What Is the ERP Life Cycle? What Manufacturers Need to Know

Enterprise resource planning software is a long-term, large-scale investment. Thus, by the nature of the product, choosing, purchasing and implementing ERP software tends to be extended and involved.

Although many of today’s ERP software solutions have streamlined the process to some degree, it’s still vital for businesses to go in with an understanding of how the ERP implementation life cycle works and what to expect. Manufacturers, in particular, must be keenly aware of what the process entails due to the unique and often complex challenges of choosing manufacturing ERP software.

We’ll discuss the basics of what manufacturers need to know about the ERP implementation life cycle when choosing manufacturing ERP software. From evaluating business needs to implementing and maintaining an ERP solution, this guide will provide an overview of every process phase.

• Analysis and goal setting

A successful ERP implementation project will always begin with developing a robust business case and specific project goals. Some of the common elements in successful ERP implementation programs include:

• Assembling a cross-functional implementation team that provides a broad range of perspectives and department heads
• Identifying and targeting specific process inefficiencies to be improved
• Aligning the needs of employees on the ground with high-level business goals
• Integrating input on multiple vital functions such as supply chain, accounting and operations
• Creating a basic project timeline and budget

Approaching the process holistically is vital. Since ERP systems often touch nearly every element of a business, it’s wise to assume a wide scope from the beginning while simultaneously paying attention to specific areas for improvement.

• Comparison and choice

Once a business has established the basic framework for its ERP selection and implementation process, it’s time to begin evaluating and comparing different systems. These are some of the major factors that manufacturers will need to consider at this stage:

• On-Premises vs. Cloud: Cloud-based and SaaS ERP systems have become dominant in many market sectors, but on-premises systems are still popular with many manufacturers.
• Modules offered: While most ERP systems offer core functions such as accounting and inventory management, not every system offer every function, and UI/UX can vary widely.
• Industry-specific vs. general: Many manufacturers prefer industry-specific ERP solutions since they often require less customization to meet specific standards. Some vendors now offer both, such as the options found in the lineup of popular SAP ERP systems.
• Discrete vs. process manufacturing: On an even more granular level, discrete manufacturers, such as auto parts plants, often have substantially different needs from process manufacturers, such as food or pharmaceutical plants, so they often seek out ERP solutions tailored to their needs.
• Integration: Many businesses choose to keep some existing systems, so a new ERP system must be capable of working smoothly alongside these systems.
• Support: ERP deployment is fundamentally a collaborative process with the software vendor, so it’s smart to prioritize working with a pleasant and responsive vendor.

Most ERP software vendors have product tours or demos available, so manufacturers should take the time to try out and evaluate multiple systems.

• Customization and development

Many manufacturing businesses, especially larger ones, will need customization and configuration for their ERP software packages. Manufacturers should include the time and financial costs of customization in their project budgetary analysis.

Some common points that will usually be addressed at this stage include:

• Establishing a clear set of needs and expectations for customization
• Modifying compliance functions to address requirements unique to the industry
• Installing software on on-premises hardware equipment
• Creating a plan for data migration, including which data not to migrate
• Flagging potential trouble spots and creating plans for addressing them

• Pre-implementation training and testing

Before fully implementing an ERP system, a business needs to prepare by testing the system and providing workers with training. These aspects of the process help identify problems and assist employees in getting comfortable with the systems that will be an integral part of their job duties. Manufacturing businesses, in particular, will likely need to conduct numerous test runs to ensure that their software is ready to run key shop floor processes.

Most vendors will have training resources for end-users available, so manufacturers should be sure to take advantage of these. In addition, the manufacturer should gather feedback from end-users during the testing process and relay it to the vendor as part of a collaborative and iterative improvement process. In short, the greater the degree of collaboration at this stage, the more successful the final implementation will likely be.

• Full deployment

Eventually, the time to fully implement a new ERP system will arrive. These are some essential factors to consider in planning an ERP rollout strategy:

• Phased vs. Big Bang: Some businesses prefer a phased system that rolls out in stages to minimize downtime, while others prefer a “big bang” model that brings in the new system all at once. Still, others will keep the old system running alongside the new one for some time.
• Live support: This is one of the most critical periods when manufacturers will need direct technical support from the vendor, so make sure that channels are open for emergency and after-hours support.
• Metrics: Identify and track KPIs for deployment performance. These can provide important insights into which elements are going smoothly and which ones need extra attention.
• Vendor and supplier communication: For manufacturers, it’s essential to keep communication channels open throughout the supply chain to prepare both upstream and downstream elements of the supply chain for potential disruptions.

• Refining and maintaining

ERP systems are large and complex, and most will require a period of tweaking, troubleshooting and refining following deployment. A good ERP vendor will continue to work closely with the business during this period.

Of course, the need to refine the system doesn’t stop once implementation is finished. As a business’s offerings and processes evolve, an ERP system will need to evolve alongside them continually. This could even be the ultimate secret of a smooth ERP implementation throughout the life cycle: to treat it as a continual improvement process rather than a one-time event.