Switching to an enterprise resource planning (ERP) system can be transformational for any business, no matter what industry you operate in. Many companies see instant benefits after implementing an ERP solution, like significantly reduced overhead, improved productivity, better margins, and the ability to reach growth and revenue goals.
On the flip side, there are many cautionary tales of ERP projects gone wrong. According to Gartner, the failure rate has bounced between 55% and 75% over the years and we have firsthand experience of it. In fact, to Gartner, 55-75% of ERP projects fail completely or wind up missing their aimed objectives.
At ICC, we’ve done our fair share of ERP rescue missions over our 20+ years in the ERP consulting, implementation, and service business. A reoccurring pattern in salvage stories is finding critical pieces of the implementation strategy and preparation process missing.
All ERP project implementations start with internal planning, but project failure is a likely outcome if that effort doesn’t go deep enough. A short list of general objectives doesn’t count as a comprehensive ERP project plan, and vague, wishy-washy goals won’t get you to the finish line successfully.
Without thorough requirements planning, a detailed implementation plan that aligns with your goals, and a defined deployment strategy, your ERP project is on a path for failure and will most likely go over budget, out of scope, and not meet your deadlines.
To avoid mistakes, conflicts, and delays, you need to prepare for all aspects of an ERP project; and that starts with understanding your implementation strategy options.
One of the critical early decisions in implementation planning is deciding what ERP software deployment strategy will work best for your business. Although you don’t need to choose a strategy before talking to a software partner, it’s helpful to understand the most popular and more widely accepted approaches in advance so you can make the most of those initial conversations.
In this blog, you will learn about the 4 most commonly used deployment and implementation strategies for mid-to-large scale ERP projects. For each one, we’ll cover the pros and cons, security considerations, and what types of businesses each strategy works well for so you can begin to think about what method will fit your organization.
As you start gathering requirements and researching ERP solutions and options, it’s important to get familiar with the overall implementation process.
How to Select an ERP Solution for the Life of Your Business
ERPs are intricate solutions that require process mapping, optimization, system integration, user training, and more. Ultimately, these multi-faceted phases are why you need an experienced partner to guide you through the steps.
Each of the 4 implementation strategies described below are valid approaches to making the transition to a new ERP software or significant upgrade.
Like the birth of the universe, this is an all-at-once implementation strategy. One day your team is consolidating transactions in local accounting software and standalone spreadsheets; the next, they are posting journal entries in SAP Business One. In this approach, your ERP software partner is responsible for helping you develop a detailed plan driving to a specific launch day. Everything goes live all at once, and your team dives in headfirst.
Single cost – You won’t have to pay to run multiple legacy software systems simultaneously as you start paying for your brand-new ERP.
Baptism by fire – Your team has extensive training before launch day so they can jump right in and keep working with minimal disruption to their work schedule.
Glitches get fixed fast – If you switch everyone all at once, you’ll quickly identify any hidden glitches so they can be dealt with ASAP.
High user adoption rates – If the old software is suddenly no longer available, your staff have no choice but to learn the new system.
Short high-stress time – All the stress, in theory, should be around the same time, and then you can settle into the new normal quickly.
Immediate ROI – The benefits of an ERP system, like higher productivity, intelligent data insights, and lower operating costs, will be noticeable very quickly.
Downtime possibility – If some strange glitch or specific challenge has hidden itself until launch day, your entire business could have to pause operations until it can be fixed. You won’t be able to go back to old operating systems because they won’t be there anymore.
Staff resistance and pressure – Such a big change overnight with such high stakes (they HAVE to figure it out because there’s no other way) may make staff feel anxious and stressed. An overnight launch without being able to fall back on old systems is a lot of pressure.
Lots of background work – Every strategy includes background work, but Big Bang launches require that every person, every machine, and every department is trained and ready to go simultaneously. That requires many hours behind the scenes before launch day.
Possibility of many glitches all at once – With so many things happening on the same day, your software partner and IT team may need some extra time to get simple fixes ironed out.
Big bang deployment strategies are often best suited to smaller organizations with single or limited locations and few employees. It’s risky for a large and complex enterprise to try an all-at-once corporation-wide software launch; there are too many variables, locations, and employees that you cannot control.
A big bang approach has low security risks. Since you won’t be running legacy systems side-by-side, there are fewer vulnerabilities between APIs, and the amount of time your systems may be vulnerable should be minimal. You can perform an IT Security Risk Assessment beforehand to identify any risks.
