ERP Implementation Strategies and Guidelines

Kavya Susheel
C Batch
37121069
School of Management Studies
CUSAT, Kochi – 22
E-mail: [email protected]

Abstract: Enterprise Resource Planning (ERP) is a software solution

that enables organizations to manage and integrate all their business
processes, from production planning to customer relationship
management. ERP implementation requires a well-defined strategy
and guidelines to ensure a successful outcome. In this report, we will
discuss ERP implementation strategies and guidelines. Choosing the
right ERP implementation strategy is crucial for a successful ERP
implementation. The four types of ERP implementation strategies
include Big Bang Implementation, Phased Implementation, Parallel
Implementation, and Pilot Implementation.

Key Words: Enterprise Resource Planning, Business Process,

Implementation Strategies, Implementation Guidelines, Production
Planning, Customer Relationship Management.
1.0 INTRODUCTION
1.1 General Information
Enterprise Resource Planning (ERP) is a software solution that enables organizations
to manage and integrate all their business processes, from production planning to
customer relationship management. ERP implementation requires a well-defined
strategy and guidelines to ensure a successful outcome. In this report, we will discuss
ERP implementation strategies and guidelines.

ERP (Enterprise Resource Planning) is an essential software that integrates various

functional departments of an organization into a single, unified system. There are
different types of ERP implementation strategies that companies can choose from to
meet their specific needs and requirements. In this report, we will discuss the four
different types of ERP implementation strategies.

2.0 ERP IMPLEMENTATION STRATEGIES

1. Big Bang Implementation: Big Bang Implementation is a type of ERP
implementation where the entire system is implemented at once. This
approach is usually taken by organizations that want to see the benefits of the
new system immediately. This type of implementation can be risky because it
requires a significant number of resources, and any issues that arise during
the implementation process can impact the entire organization. However, it
can be beneficial for small organizations or businesses with simple processes.

2. Phased Implementation: Phased Implementation is a type of ERP

implementation where the system is implemented in stages. This approach is
usually taken by organizations that have complex processes or large
departments. This type of implementation can be less risky than Big Bang
Implementation because it allows organizations to test the system in small
stages before implementing the entire system. This approach can also help
organizations identify any issues and resolve them before moving on to the
next stage.
3. Parallel Implementation: Parallel Implementation is a type of ERP
implementation where the existing system and the new system are run in
parallel for a specific period. This approach is usually taken by organizations
that want to minimize the risk of a new system impacting their business
processes. This approach can also help organizations identify any issues with
the new system and resolve them before completely replacing the old system.

4. Pilot Implementation: Pilot Implementation is a type of ERP implementation

where the new system is implemented in a small pilot group before
 implementing it across the entire organization. This approach is usually
taken by organizations that want to minimize the risk of a new system
impacting their business processes. This approach can also help
organizations identify any issues with the new system and resolve them
before completely replacing the old system.

Big Bang Implementation is the quickest, but it can be risky, while Phased
Implementation, Parallel Implementation, and Pilot Implementation take more time
but are less risky. The key to a successful implementation is to have a clear plan,
establish a project team, conduct a business process analysis, choose the right ERP
system, customize and configure the system, test and train, and rollout the system.

2.1 Big Bang Implementation

Big Bang ERP Implementation is a type of implementation strategy where the entire
ERP system is implemented at once. This approach involves the deployment of the
entire system in a single go, usually during a specific time frame, such as a weekend
or a few days of downtime. It is a popular approach because it is faster, simpler, and
requires fewer resources than other ERP implementation strategies.

Advantages of Big Bang ERP Implementation:

1. Faster Implementation: Big Bang ERP Implementation is the quickest way to

implement an ERP system as the entire system is implemented at once, and
the company can start using it immediately. It is an excellent option for small
businesses that do not have a large number of users and processes.

2. Simpler: Big Bang ERP Implementation is a simpler approach than other

strategies as it involves implementing the entire system at once. This means
that there are fewer complexities involved in the implementation process,
such as managing different phases, stages, or pilot groups.

