Implementing an Enterprise Resource Planning (ERP) system means bringing the ERP system into an organisation — what everyone calls “system implementation” — to manage various resources efficiently and consolidate data in one place, including planning, development, testing, and training. The cost of implementation is often high, to the point that many business owners wonder how implementation works and why this cost is so expensive compared to the licence fee. This article describes the roles and duties of the Implementer, which involve the following processes.

Gathering Requirements, or analysing the system’s needs
Planning the Implementer team’s work
System Design
Development and Customization
Testing
User Training
Go-Live
Post-Implementation Support

The information and details of each point are as follows.

1. Gathering Requirements, or analysing the system’s needs

This is gathering data on the user’s needs — what they want the system to be able to do. This is a crucial time, when the user must prepare their requirements, and a professional vendor will not simply do whatever the user wants, because sometimes the user’s requirements are not actually correct. The Implementer’s duty is to advise and propose the best approach that matches the user’s needs as closely as possible.

2. Planning the Implementer team’s work

Planning the ERP implementation by the Implementer team is a key factor for an implementation that charges by man-day or implementation fee, because whoever plans the implementation from day one through to a successful go-live must have no less than 3 years of experience and be a special expert in that particular system. The same is true of ERP systems. If any vendor does not provide an implementation plan, or does not plan and prepare a clear schedule for the user, that prevents the system from going live.

3. System Design

Designing the ERP system means taking the Requirements to analyse the user’s needs and designing the system so it can support the work. Sometimes the standard system may already support the work, but the Implementer must take the user company’s data and design the system’s usage steps correctly according to principle, and also find the best solution for the user.

4. Development and Customization

This follows on from System Design, because if the Requirements are more complex than a general standard system, or are very specialised, the ERP system must be adapted to fit that part of the work. The Implementer’s duty is to take the information discussed with the business owner and the user to summarise all the requirements, and use it to design the system — passing the information to the Development team to build. But not every system can be adapted; you must choose an ERP system that is highly flexible and whose vendor owns the system, which makes it free and easier to customise than large, relatively expensive foreign systems.

5. Testing

Once the system is designed and customised successfully, it moves into testing to check whether it works as the user needs. For testing, besides the Implementer team doing the testing, the users should also be sent in to test together, to ensure that the adapted ERP system can be used to meet the objectives as closely as possible.

6. User Training

No matter how expert the user already is at using ERP systems, if they’re implementing a new ERP vendor, training is required before use, which may take more than 6 months of training to learn how to use the various functions. The Implementer carries out the training and arranges the training schedule for the user, so they have time to queue and book training. The Implementer must be someone with expertise and a very good understanding of the business context.

7. Go-Live

All the processes mentioned are key components in bringing the system into real use. Even after passing through all of them, a successful go-live — and the company being able to close its books in the system — all comes from the Implementer team’s work. Every task requires time, experience, and specialised expertise. But no matter how good or skilled the implementation team is, if the user doesn’t cooperate, the system cannot go live successfully.

8. Post-Implementation Support

Besides the duty of implementing the system through to a successful go-live, the Implementer is also responsible for after-sales service. Some vendors may have a separate support team; others split company sites so that each is the responsibility of one particular Implementer to look after.

From the article above, you can see that the reason implementation cost is expensive comes from the whole work process, which consists of: gathering Requirements (analysing the system’s needs), planning the Implementer team’s work, System Design, Development and Customization, Testing, User Training, Go-Live, and Post-Implementation Support.

All the processes mentioned above require expertise, experience, and a capable ERP system, which makes the implementation cost many times higher than the module fee.

What is ERP implementation, and why is it expensive?