Considering an eCommerce ERP implementation? Here’s what to look for
You’ve heard the horror stories of ERP implementations that get blown out of scope, cost your team far more than you anticipated, and require endless effort afterwards to manage the change that a new system has brought upon the organization. No wonder you’re nervous!
It’s true that ERP implementations don’t happen overnight and they’re not free, although when they’re done well, they bring massive returns to the companies that use them. The other ones - that take twice as much time, budget, and energy - often have something in common.
They weren’t set up for success.
There are many reasons why ERP implementations may not work out. At the same time, there are lots of things you can do to set your team up for a spectacular ERP implementation.
This guide offers three practical questions to ask yourself and your implementation stakeholders, which will lay the foundation for a successful implementation. It also identifies the underlying traits for selecting a well-suited ERP for eCommerce, and common root causes that lead to unsuccessful implementations.
First, what is an eCommerce ERP?
An eCommerce ERP is an Enterprise Resource Planning (ERP) system that’s been purpose-built for modern merchants selling their products through an omnichannel strategy. The main goal of the ERP is to provide a single source of truth for operations that will enable an unparalleled customer experience.
Why might an eCommerce ERP implementation fail?
There are many reasons why an ERP implementation might fail. Some of these reasons are due to the way in which the implementation is conducted - the team that was put in place, the intention behind the project, and so on. Other reasons are rooted in an inherent lack of fit between the merchant’s operations, and the technological capabilities being implemented.
Let’s dig into these.
There are three common pitfalls merchants succumb to which can hinder the success of their ERP implementation.
- Merchants implement an ERP for the wrong reasons:
Some quickly-scaling merchants will feel influenced by their Board, VCs, other investors, or an internal ‘squeaky wheel’ to implement an ERP for optics or to solve for the wrong problems. Those aren’t good enough reasons to undertake this kind of project (more on this below).
- An inadequate champion is selected and fails to inspire or uphold adoption of the system:
Many eComm merchants make the mistake of exclusively using external consultants to run the implementation of an ERP. Why? Because they’ve done this before, merchants imagine that they will provide a neutral perspective, they can do some of the rough tasks involved with change management, and so on. However, as an external consultant, what they have in varied experiences they lack in rapport, clout, and collaboration with your company and its teams. If you’re seeking the involvement of a consultant, consider having them come on only in a supporting role. If they’re running the show, the fees attached to their services (in addition to whatever technology fees you’ll be taking on) won’t accomplish what you need or be worth it.
- Insufficient resources (time and skillset) are provided:
Even if an internal champion is selected, many brands will try to simply add managing the implementation project on top of the individual’s regular role and responsibilities. Another tempting practice is to put the responsibility on a newer, junior hire. Both of these options fall short on the level of time, involvement, and influence that is required for a successful implementation.
These potential barriers to success, though significant, can be addressed through strong leadership and proper project & resource planning.
Inherent Lack of Fit
Assuming the appropriate preparation has been done, and clear objectives for the implementation are widely acknowledged, there are external factors that still put an implementation at risk, and these fall largely on whether or not the technical capabilities of the solution being implemented will fit your needs.
Luckily, there are two simple, yet foundational characteristics you can measure against to evaluate how well an ERP will work for you.
First, consider the way in which the solution was developed. The technical infrastructure of an ERP build for eCommerce companies will be built to scale with large transaction volumes. Traditional ERP systems, on the other hand, were built to record and manage accounting transactions for a myriad of industries and can struggle to scale with the pace of a modern brand.
In B2C business models, the transactions being stored in the ERP tend to be high in number, with lower order values. For example, a DTC ecom brand will sell thousands of smaller products, ranging in value under $30.00, versus a B2B furniture company will sell fewer products, each valued over $500.00.
A traditional ERP, built for B2B transaction volumes such as couches, rugs, and has the potential to suffer from performance issues if it’s applied to an eCommerce model. From the onset, it’s architecture isn’t created to support a scaling number of transactions, leading to an inevitable unsuccessful solution as operators are constantly trying to customize, integrate, and connect this traditional ERP to other systems using costly and disconnected middleware.
Image 1. Middleware madness
Niche Workflow Capabilities for DTC
Beyond the database infrastructure, the design of a traditional ERP platform was also intended to be applicable to a wide variety of companies and industries, whether that’s manufacturing, services, retail, and so on.
Modern merchants running eCommerce business models are unique and continue to evolve at a rapid pace. Standard operating procedures such as Buy Online Pick Up In Store (BOPIS), offering subscription services, doing dropshipping, and more, are all operationally unique. What this means is that in order for a traditional ERP to properly record, monitor, and facilitate eCommerce operations, a lot of customization is required to stand up the environment.
