What are Some Common ERP Implementation Approaches for Transitioning to a New ERP System

by Aug 25, 2023ERP Research, Expert advice0 comments

Enterprise resource planning (ERP) systems are vital in the modern business world that simplifies business processes, including inventory and order handling, accounting, human resources, and project management. These systems enhance communication between an organization’s departments, linking everyone through a central database for a detailed view of a company’s operations. There are several ERP implementation approaches to consider. Successful ERP implementation is critical to streamline business operations, enhance organizational efficiency, and improve decision-making capabilities. But what ERP implementation approach is right for your company’s transformation? This article will help you choose from the top ERP implementation strategies to determine the most suitable for your company’s needs.

Common ERP Implementation Approaches

Big Bang Implementation

The first option your business can consider is the Big Bang strategy. The big bang approach describes an implementation strategy where an organization switches from its current ERP system to a new one at a single point, known as the go-live scenario. With a big bang implementation, all an organization’s modules go live and function simultaneously.

There are several benefits to the big bang ERP implementation strategy. This strategy is ideal for quick deployment and an immediate system-wide transformation, eliminating the lengthy deployment process involved in some other methods. A big bang implementation is best for businesses seeking a lower-cost implementation process.

Though there are benefits to this implementation approach, there are also drawbacks to the big bang strategy. Because the implementation requires an immediate system switch, the pre-go-live period is often lengthy and overwhelming, increasing organizational stress. This solution is also high-risk and can interrupt ongoing system operations, harming your business and causing data loss. A proper contingency plan is a must!

Phased Rollout

A phased rollout approach is another option for ERP implementation that occurs over weeks or months. The phased approach goes through implementation in stages, gradually rolling out the ERP system. While the go-live process still occurs, it doesn’t happen simultaneously, like the big bang approach. Therefore, teams continue working on the current organizational software until the ERP system is fully implemented.

One of the biggest advantages of the phased approach is that it involves much less risk than the big bang approach. This approach improves usability, resource management, and user adoption. It gives employees more time to learn the new system without feeling overwhelmed by memorizing everything at once.

However, there are some disadvantages to the phased rollout approach. Because the rollout strategy takes a significant amount of time to complete, you won’t be able to benefit from your ERP system immediately. Because the transition occurs over a long period, many businesses have trouble maintaining consistency during each implementation stage.

Parallel Adoption

Parallel ERP implementation involves old and new systems running concurrently for a certain period. This approach allows your business to maintain its legacy systems for an additional safety net if things go awry with the new system’s implementation. Therefore, if the new system malfunctions, your team will have a backup to continue operating efficiently.

Parallel ERP implementation is beneficial because it reduces the risk of errors during implementation and allows for continuous operations, no matter how the ERP implementation goes. However, despite the reduced risk, a parallel ERP implementation is labor intensive and involves increased resource demand that your organization might struggle to keep up with. This approach also requires meticulous data synchronization, which can become overwhelming quickly.

Pilot Implementation

A pilot implementation approach occurs in a small-scale, controlled environment where the ERP system is deployed before full deployment and implementation occurs. This low-commitment strategy allows your business to test deployment results before moving forward.

There are many advantages to this approach. Thorough testing in this stage identifies potential system issues that could cause major problems, meaning that a pilot implementation lowers the overall transition risk. This method also allows you to build internal capabilities and gives your team the resources to adapt to the new system.

However, this strategy has a couple of disadvantages, namely scalability concerns and the possibility of mismatches between pilot results and the actual implementation results.

Hybrid Implementation

The final implementation strategy is the hybrid approach, which combines various elements of different implementation methods to create an implementation approach that suits your specific needs. This strategy is beneficial for companies that want to balance risks that come with the implementation process while maximizing resource efficiency.

While this approach helps balance risk, allocate resources, and speed up the implementation process, it also has downsides. For example, this approach requires an amplified need for careful deployment planning. You need a deep understanding of your standard business process to ensure this method is done safely.

Factors Influencing the Choice of Approach

Organization Size and Complexity

The size and complexity of your company’s daily operations play an important role in the most suitable implementation approach. Smaller businesses, for instance, can benefit from a pilot approach because of the small-scale and controlled environment present in this strategy.

Larger organizations facing a complicated data migration process should opt for phased rollout because it allows for smaller steps and avoids overwhelming and disrupting your operations.

Budget and Resources

Your ERP budget and resources play another role in which strategy is most suitable for implementing an ERP system in your organization. Budget constraints and resources can determine which options are accessible for your ERP solution. For instance, approaches like the big bang approach require a significant upfront investment that might not be workable for your company, whereas phased or pilot approaches are budget-friendly alternatives to implementing the system.

Risk Tolerance

Your organization’s risk tolerance is another essential consideration when implementing an ERP module. Risk-averse organizations might lean toward phased or parallel adoption because these methods provide a smoother, less risky transition. Options like the big bang approach involve greater risks but might be suitable if your risk tolerance is high and you want a significant return on investment.

Time Constraints

Regulatory deadlines, market pressures, and other time constraints can influence your ERP implementation approach. Consider a fast-paced implementation approach like the big bang strategy or a hybrid model if you’re on a short deadline and have urgent requirements. If time isn’t a concern, you can opt for less risky methods like phased rollouts.

Conclusion

The most common ERP implementation approaches are the big bang, phased rollouts, parallel adoption, pilot implementation, and hybrid approaches. Your organization’s approach should depend on its unique needs, resources, timeline, and goals.

Carefully planning your ERP implementation approaches and having strong project and change management strategies in place as you navigate implementation is crucial. No matter your approach, you can embark on your ERP implementation journey with Intelligent Technologies. Contact us today to learn more about transitioning to a new ERP system and schedule your consultation.