Two ERP Implementation Methodologies
In the last few years, we have seen two different implementation methodologies emerge. When buying a new enterprise resource planning (ERP) system, you should make sure you understand the ERP implementation process proposed by the vendor or re-seller and its pros and cons.
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ERP Implementation Methodology #1: The Traditional Method
The first ERP implementation plan is the Traditional methodology, since it has been around since the early 1980’s. It focuses on the customer team taking a leading role in the implementation process, completing most of the work themselves. The customer is responsible for project management as well as system configuration and deployment, while the ERP vendor provides general guidance and technical expertise as necessary.
This methodology uses the following phases:
- Planning: The project managers (customer and vendor) work together to form the ERP implementation team, and plan the project based on the right ERP implementation process for the project scope and available resources. A kickoff meeting involves the entire team to review the project plan and communicate the company objectives for the project.
- Education: The vendor consultants educate the implementation team. Most advocates of this methodology believe the education of the core ERP project team is the key to the customer’s self-sufficiency and a successful project.
- Design/Configuration: The consultants assist the implementation team in designing, configuring and setting up the new ERP and business processes. The vendor consultants support the implementation team, and the team does the work.
- Conference Room Pilot: The implementation team tests the system in multiple Conference Room Pilots (CRP). The final CRP becomes a simulated “go-live.” At the end of the phase, the system is accepted by the team as ready to go live. The vendor consultants support the team’s effort. By the end of this phase, the key users have established a complete understanding of the new system.
- Cutover Activities: The implementation team plans the ERP cutover process and trains the rest of the end-users on the new system. The implementation team performs the training, and the vendor consultants support the team.
- Go-Live Support: Finally, the implementation team supports the end-user in the use of the new software and provides real-time support. The vendor consultants are also on-site during the first month to support the quick resolution of new problems as they arise.
There are, of course, pros and cons to all ERP implementation methodologies, and the Traditional methodology is no exception. This method can give you (the customer) more control over how the ERP software is configured to meet your specific business processes and workflows. Plus, overall ERP implementation cost can be reduced because less external consulting services are required. In addition, this form of ERP implementation project can foster more proficiency in knowledge and use of the new ERP package, reducing reliance on external support in the long-term.
However, the Traditional methodology also has its drawbacks. Several factors may be problematic, depending on the strengths and availability of your team. For instance, unless your team has extensive knowledge of ERP systems and implementation experience, the rollout may be difficult to implement successfully. Also, a typical ERP implementation could span a few months to as long as 2 years with a phased rollout. This significant time investment may interfere with routine business processes, which may prove challenging when you need to allocate resources to implementing the software.
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ERP Implementation Methodology #2: The Turnkey Method
The Turnkey methodology is a comprehensive, end-to-end approach lead by the vendor who is responsible for the entire project, including installation, configuration, go-live, training and support. It requires minimal involvement from the customer.
This methodology employs the following phases:
- Planning: The activities are the same in this phase as the traditional methodology, with the vendor consultant taking a bigger role in the construction of the planning. Also, the vendor project manager is planning the vendor consultants’ time since they are involved full-time in the next four phases of the project.
- Discovery/Setup/Configuration: Here we see the major difference between the two methodologies. In this phase, the vendor consultants review the client’s current business process, design/configure/setup new processes, and perform an initial test with minimal involvement of the customer team. The customer implementation team is only involved in discovery by providing input on current processes and organizational needs. In essence, the vendor team is providing a “turnkey” approach to system design, project management and the setup of the new system.
- Prototype Review/Education: In this phase, the vendor team delivers the new system to the customer implementation team and begins user training of the customer team through prototype demonstration workshops. In these reviews, the customer team is educated on the ERP system and the capabilities of the software. The vendor team identifies any issues and adjusts the configuration as needed. At the end of this phase, the customer project team members accept the system design.
- Conference Room Pilot: During the pilot phase, the vendor team leads the customer team through several phases of a conference room pilot (CRP). The last CRP becomes a simulated “go-live”. When this CRP is completed, the customer team accepts the new ERP and is ready to go live.
- Cutover Activities: The implementation team plans the cutover process and trains the ERP user base on the new system. The implementation team performs the training, and the vendor consultants provide technical support.
- Go-Live Support: The implementation team supports the end-user in the use of the new system. The implementation team provides real-time support. The vendor consultants are also on-site during the first month to support the quick resolution of any problems as they arise.
This “turnkey” ERP implementation methodology has been used by SAP and Oracle in the past. The pre-configured industry templates and this methodology allow them to offer a low-cost implementation to compete with Tier II vendors.
From a client perspective, there are several PROs to the Turnkey methodology. A successful implementation through the Turnkey method often has a quicker timeline than the traditional methodology. This can mean an accelerated time-to-value for the business. The client also benefits from the vendor’s proven best practices for a more streamlined and efficient solution.
But the Turnkey method, while faster, can involve higher total cost of ownership including implementation costs, licensing, or customization costs. Plus, relying on the vendor for ongoing support can lead to higher costs for maintenance or updates. Also, reliance on the vendor for overall project management can impact the speed and success of the implementation if there are setbacks in the timeline or software setup errors.
The Importance of Choosing the Right Methodology for Your Company
If your company has strong ERP competency, and the majority of your team has had previous ERP implementation experience (within 5 years), then the traditional model may be a viable option for your ERP project. This approach places the responsibility for success on your team.
But if your company does not have experienced ERP users and the users have been using an older legacy system for many years, the turnkey model may be your best choice. This model is also attractive to companies that have downsized and have lean staff that may struggle with the added burden of implementing a new ERP system.
The trend is up for successful ERP implementations, but for a successful ERP implementation, you still need to be very careful in staffing the project, choosing the right project manager, hiring the right implementation partner and selecting the right ERP implementation methodology. Whether you decide to head the implementation in-house or depend on a turnkey project plan from the ERP vendor, there are benefits and risks to each.
Trust the Ultra Experts
Ultra’s team of ERP implementation experts are here with our proven method for implementation management. We begin by aligning your team, the ERP vendor, our ERP consulting team, and the implementation team to ensure everyone is on the same page regarding project requirements, deliverables, goals, expectations, and the key business and technology objectives for your desired future state. Then through careful planning, we create an integrated project plan to serve as the foundation for success.
Using our structured project methodology, we also focus on managing change, ensuring your team is prepared to embrace the changes that come with any technology project or digital transformation. To learn more about how to manage your implementation project, schedule your free discovery call with an Ultra consultant.