3. Requires fewer resources: Big Bang ERP Implementation requires fewer

resources as it involves implementing the entire system at once. This means
that the company does not need to invest in multiple stages or pilot groups,
which can be expensive.

4. Better User Acceptance: Since the entire system is implemented at once, users
are less likely to be confused or frustrated by the new system's changes,
which can lead to better user acceptance and faster adoption.

Disadvantages of Big Bang ERP Implementation:

1. High Risk: Big Bang ERP Implementation is a high-risk approach because it
involves implementing the entire system at once. Any issues that arise during
the implementation process can impact the entire organization.
 2. Limited Testing: Big Bang ERP Implementation allows for limited testing of
the system, which means that any issues that arise during the
implementation process may not be identified until it is too late.

3. Limited Customization: Big Bang ERP Implementation does not allow for
much customization of the system as the entire system is implemented at
once. This can be a disadvantage for companies with complex business
processes that require customization.

4. Training Challenges: Big Bang ERP Implementation requires significant user

training, as the entire system is implemented at once. This can be a challenge
for companies with a large number of users and complex business processes.

Big Bang ERP Implementation is a popular approach for companies that want a faster
and simpler implementation of the entire system at once. However, it is also a high-
risk approach that requires significant user training and limited testing and
customization of the system. Companies should carefully evaluate their needs and
consider the potential risks and benefits of this approach before deciding to use it.

2.2 Phased Implementation

Phased Implementation is a type of ERP implementation strategy where the ERP
system is implemented in stages or phases, rather than all at once. This approach
involves dividing the implementation process into smaller, manageable parts, with
each stage focusing on a specific area of the organization's operations. It is a popular
approach for companies with complex business processes or large departments.

Advantages of Phased Implementation:

1. Reduced Risk: Phased Implementation reduces the risk of implementing the

entire ERP system at once. This approach allows organizations to test the
system in smaller stages, which can identify any issues and resolve them
before moving on to the next stage.

2. Customization: Phased Implementation allows for more customization of the

ERP system. This approach enables organizations to focus on specific areas of
their operations and tailor the system to meet their specific needs.
3. Better User Acceptance: Phased Implementation can lead to better user
acceptance as users have more time to adjust to the changes in the system.
This approach also allows organizations to provide more comprehensive
training to their users, ensuring they are comfortable with the new system.
 4. Manageable: Phased Implementation is a more manageable approach than
Big Bang ERP Implementation, as it involves implementing the system in
smaller stages, which can be easily managed.

Disadvantages of Phased Implementation:

1. Longer Implementation Time: Phased Implementation takes longer than Big
Bang ERP Implementation, as it involves implementing the system in smaller
stages. This can be a disadvantage for companies that want to see the benefits
of the new system immediately.

2. More Resources: Phased Implementation requires more resources than Big

Bang ERP Implementation, as it involves implementing the system in
multiple stages. This approach can be more expensive for organizations with
limited resources.
3. Complexity: Phased Implementation can be more complex than Big Bang
ERP Implementation, as it involves implementing the system in multiple
stages. This can be a challenge for organizations with complex business
processes.

4. Resistance to Change: Phased Implementation can face resistance to change

from users, as it involves implementing the system in multiple stages. Users
may be resistant to change, which can slow down the implementation
process.

Phased Implementation is a popular approach for companies with complex business

processes or large departments. This approach reduces the risk of implementing the
entire ERP system at once, allows for more customization, and can lead to better user
acceptance. However, it also takes longer, requires more resources, can be more
complex, and may face resistance to change from users. Companies should carefully
evaluate their needs and consider the potential risks and benefits of this approach
before deciding to use it.

2.3 Parallel Implementation

Parallel Implementation is a type of ERP implementation strategy where the old
system and the new system are run simultaneously for a period. This approach
involves testing the new ERP system alongside the existing system to ensure the new
system meets the organization's requirements before fully implementing it. It is a
popular approach for companies that want to minimize risk and ensure a smooth
transition to the new system.

Advantages of Parallel Implementation:

1. Reduced Risk: Parallel Implementation reduces the risk of implementing the

new system by running the old and new systems simultaneously. This
 approach allows organizations to identify any issues or gaps in the new
system before fully implementing it.