Staging your ERP software implementation project over weeks or months can make the transition seamless, minimize customer impact, and ensure any glitches are worked out before starting the next phase.
There are 4 ways that projects may be phased: over a period of time, by software module, business unit, or location. Following this approach, your team would transition into working fully in the new system, but there is usually some overlap of duplicating work in both systems before the old one is fully abandoned.
Minimal downtime risk – Phased rollouts significantly reduce the possibility of an operational pause or complete company downtime because they are limited to smaller portions of the business.
Ample time to acclimate – Phasing allows staff to get used to the new system slowly, so they have more time to learn. Evangelists of the new software can help support staff who are feeling uncertain.
Time to catch and eliminate glitches – Rolling out new software in smaller phases will allow your software partner and IT to identify quirks and glitches, fix them, and predict when they might happen in future phases.
Ability to prioritize ROI – A phased approach means you can prioritize transitioning the functions or departments that will give you the most significant ROI benefits first.
Legacy system safety net – If things go wrong or significant fixes are needed, you can fall back on legacy systems until the solution is found.
Access to historical data – All your old data will still be available in the legacy system. This can be helpful if you realize partway through that you’ll need to transition more historical data than you initially thought.
Minimizes customer impact – Your clients may not even realize you’re doing a software rollout because staff can provide the same service level with access to legacy and new systems.
Simultaneous system fees – You’ll be paying the subscription fees or licensing costs for both the old and new systems.
Time – A longer deployment means more time paying for both systems, reduced productivity due to duplicating work in two systems, and more time for staff to hear complaints and develop resistance to learning the new system.
Lack of urgency to learn – Staff may not be as motivated to learn the system or update their processes since their old familiar habits are still accessible in the legacy system.
Slower ROI – Your ROI will not be lower than other strategies, but it will take longer to see the results because of incremental transition.
Pressure on IT – Your IT teams will have additional pressure with supporting two systems at the same time.
Possibility for confusion – If you’re working through training for one department, while launching with another, and building a schedule for a third, there’s potential for confusion.
Phased ERP implementations are at low risk for catastrophic failure and should eliminate or reduce the possibility of downtime. They’re a good option for larger businesses that want to minimize customer impact. A phased rollout is also a great option if you have specific bottlenecks that need to be addressed ASAP; you can prioritize those in your phase planning.
Phasing your ERP implementation project does have some extra security factors to consider. Because you’ll be running both systems, like local accounting software and your new ERP, there’s a slightly higher possibility for vulnerabilities with API interactions. Those vulnerabilities or loopholes exist for longer and will require protection. There’s also an increased risk for data integrity with staff duplicating work in two systems. Your IT team and software partner should have a policy for system vulnerabilities.
A parallel ERP implementation project rollout is when you have both systems fully deployed simultaneously for a pre-determined amount of time. That means employees would duplicate all work in both systems to start. This approach is the lowest risk for customer impact and downtime, as the legacy systems are still fully functional and available if or when glitches or errors appear in the new system. Staff also have plenty of time to get used to the new system, with the comfort that they can still revert to the old system if something goes wrong.
Legacy safety net – The legacy system provides a safety net, so you should never have to pause operations or deal with downtime.
Low-pressure learning – Your staff can learn the new system at a pace that makes sense for them.
No downtime – Critical functions that must operate 24/7 will not be interrupted.
Time for data transition – Parallel rollout allows you time to identify if any more legacy data sets need to be imported.
Time to refine processes – You’ll have more time to brainstorm, test, and refine workflow processes in the new system before relying on them entirely.
Reduced productivity – Parallel transition will temporarily reduce productivity since people will work in both systems.
Data integrity risks – There’s a slightly higher risk of compromising data integrity with duplicating work in two systems.
Double the fees – You’ll be paying full subscription or licensing fees for the duration of your transition; that gets expensive.
Staying in the comfort zone – Staff may be less motivated or more resistant to learning the new system since the old system is still available.
Old habits die hard – Breaking old habits and adapting processes associated with the old system is harder when people are still using it every day.
Potential for confusion – People will have to continue operating in the old system while also learning a new system with changed workflow processes for completing the same task; that can be confusing.
