Implementing an ERP System—Here's How to Do It Right

According to a Statista study, 89 percent of companies with more than 250 employees used an ERP system in 2023. In medium-sized organizations (50 to 249 employees), the share was 67 percent, while 37 percent of small businesses (10 to 49 employees) used an ERP system. One reason ERP solutions have so far been established primarily in large organizations is that smaller companies often do not see the need for such a system due to the lower complexity of their processes. Yet it can offer them exactly the same benefits as it does for large companies.

Due to advancing digitalization, organizations of all sizes face the challenge of making their processes more efficient and flexible in order to remain competitive. Systems without ERP functionality often reach their limits when trying to achieve this goal—for example, because they cannot be integrated with one another or cannot process large volumes of data. ERP systems can help overcome these problems. It is therefore not surprising that an increasing number of companies are expected to adopt ERP solutions in the future . According to Statista forecasts, revenue in the ERP market segment will grow steadily by more than 4 percent annually in the coming years, reaching a new high of over 61 billion euros in 2029.

In light of this trend, the question arises as to how companies that decide to implement an ERP system can do so successfully.

Why Implementing an ERP System Is Worth It

An ERP system enables the digitization of all business processes and their consolidation into a central database. This reduces the number of manual steps, thereby minimizing the risk of data entry or transmission errors. At the same time, the standardization of workflows ensures that processes across different departments integrate seamlessly. Redundant tasks are eliminated, allowing employees to focus more on value-added tasks. This reduces personnel expenses and associated costs while increasing the company’s overall efficiency.

Another advantage is access to real-time data. Thanks to centralized data analysis, companies can gain a comprehensive overview of their operations at any time. Risks can be identified early on, and opportunities can be seized immediately. This strengthens their competitiveness.

In addition, ERP solutions simplify communication. All relevant information is available in one central location, ensuring that employees across all locations always have access to up-to-date and consistent data. This transparency facilitates collaboration within the company and improves coordination with external partners.

Finally, ERP systems also help ensure compliance with regulatory guidelines. Many modern software solutions feature built-in audit mechanisms that flag violations.

Selecting an ERP System

There are a wide variety of ERP systems on the market. When deciding on a suitable solution, the following factors, among others, are important:

Scalability: An ERP system should grow with the company. The more adaptable a software solution is, the better it can respond to changes within the company.

Cost Transparency: Providers use different pricing models. It is important to have a transparent cost structure that clearly defines which features are included with the purchase of the system and what ongoing costs will be incurred.

Interfaces: An ERP system should integrate seamlessly into the existing IT landscape. Interfaces ensure smooth data exchange, which helps prevent transmission errors and reduces the workload.

Internationalizability: Companies with international business operations need software that supports the standards of the respective countries. In addition to language and currency, this includes legal requirements and accounting regulations.

To ensure that an ERP system not only meets the basic criteria but is also optimally tailored to the company’s needs, it is advisable to define the goals to be achieved through the implementation. A requirements analysis can determine which functions an ERP system must provide—and to what extent—in order to achieve these goals. The requirements are then documented in a requirements specification. This requires a detailed description of existing business processes as well as a definition of the target processes. The requirements specification serves as the basis for selecting a system.

If negotiations begin, the provider prepares a statement of requirements based on the contents of the specifications. This document outlines the steps the provider will take to meet the requirements. A statement of requirements is binding and serves both parties as legal protection and as a means of avoiding misunderstandings.

Cloud ERP or On-Premise ERP?

One decision companies face when choosing an ERP system is whether to opt for a cloud-based or an on-premises solution. According to Forterro’s ERP Barometer, in 2024, 52 percent of companies using ERP software relied on an on-premises system, 31 percent used a cloud solution, and 16 percent used a combination of both options.

With on-premises systems, a license for an ERP system is purchased. It is then installed on the company’s own servers and managed by internal staff. Cloud ERP, on the other hand, is accessed via a web browser. The provider handles the maintenance and management of the IT infrastructure. For this reason, cloud solutions are also referred to as Software-as-a-Service for ERP (ERP-SaaS).

On-premises solutions require significant upfront investments for purchase and implementation. The in-house IT team must devote a great deal of time to getting the system up and running and ensuring its stability. If the company lacks qualified IT staff for this, additional costs for recruitment are incurred. This effort is eliminated with cloud solutions. Furthermore, they do not require a large initial investment. Instead, monthly fees are charged as part of a subscription model, based on the scope of the system. With cloud-based solutions, you generally only pay for the features you actually use. Since there are no additional costs, it is easy to calculate the total expense.

However, using cloud ERP also comes with drawbacks. For one thing, it creates a dependency on the provider. If, for example, server outages occur, companies must trust that the service provider will respond quickly. Second, cloud solutions require sensitive company data to be stored on external servers, which can raise data privacy concerns. Therefore, it is essential to ensure high security standards when selecting a provider. With on-premises ERP, companies retain full control over their data and IT security. However, they are also responsible for implementing appropriate data protection measures themselves.

Both models have advantages and disadvantages. Which solution is more suitable depends on the company's specific requirements and available resources.

Steps for Implementing an ERP System

Once a suitable system has been selected, the next step is its implementation, which is typically divided into three phases:

1. Data Migration

Before the existing data is transferred to the new ERP system, it should be organized and reviewed for relevance. Based on this review, a decision will be made as to which information will be transferred and which will be archived or deleted. Subsequently, all relevant data from the various sources will be consolidated and migrated to the new system.

With cloud solutions, providers assist companies with this process. They have the necessary data migration tools, which can typically perform automatic data cleansing and fill in missing values. With on-premises solutions, companies may need to procure migration tools or engage external service providers for this step.