2. More Accurate Data: Parallel Implementation ensures more accurate data

migration to the new system. This approach allows organizations to compare
the data between the old and new systems and identify any discrepancies.

3. Better User Acceptance: Parallel Implementation can lead to better user

acceptance as users have more time to adjust to the changes in the system.
This approach also allows organizations to provide more comprehensive
training to their users, ensuring they are comfortable with the new system.

4. Easy Rollback: Parallel Implementation allows for easy rollback to the old
system if any issues arise during the implementation process. This approach
ensures organizations can continue operations while resolving any issues
with the new system.

Disadvantages of Parallel Implementation:

1. Requires more Resources: Parallel Implementation requires more resources
than other implementation strategies, as it involves running two systems
simultaneously. This approach can be more expensive for organizations with
limited resources.
2. Longer Implementation Time: Parallel Implementation takes longer than
other implementation strategies, as it involves running two systems
simultaneously. This approach can be a disadvantage for organizations that
want to see the benefits of the new system immediately.

3. Complexity: Parallel Implementation can be more complex than other

implementation strategies, as it involves running two systems
simultaneously. This can be a challenge for organizations with complex
business processes.

4. Data Duplication: Parallel Implementation can lead to data duplication

between the old and new systems. This approach requires careful
management to ensure the data remains accurate and up-to-date in both
systems.
Parallel Implementation is a popular approach for companies that want to minimize
risk and ensure a smooth transition to the new system. This approach reduces the risk
of implementing the new system, ensures more accurate data migration, and allows
for easy rollback. However, it also requires more resources, takes longer, can be more
complex, and may lead to data duplication. Companies should carefully evaluate
their needs and consider the potential risks and benefits of this approach before
deciding to use it.
2.4 Pilot Implementation
Pilot Implementation is a type of ERP implementation strategy where a smaller scale
version of the ERP system is implemented in a specific department or area of the
organization before full-scale implementation. This approach involves testing the
new system in a controlled environment with a limited number of users to identify
any issues or gaps in the system before fully implementing it across the organization.
It is a popular approach for companies that want to minimize risk and ensure a
smooth transition to the new system.

Advantages of Pilot Implementation:

1. Reduced Risk: Pilot Implementation reduces the risk of implementing the

new system by testing it on a smaller scale before full-scale implementation.
This approach allows organizations to identify any issues or gaps in the
system before fully implementing it across the organization.

2. Better User Acceptance: Pilot Implementation can lead to better user

acceptance as users have more time to adjust to the changes in the system.
This approach also allows organizations to provide more comprehensive
training to their users, ensuring they are comfortable with the new system.

3. Customization: Pilot Implementation allows for more customization of the

ERP system. This approach enables organizations to focus on specific areas of
their operations and tailor the system to meet their specific needs.

4. Easy Rollback: Pilot Implementation allows for easy rollback to the old
system if any issues arise during the implementation process. This approach
ensures organizations can continue operations while resolving any issues
with the new system.

Disadvantages of Pilot Implementation:

1. Longer Implementation Time: Pilot Implementation takes longer than other

implementation strategies, as it involves testing the new system on a smaller
scale before full-scale implementation. This approach can be a disadvantage
for organizations that want to see the benefits of the new system
immediately.

2. Requires more Resources: Pilot Implementation requires more resources than

other implementation strategies, as it involves testing the new system on a
smaller scale before full-scale implementation. This approach can be more
expensive for organizations with limited resources.
3. Complexity: Pilot Implementation can be more complex than other
implementation strategies, as it involves testing the new system on a smaller
 scale before full-scale implementation. This can be a challenge for
organizations with complex business processes.

4. Limited Scope: Pilot Implementation has a limited scope, as it only tests the
new system in a specific department or area of the organization. This
approach may not provide a complete picture of how the system will
perform across the organization.

