Welcome to Part 2 of the Successful Digital Transformation series, our comprehensive step by step guide, on how to start you digital transformation journey through the implementation of an ERP system.
These next few steps are vital towards successfully implementing change and transforming your organization into a fully capable and integrated business, accessible anytime by you with your chosen ERP system.
4. Consider Your Budget
With an ERP solution consider not just software license and implementation costs but also other potential costs. To make it simpler here is a brief overview of the costs that your ERP budget should cover.
1. Technical Costs
Technical costs include the costs of
- Maintenance & Support
- Applications software
- Chosen Operating System
- Network communications
The technical costs should generally encompass all hardware, software and implementation costs as part of your ERP budget.
2. People Costs
These costs are usually during the planning and implementation stage and include:
- Change management (a collective approach in making organisational change)
- External Consultant support
Often most people related costs are considered when preparing a budget, but planning these costs is crucial to having a smooth transition during the implementation of an ERP software.
3. Data Migration Costs
When migrating data from legacy systems to be replaced by newer applications such as an ERP these costs usually include:
- Entry into a new system,
- Cleansing and accuracy of data migration
- Extracting the data from a legacy system
Once these costs are known, your next step is to get estimates for these, which can be done by compiling and sending out an RFI to potential vendors as explained in Step 3. The estimates as provided by the vendor can be analyzed along with all other costs to build a realistic budget that would fit with the ERP strategy for the organisation.
5. Evaluating Different Systems
Based on your requirements and budget you should be able to identify a few systems that might be primary candidates. On closer analysis of their features, you should be able to narrow this down to two or three packages. You should then have a detailed demonstration of these two or three systems. Provide the software companies with a list of your requirements upfront so they can tailor the demonstration to your needs, and ask to see critical areas.
If you are part of a growing organisation an important factor to take in as part of your overall decision process is to ask yourself is the ERP solution modular? The reason why it is highly advantageous to have a modular ERP solution is primarily to help you get only what you need and no extras, thus shaving of costs and also give the primary stakeholders within your organisation time to learn and use the software one module at a time if needed.
Here are the 3 steps you can take if you believe you have outgrown the essential modules and want to expand furthermore
- Specifically, which additional modules you’ll need in your new system
- What functionality do you currently rely on?
- Boosting employee productivity by additional functionality within the system
Most ERP companies will offer On Premise deployment, however having a cloud-based system is also highly beneficial to daily users of the system, you can also have a combination of both as a way of transitioning to the cloud at your own pace based on your organisational business strategy, resources and your customer needs.
If the decision rests with your CIO, ensure there is an understanding with your chosen vendor about business continuity and disaster recovery plans, service level agreements and which data centers they utilize (for cybersecurity reasons). Additionally, many platforms can have limitations such as geographic and also feature disparity between cloud and on premise software.
By 2025 it is projected half of large enterprises will implement as SaaS (Software as a Service) strategy and run their core ERP systems through the cloud.
This is mainly due to scalability, reliability, agility and cost savings.
Having a cloud-based system in today’s environment is advantageous as users can access the system remotely, moreover cloud based ERP solutions are cost efficient, strong safeguards in terms of cybersecurity and offer a platform for deployment of regular updates as the software can be continually updated remotely without the need of sending a support team.
Phasing the deployment can help reduce not just disruption but also costs, often ERP systems like Triumph is implemented by individual modules, which are updated when the business requires more functions as it grows. Incremental adoption also helps internal stakeholders to learn and apply lessons learned from each module to further simplify business processes.
6. Ensure you are comfortable with the product/training staff
The phrase “user-friendly” is over-used in the IT industry and it is important that you feel that (with training) you can utilize the functions you require. Are screen layouts clear and concise? Is online help available? Is data entry straight forward? Having a test drive of the system might be a good way to get a feel of it. Ask to talk to some reference sites. This is one of the best ways to get comfortable with the product. Get some feedback from real users who have been using the product for a period of time.
With the change in and adoption of new technology there is bound to be a learning curve. A critical step towards the successful adoption of your chosen ERP solution is implementing an organisational change management strategy to help the primary internal stakeholders within your organisation or the end users of the solution learn.
Here are 4 steps you can take as part of your change management strategy:
- Articulate the case for change
- Clearly articulate the case/reason for change and define actions taken to support the change
- Communicate and talk about the schedule for implementation, rollout strategy and your wider scope of the ERP system within the organisation
- Empower key stakeholders who will be end users for the software by giving them authority to make decisions.
- Managing opportunity and risk
- Address the corporate cultural changes the implementation will create (meaning the increase in organisational performance due to ERP solutions providing the ability to contribute, support and improve operations and financial goals as well due to being a collaborative tool)
- Identifying key stakeholders within your organisation and communicating best way to implement for adoption of the chosen solution
- Supporting the workforce
- Evaluate and assess your current workforce this can be in relation to skills, abilities, experiences and capabilities (As it can have an impact during the transition phase without proper training of staff)
- Impact your new digital strategy will have on staff, to further close learning gaps it is highly recommended to implement training strategies
- Stakeholder communications
- Ensure before your ERP solution goes live, that all stakeholders (internal and external) are properly informed and understand how their business processes and work will be impacted
Examine the organisation that you are buying the software from
Most software products are not sold and supported directly by the manufacturer; this is normally done through financial software specialists or consultants. Ask yourself “What size is the organisation”, “how much experience do they have”, “how many consultants do they have?” Software consultants are the vital link between you and the software application. They are the key to a seamless and successful installation.
Let’s wrap it up!
Hopefully this has given a greater understanding and a blueprint to help your organisation achieve a successful digital transformation by updating or installing an ERP system, a vital piece of software technology that goes beyond today’s collaborations and remote working but also helps you keep up in today’s increasingly evolving and fast paced business environment.
With an ERP system as the foundation of your digital transformation you now have a profound level of knowledge and access to your business through data and analytics, ensuring your company is competitive and sustainable not in a year’s time but a decade.
If you would like to review Part 1 of this article again click here!