And you’ll need a tech ally with the vision to balance technology, processes, and people to ensure your new ERP solution delivers benefits on all fronts.   

3. Current business processes assessment

The chances of finding a needle in a haystack are higher than choosing the right ERP system without mapping out your core business processes. Understanding them down to the last detail is a prerequisite for successful ERP implementation. 

Jumping into ERP implementation without a thorough discovery phase is a recipe for washout.

Therefore, don’t put the cart before the horse. Take your time to properly map your business processes, involving stakeholders in this undertaking. A slower yet more keen-eye-for-detail approach at the start will pay off with a smoother, faster finish in the long run.

With all business processes in the palm of your hand, you’ll be able to spot which of them can bring quick wins and should be put first on your ERP implementation plan.

Process assessment should go hand in hand with laying the foundation for change management. ERP software is only as good as how well it’s implemented and how well employees adopt it.

Therefore, you should engage end users early in the project and keep gathering user feedback down the road to provide staff with a system that helps, not burdens them.  

The following example illustrates what can go wrong when rank-and-file employees’ perspective is ignored. 

One of our clients in the government sector decided to take their operations to the next level by replacing their outdated ERP system with a new, sleek, user-friendly one. The C-suite was on board with the idea, but the reality turned out to be very different for the staff using the system daily. 

While the former system was very well-adjusted to handle the client’s specific tasks down to filling out form fields of customs declarations, the new ERP was entirely out of sync with those procedures. What had been taking no more than 5 minutes, started to eat up to 40, hindering staff productivity.  

Seeing that their ERP implementation effort didn’t play out as intended, the client turned to us looking for expert support to get back on the safe old track with minor fine-tuning of their initial ERP to match the company’s growth and scalability pace. 

— Elena Prokunina, Senior Business Analyst, *instinctools

4. Project planning 

After selecting the processes that can provide maximum value when automated, it’s time to chart your ERP implementation plan.

• Choose an implementation approach. The abrupt and most risky big bang method, when everything goes live at once, works for small companies that adopt or replace up to two ERP modules at a time. The phased approach is the safest and most popular option, when organizations move to the new ERP slowly but surely by modules, business units, or locations. And the hybrid approach, when smaller departments follow the big-bang path while others with more complex processes adhere to the phased one, combines the best of both worlds.

• Identify mandatory and facultative roles within the ERP implementation team. That way, you can balance your expenses for a full-time core team and facultative members who’ll join part-time. 
• Outline a well-thought-out change management strategy at the initial stage of your ERP implementation life cycle. Change management isn’t a task you can address ad-hoc and handle on short notice. And don’t be misguided by the company size — startups are just as likely to face change resistance as midsize organizations and enterprises. 
• Establish clear governance. Knowing your key stakeholders, business process owners, all other roles, and their responsibilities facilitates decision-making and streamlines risk management and issue resolution.  
• Set a realistic implementation timeline. The typical ERP project timeline is between 6 and 12 months. But keep in mind that a complex, highly custom implementation initiative for several locations, with multiple currencies and languages, may last for years until a full company-wide rollout.

5. ERP selection

As for 2024, 78,6% of companies prefer cloud-based ERP over on-premise systems. When it comes to deployment models, the scales are tipping in favor of SaaS software (over hosted or managed services) chosen by 70,9% of organizations. 

Speaking of SaaS options, they can be divided into three tiers:

1. Enterprise-targeted ERP systems like SAP and Oracle can cover complex processes across multiple industries. 
2. Software for midsize and small companies, such as Odoo and Microsoft Dynamics 365, is a good fit for managing several company branches. Smaller organizations can opt for NetSuite ERP or Acumatica. 
3. Tools for startups, such as Aptean and ECI, help small companies hit the ground running from day one and enable smooth scalability down the road.  

At this stage, your ERP partner compares different software options to draw out the ups and downs of considered systems specifically for your case and make a well-grounded choice.   

At *instinctools, we also look for cost optimization opportunities before going full-scale on the ERP implementation. Therefore, we compare different solutions in terms of licenses and infrastructure optimization to go easier on your budget without compromising the system’s reliability. 

— Aleksej Morskoj, Delivery Manager, *instinctools

6. System configuration vs. customization

As customization always costs a pretty cent, we suggest solving issues through configuration before customization and making the most of an out-of-the-box user interface and available extensions. 

However, if you already have established processes that don’t match generally accepted principles in the system of your choice, you’ll have to decide whether to keep them that way or reengineer to align with the ERP standard. 

Here’s an example of a non-standard process being a pain in the neck. Let’s say, an ecommerce company has a specific way of managing inventory. Instead of relying on template-based approaches and document-oriented databases to build sales reporting and forecasts in the BI system, they have a set of connectors that link their database with a data normalization tool, ending up with a fragile, layered, and arduous-to-maintain system. 

It’s a common headache for businesses that stray from best practices and have to put up with rickety crutches of their software ecosystem.

— Aleksej Morskoj, Delivery Manager, *instinctools 

After the configuration is done, it’s time for an ERP demo on the mock data to check if the system performs as intended. 

7. Data migration 

No wonder issues with existing data top the list of reasons for ERP projects blow past their budgets and timelines. The amount of data directly influences the cost of software adoption, while its variability contributes to the complexity of the ERP implementation process. 

To prevent data-related issues before the system gets in gear, increasing the cost of fixing errors at least seven times, make sense of your legacy data, and decide what information should be moved to the ERP.  

Your data migration strategy should cover three key areas: data model design, data integrity, and data flow. 

Here’s a tip if you can’t let your legacy data go completely. Consider setting up a data archive, which will provide read-only access to the historical information from previous systems without overloading your ERP. We followed this approach while replacing outdated software with Odoo ERP for a European streaming platform provider.

— Elena Prokunina, Senior Business Analyst, *instinctools

8. Testing 

While ERP system testing might seem like any software functional and non-functional testing, there are best practices to keep in mind. The points listed below may sound basic, but they’re often neglected in real-life projects:

• Involve actual users
• Test all business-critical processes
• Go beyond checking individual tasks in isolation and test how the system handles workflows
• Provide a robust protocol for future testing after each update

9. User training 

Training isn’t a “nice-to-have” — it’s the backbone of a successful ERP rollout. Therefore, create a continuous learning framework that spans over:

• Initial role-based training on both systems and processes in various formats (classroom, computer-based training, self-study, blended learning) with a focus on the capabilities and responsibilities of different roles. 
• Refresher training for the employees who might need extra time to catch up. 
• Ongoing education to keep your staff updated on new software features and improvements.
• Feedback mechanism to encourage employees to make suggestions on the training process and adjust methods and formats to their needs. 

At *instinctools, we follow a train-the-trainer approach when our project team members teach critical roles on the client’s side prior to going live, and then they pass the knowledge on to the rest of your team. Along with more efficient knowledge sharing, it also contributes to completing the project with less cost, as you pay for the tech partner-led training only once instead of covering regular training bills. 

Keep building momentum in your ERP journey

Don’t rush to unbuckle your seatbelt — the effort associated with an ERP initiative doesn’t end with hitting the go-live milestone. It’s only half the battle. The ERP implementation life cycle proceeds with regular business process reviews and ongoing support to keep things hitch-free.