Pilot Implementation is a popular approach for companies that want to minimize risk
and ensure a smooth transition to the new system. This approach reduces the risk of
implementing the new system, allows for more customization, and allows for easy
rollback. However, it also requires more resources, takes longer, can be more
complex, and has a limited scope. Companies should carefully evaluate their needs
and consider the potential risks and benefits of this approach before deciding to use
it.

3.0 BENEFITS OF ERP IMPLEMENTATION GUIDELINES

1. Improved Efficiency: ERP implementation can help improve the efficiency of
an organization by streamlining processes and reducing redundancies. This
can help reduce costs and increase productivity.

2. Better Decision Making: ERP systems provide real-time data that can help
organizations make better-informed decisions. This can help improve the
overall performance of the organization.

3. Increased Collaboration: ERP systems can help improve collaboration

between different departments within an organization. This can help break
down silos and improve communication.

4. Scalability: ERP systems are scalable and can be customized to meet the
changing needs of an organization. This can help organizations grow and
adapt to changing market conditions.

ERP implementation is a complex and costly process, but it is essential for improving
a company's efficiency, productivity, and profitability. Companies should follow ERP
implementation strategies to ensure a successful implementation process. The key to
a successful implementation is to have a clear plan, establish a project team, conduct a
business process analysis, choose the right ERP system, customize and configure the
system, test and train, and rollout the system. The benefits of ERP implementation
include improved efficiency, better decision-making, increased collaboration, and
scalability.
4.0 ERP IMPLEMENTATION GUIDELINES
ERP implementation is a complex process that requires careful planning, preparation,
and execution to be successful. Here are some guidelines for successful ERP
implementation:

1. Define Business Requirements: Before starting the implementation process,

it's crucial to identify and document the business requirements. This includes
understanding the organization's objectives, goals, and processes, and
defining the requirements for the ERP system to meet those needs.
2. Select the Right ERP System: Choosing the right ERP system is critical to the
success of the implementation process. This requires a comprehensive
evaluation of available ERP systems, considering factors such as
functionality, cost, scalability, and support.

3. Form a Cross-Functional Implementation Team: ERP implementation

requires a cross-functional team that includes representatives from all areas
of the organization. This team should include IT, finance, operations, and
other key stakeholders.

4. Develop a Detailed Implementation Plan: The implementation plan should

include a detailed timeline, milestones, and responsibilities for each member
of the implementation team. This plan should also outline the project's scope,
budget, and risks.

5. Customize the ERP System: ERP systems are designed to meet the needs of a
range of industries and organizations. Customizing the system to meet the
specific needs of the organization is critical to its success.

6. Focus on Data Quality: Data quality is essential for the success of ERP
implementation. The organization should establish data quality standards,
and the implementation team should validate the data to ensure it's accurate
and consistent.

7. Test the System: Thorough testing of the system is critical to identify any
issues or errors before going live. Testing should include end-to-end testing,
integration testing, and user acceptance testing.
8. Train Employees: Employee training is critical to the success of ERP
implementation. The organization should provide comprehensive training to
employees on how to use the new system effectively.

9. Monitor and Evaluate: After going live, it's essential to monitor the system's
performance and evaluate its effectiveness. This includes tracking key
performance indicators and addressing any issues that arise.
 10. Continuously Improve: ERP implementation is an ongoing process. The
organization should continuously evaluate the system's performance and
identify areas for improvement to ensure it continues to meet the
organization's needs.

ERP implementation is a complex process that requires careful planning, preparation,

and execution. Following these guidelines can help organizations successfully
implement ERP systems and reap the benefits of increased efficiency, improved data
accuracy, and better decision-making capabilities.
In conclusion, ERP implementation requires a well-defined strategy and guidelines to
ensure success. The organization must select the right ERP system, develop a project
plan, and ensure that all users are trained on the new system. The implementation
process should be managed carefully, with a focus on minimizing risk and ensuring a
smooth transition to the new system.

5.0 CONCLUSION
ERP implementation can present numerous challenges for organizations. Addressing
these challenges requires careful planning, effective project management, and a
willingness to adapt to change. Organizations that can overcome these challenges and
successfully implement ERP systems can benefit from increased efficiency, improved
data accuracy, and better decision-making capabilities.

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