Parallel deployment implementation works best for companies with critical functions that must operate 24/7 without downtime. It is also well suited for companies going through mergers or acquisitions where each new entity may be using different systems than other recent acquisitions.
Security risks are very low for a parallel ERP rollout. Both systems will operate at total capacity with full security measures. Since the systems will have minimal integrations, there should be no vulnerable access points. You can keep running your regular security and ransomware education programs, with additions for security features in the new system.
A hybrid deployment is just what it sounds like: picking and choosing the different elements of other strategies that work best for your business. For example, you may decide to rollout the accounting module of your ERP system before tackling HR. After that, you might phase in the rest of the company based on individual ERP modules or launch all other departments once you’ve ironed out all the kinks from the first two units.
Another option could be to launch several specific modules all at once and slowly phase in additional modules over time. The gray area is that most ERP deployment strategies will be a bit of a hybrid since your software partner will (and should) customize your deployment to suit your specific needs and goals.
Options to suit different units – You can choose different deployment styles to suit various business units or locations.
Adaptability – You can adapt your implementation plan based on your budget, investing more time and dollars into critical functions and using a big-bang launch for less essential departments to reduce costs.
Customizable plans – Every step of the process is customized to suit the needs of your business, account for risks, and consider the concerns of your team.
Space and time to determine needs – A customized rollout can allow you more time to ensure you get exactly what you need from the new system, no more, no less.
Extended planning required – The pre-project logistics process may take longer than other strategies since each type of deployment you choose to use will require custom documentation.
Possibility for too much customization – The more customizations to your system, the more likely it is to go beyond your budget and schedule and create possible future challenges.
Details, details, details -There are so many things to consider and define when using multiple deployment strategies for different units; it’s easy to sink excess hours into planning.
Possible budget challenges – Extensive time investments, customization costs, and possibly paying fees for both systems will eat into your budget.
The short answer is that a hybrid approach can suit any business. But it is likely to shine when you have complex and unique needs in a new or rapidly growing and changing industry. It can also be beneficial for businesses growing due to acquisition or merger, for similar reasons as a parallel strategy, with a little more room to control the budget.
With a hybrid deployment approach, your IT team and software partner must be aware of all possible for all systems and know how to mitigate each of them. It can require more planning for security during transition periods, but it’s not necessarily riskier than other strategies.
After you have taken the time to vet and select your ERP system, deciding on your ERP software implementation and deployment strategy should be done as a joint effort with your software partner. Things that factor into choosing your deployment strategy include:
Timeline
Budget
Risk tolerance
ROI
Company size
Infrastructure (Cloud vs. on-premise)
User preferences
Ultimately, the strategy you select will depend on your business, your people, and your goals for investing in a new ERP system. Although we have outlined some of the pros and cons of each strategy, the best way to succeed is with an experienced ERP software partner.
Your implementing partner will leverage a team of business process management software and infrastructure experts who take the time to understand your needs. They can share examples of what strategies have worked well for previous customers of similar size, industry, or product migrations, and they will know the questions to ask in order to suggest an ERP project strategy and approach that best matches your objectives.
Before any project can begin, the business technology experts at ICC will figure out precisely what you need right now, and in the long-term, and balance that to find the most practical, scalable solution within your budget and schedule.
As a trusted SAP Business One partner, our methodology is to deliver stable technology solutions that meet your unique needs and seamlessly grow with your business.
With over 20 years of helping companies successfully implement ERP software, ICC can help you decide on the best software deployment approach for your business and develop an implementation plan that covers all the bases. Contact us today for a free ERP project assessment to get started!
Once you’ve selected an ERP for your business and defined your deployment strategy and implementation plan, a few extra things will ensure a successful ERP transition project. These 5 additional ideas can further reduce friction and smooth the path for ERP implementation success:
Project evangelists for the new system will develop staff enthusiasm and buy-in from your leadership team, which are critical to the success of your ERP implementation.
A dedicated implementation team for your ERP project with a range of people from across your business, not just your C-suite team, will ensure the perspectives of different user groups are accounted for.
Encouraging transparency about project progress, changes, schedules, and possible disruptions will help staff develop a positive view of the new system.
In-depth hands-on and/or virtual training with the addition of proper documentation will ensure that staff feel comfortable in the new system.
From database type (HANA or SQL) and hosting options (cloud, on-premise, co-located) to customizations and add-ons, learn more about all the factors that go into calculating your total cost of owning SAP Business One.
