Do and Don’ts in ERP Implementation
September 4, 2017
ERP Life Cycle
September 4, 2017

Implementation of ERP System

Of many reasons to implement an ERP solution, the chief reason is the need for a common IT platform. Other reasons include a desire for process improvement, data visibility...

Of many reasons to implement an ERP solution, the chief reason is the need for a common IT platform. Other reasons include a desire for process improvement, data visibility, operating cost reductions, increased responsiveness to customers and improvement in strategic decision-making.

Organizations need an implementation strategy encompassing both pre implementation and implementation stages. Implementation of ERP System is a complex exercise, involving many process alterations and several legacy issues.

Following issues must be carefully thought out and formulated, as a part of implementation strategy, before embarking on actual implementation:

Business Process


An ERP implementation could be a great occasion to assess and optimize existing business processes, control points, breaking points between departments, and interfaces with trading partners.

Automating existing manual processes peculiar to a company necessitates, significant source code customization, as even a best fit ERP product match to a maximum of 85% to 90% of legacy processes. Source code customization will not only require changing of software objects but also need changing data models. The efforts needed to make such changes are significant in terms of development, testing and documentation. The future cost of maintenance and upgrades will be substantial, affecting entire life cycle of the system.

Another major implementation strategy is “phased implementation”, where roll out is done over a period. This method is less focused, prolonged and necessitates maintenance of legacy system over a period of time. But, phased implementation is less risky, provides time for user’s acquaintance and fall back scenarios are less complicated. There are various choice of phasing such as i) phased roll out by locations for a multi location company ii) phased roll out by business unit e.g. human resources iii) Phased roll out by module e.g. general ledger.

Implementation Methodology:

Selection of implementation methodology constitutes an important component of implementation strategy.

  • Big bang Most popular implementation methodology is “big bang” approach where on a scheduled cut-off date; entire system is installed throughout the organization. Implementation happens in a single instance. All users move to the new system and manual / legacy systems are discontinued on a given date. The implementation is swift and price tag is lesser than a phased implementation. On the flip side, risk element is much higher and resources for training, testing and hand holding are needed at a much higher level, albeit for a shorter period of time.
  • Phased rollout: Another major implementation strategy is “phased implementation”, where roll out is done over a period. Changeover occurs in phases over an extended period of time. Users move onto new system in a series of steps. This method is less focused, prolonged and necessitates maintenance of legacy system over a period of time. But, phased implementation is less risky, provides time for user’s acquaintance and fall back scenarios are less complicated. There are various choice of phasing such as i) phased roll out by locations for a multi location company ii) phased roll out by business unit e.g. human resources iii) Phased roll out by module e.g. general ledger.
  • Parallel adoption: Both the legacy and new ERP system run at the same time. Users learn the new system while working on the old.Methodology of implementation should form an important constituent of implementation strategy, which should be formulated after considering availability of resources, state of preparedness, risk perception, timeframe of implementation and budgetary provisions.

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