2. Conducting training sessions

An ERP system can only be used efficiently if employees are familiar with both the software itself and the new workflows. Therefore, training sessions should be conducted throughout the implementation process.

For cloud solutions, training focuses primarily on how to use the system and adapt workflows to the new digital capabilities. As explained earlier, for on-premises solutions, technical topics such as performing maintenance play a role for employees in addition to using the software.

3. Commissioning

Once preparations are complete, the final implementation of the ERP solution takes place. There are various strategies for this.

One option is to implement the entire system immediately, which eliminates the need for parallel operation with the previous solutions. This method allows for rapid deployment but carries high risks. If problems arise or outages occur during implementation, it can disrupt processes throughout the entire company.

A phased rollout is a lower-risk alternative. The transition takes place in several controlled phases, allowing errors to be identified early on, attributed to specific stages, and corrected. While this approach extends the overall process, it makes it easier for employees to adjust.

To better assess potential problems, a pilot implementation can be carried out in advance. In this process, the system is first tested on a limited scale—for example, in a small department. This allows vulnerabilities to be addressed before the full go-live. In addition, user feedback from the test phase can be used to make optimizations before the final launch.

In a hybrid approach, the strategies mentioned are combined in any way. For example, core functions are first tested in a pilot phase, while other functions are introduced gradually.

Measuring the Success of the Implementation

After implementation, the success of the ERP system should be evaluated to verify that the set goals have been achieved and to identify opportunities for improvement. This is done using previously defined key performance indicators (KPIs), which are measured before and after implementation. If negative trends emerge or certain targets are not met, adjustments should be made to the ERP system.

KPIs should be reviewed not only once after implementation, but also on a regular basis going forward. This allows for the identification of opportunities for improvement that only become apparent during ongoing operations or that arise from operational changes.

Key metrics frequently used in the context of ERP implementations include process speed, error rate, and personnel costs. These can be determined using analytical tools.

Challenges During Implementation

Implementing an ERP system is a complex process that can present various challenges.

One of the biggest hurdles is a lack of willingness on the part of employees to embrace new processes. Resistance can result in a new system not being used fully—or at all—and thus failing to deliver its intended benefits. Therefore, the training sessions planned as part of the implementation process should not only impart the necessary technical knowledge but also foster employee acceptance. This can be achieved by addressing concerns and clearly highlighting the benefits of the changes.

Equally important is the technical infrastructure. Outdated hardware or software may not be able to meet the requirements of a modern ERP system. In such cases, upgrades or even a complete replacement may be necessary, resulting in additional unexpected costs. Before deciding on an ERP system, you should therefore assess whether your existing technical infrastructure is up to date.

Another problem can be an unclear structure of responsibility. If too many people are involved in the decision-making process without clear responsibilities having been defined, disagreements and delays can quickly arise. To ensure a smooth implementation, responsibilities must be clearly assigned and communicated in advance.

Poor time management also hinders the process. Implementing a new ERP system involves a significant amount of work that should not be underestimated. If the timeframes are too tight, delays may occur that could throw the entire project schedule off track. To prevent this, the schedule should be broken down into individual phases and supplemented with sufficient buffer time to account for unforeseen challenges.

Another challenge is ensuring that the data migration is carried out correctly . All data protection regulations must be complied with to avoid legal consequences. In addition, data consistency must be ensured. If data is incomplete or incorrect, it can lead to incorrect decisions, for example. Therefore, data quality should be reviewed regularly and, if necessary, data protection experts should be consulted.

Support from ERP consultants

Companies can rely on external support both when selecting an ERP system and during its subsequent implementation. ERP consultants bring a high level of expertise to the field. Through their work with various companies, they are familiar with a wide range of systems and have a comprehensive understanding of their features and benefits. They analyze business processes and, based on the results, determine which solution best fits an organization’s specific requirements.

Once a system has been selected, they can guide the entire implementation process—from installation and data migration through to go-live. They can also handle change management and conduct training for employees. Thanks to their expertise, ERP consultants are able to overcome all implementation challenges and ensure the success of the rollout.

Even after implementation, external service providers can continue to support the company. Since they are already familiar with the system and its capabilities, they can quickly implement appropriate adjustments as business requirements change.

Conclusion

Implementing an ERP system is a complex process that presents companies with various challenges. However, once it has been successfully implemented, companies can reap numerous benefits. Careful planning and a structured implementation are essential to ensuring the process goes smoothly. Many organizations rely on the support of external ERP consultants for this purpose.

The ERP sector is driven by innovation. Future developments—such as the increased use of artificial intelligence (AI) or the growing shift toward remote work—will continually change the demands placed on ERP systems. Vendors must respond with ongoing enhancements to meet companies’ new requirements and remain competitive.

For organizations, this dynamic means they must regularly adapt their ERP system—for example, by retroactively integrating additional features. This is the only way to realize the system’s full potential. However, retrofitting the existing system is not always feasible and often involves additional effort. According to the ERP Barometer 2024, 30.6 percent of companies plan to switch to a different system due to the lack of adaptability in their ERP solution. To avoid costly and time-consuming migrations, it is advisable to opt for flexible solutions right from the initial implementation.

One promising approach to this is composable ERP—a modular system that enables companies to add or replace individual functions as needed. Through AI-powered processes, it offers a high degree of agility and can quickly adapt to new requirements. Low-code platforms also increase flexibility: Using intuitive dashboards, employees without in-depth IT knowledge can make adjustments on their own and thus optimize internal processes in no time.

Both options are based on cloud technologies. The fact that these are expected to become increasingly important is also reflected in forecasts. According to the ERP Barometer 2024, the number of companies relying on on-premises systems will decline by 20 percent over the next two years, as companies increasingly prefer hybrid solutions or cloud systems. By switching to modern solutions, companies are laying the foundation for a future-proof IT strategy.