How To Begin Your First ERP Implementation: Considerations for Small Businesses

Written By: Brian Potts
Date: May 20, 2020

By Brian Potts and Kristy Barber

At some point during its evolution, every growing business faces the decision of when the time is right to replace QuickBooks or other accounting system with a consolidated ERP. Once you have decided the time is now and you have determined to select and implement a new ERP, now what? While some business owners have been part of larger organizations and seen implementations in the past, for most this is a new endeavor.

Most implementation best practices you read about relate to any size organization. However, the importance and prioritization may vary for a small business. For those SMB owners heading into your first ERP transformation, we have outlined a list of considerations to help you navigate:

Don’t overlook a proper software evaluation

It is likely the case you are hoping to utilize software “best-practices” with your new software, but remember that software cannot do what it is not programmed to do. What this means is that if you have a process that differentiates your business from competition, you are planning to keep an existing platform that needs to be integrated or you are planning on potentially changing your product or service offering in the future you will need to make sure your selected software will work.

When we first talk to SMB’s heading into their first ERP we often hear they have talked to either a software company that one of the leaders has worked with in the past, or common software vendors such as NetSuite or Microsoft Dynamics Business Central that target their marketing to SMBs. While these are all fine products, they do not work in every situation.

Additionally, what many business owners find after the fact is that they did not do their homework on surrounding costs, such as advanced modules, necessary bolt-on products, integration, and on-going maintenance costs. Just do your homework before signing on and enterprise application. (Also see our independent ranking of the top small business ERP systems).

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There is no need to rush

While you may be eager to get through this endeavor, rushing an enterprise application implementation rarely has good results. Especially as this is your first rodeo, make sure that your questions are answered and you have confidence in your approach before proceeding. Your business probably cannot afford significant impact to operations.

Make sure you keep ownership of your project

Software vendors and implementation partners may be stating that they have your back and can carry you through implementation, but make sure that you remain in control of the process. A stated above, if you are feeling rushed, you are unsure of what is being done or sensing unusual stress to your business or clients, you need to share this concern and make sure the approach is managed to your satisfaction.

There are three things to keep in mind as you work with your implementation partner:

  • Vendors want to you succeed, but their interests will always come first. The quicker they can get you “implemented” and on service contract the better (for them).
  • Understand the timeline and implications of things like cutover planning, understand if operations will need to be shut down and how this may impact business or financial cycles.
  • If you do not have a proper level of ownership during the implementation, you risk becoming over-dependent on consultants following implementation. This can get very expensive in the long-run.

Understand and document your current state before starting

This is no-brainer for larger organizations, but we find many times that small businesses may overlook an understanding of current state before bringing in a new system. This includes both processes and systems. Most small businesses have acquired numerous systems for things like inventory management, tax or currency calculation, MRP, CRM, supply chain management or other business needs.

Be sure that your system implementer has a list of existing applications BEFORE you sign for your software or implementation services. This will ensure that you are clear on which modules will be incorporated into your ERP as well as the estimated cost and complexity of needed integrations.

Also, as you document your current state, be certain that you are uncovering existing work-arounds and custom spreadsheets that your employees have been utilizing, otherwise you may find these popping back up once the ERP is implemented.

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Do not overlook Organizational Change Management

Many small business owners assume that organizational change management (OCM) is only needed for larger organizations with hundreds or thousands of employees. They could not be more wrong. The approach for OCM may be very different for a small business, but it absolutely needs to be addressed.

Consider with only a handful of employees the importance that each employee has in the success of the organization. If even one person is distracted or resistant to the change, this could have significant impact on the implementation.

Here are a few points to start thinking around the concept of change management:

  • Do people know why they are being asked to change? Communication is critical.
  • Consider that not all resistance intentional, meaning that people don’t always understand how they feel about change.
  • Don’t skimp on training or you will pay for it later.
  • Keep communications, training, and responsibilities simple. People may get stressed managing a growing business, and the introduction of an ERP implementation will more than likely cause additional stress.

An implementation will allow you to uncover “hidden gems”

An ERP implementation will bring out some unexpected or quiet leaders in your company. Some people will step up and take action and leaders will be created. Let this happen. You may also find that some people you thought were leaders simply are not.

The most valuable people in your implementation will set their self-interests aside and see the bigger picture. They are most likely the people who understand finances and the flow of operations, those who work well in a team environment and are respected by others.

A final idea to consider is that you may find value in hiring an independent ERP consultant to work as your advocate before and during implementation. The role of this firm should be to educate you and your team on what to expect, to help manage both the vendor resources as well as your internal team and to help make sure that you utilize the value of ERP in your growing business.

Please contact us to brainstorm ideas that we’ve seen work for other small businesses. We are happy to be a sounding board as you continue your ERP transformation journey!

Brian Potts

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