Without off-the-shelf workflows (which an eCommerce ERP will have natively built in house), modern merchants will discover that their workflows will require them to customize the traditional ERP to the nth degree as part of their implementation. This could include anything from having to build custom integrations to your sales channels, getting charged for order routing, requiring custom fields to be added for made-to-order products and more.
While customization is certainly a possible route to take in implementing a traditional ERP system, it has some ripple effects to stay aware of.
- Each required customization takes time to build, adding to the total length of the proposed implementation timeline
- Any upgrades made on the traditional ERP platform present a risk to negatively impacting your custom-built workflows
- Each custom field that is added to your instance slows the system’s performance down
- Traditional customizations usually have a direct financial cost, whether that is a one-time customization fee, or an ongoing handling fee for certain types of transactions
eCommerce ERP systems, on the other hand, are generally fully equipped for off-the-shelf implementation, with built-in workflows vetted by hundreds of DTC brands. This sets the brand up for success and can aid in a speedy implementation period.
A Framework for Consideration
As the person responsible for researching and vetting vendors and seeing a new system through to adoption, you want to make sure that your company is ready for this implementation. And if it’s not, what steps can you put into place ahead of time to make sure this experience leaves everyone in a better place than they are in today? Here are three things to consider:
Q1: What is the compelling reason for why we need to do this?
This is the number one factor to have in place, because it’s something eComm merchants need to get really clear on. Why do we want to implement an ERP? What is so broken that we need to undertake this endeavor? Why is this the path we need to take? Why is this the right time? What can’t we do today that we’ll be able to do with an ERP?
Let’s face it, ERP implementations are hard work. So if there isn’t a bright beacon on the hill guiding your attention and decision-making, this implementation will be like ascending a difficult mountain pass in the pitch-black: disorienting, painful, and quickly robbing you and your team of the will to make the changes required.
Q2: Who will be our internal champion to inspire and uphold adoption?
ERPs aren’t something that an isolated team within a company can implement. By nature, they wrap around multiple facets of the business and therefore need more than just buy-in from senior management. ERPs need leadership from senior management to inspire and promote the why behind the endeavor.
They also require an individual champion who is firmly committed to making this massive organizational change happen.
Introducing an ERP is introducing the reality of change management: a difficult and ongoing task. Your champion will need to be prepared to usher in new ways of doing things, inspire teams on how the ERP will bring success to the company, and reassure people on the value that they provide, even as their tribal knowledge gets systematized and roles & responsibilities evolve.
Make sure there is an internal champion available to push the project through, as well as an executive sponsor. The sponsor will inspire this project from the top-down, continue to allocate resources to its undertaking, and provide leadership and reassurance along the way.
Q3: What resources are we dedicating to support the execution of this implementation?
Your internal champion will act as a dedicated project manager for this implementation. Is this implementation supposed to be just one of your many projects and focus areas for the year? You might want to push back on that if it is. This project will require a lot of dedicated time and attention for the implementation period.
A well-executed ERP implementation requires someone internally who is specifically responsible for coordinating the resources required to run the project.
If it is you, you and your team will need to be prepared to have you dedicate hours of your calendar each week to coordinate with your vendor’s implementation team and your internal teams, to push the agenda, manage change, organize training, and make sure everyone is up to speed on how the project is progressing. This should be your main priority for the extent of the implementation, and other responsibilities you have will need to be delegated for the time being.
If it’s not you, ideally this person has sufficient experience working within the company, across multiple teams, with a decent understanding of the scope of the implementation. While it may be tempting to put your burgeoning PM hire on this, likely, this position should be held by an intermediate or senior role. They have depth of knowledge in your company’s processes and systems, and seasoned people skills to manage the day-to-day expectations and change that will come about the implementation as a result.
What does an ERP Implementation look like for modern merchants?
What should the implementation look like?
- When the solution you’re looking for is largely applicable to you right “out of the box”, modern merchants benefit from shorter implementation time periods. This ensures that your technology addresses your operational requirements before your business evolves and changes. eCommerce ERP solutions take a matter of weeks, not months , to hit go-live, with initial onboarding periods running 6-12 weeks.
- The smoothest ERP implementations are facilitated by a knowledge group of stakeholders who are intimately connected to the task of implementation. This should consist of the ERP technology’s onboarding specialists, as well as your own in-house project management group for this project.
- A phased approach is offered, to handle mission critical processes initially such as Inventory or Order Management functions. This guarantees a fast time to first value and a short implementation timeline, then allowing secondary processes (warehouse management, production, accounting, etc.) to follow overtime.
- Implementation will include multiple project phases, beyond the project kickoff these include critical activities such as:
- Discovery and Requirements Sharing: Documentation is completed by the merchant to detail critical business requirements and operational procedures to date
- Technical Implementation Setup: Channels are set up in the merchants environment, integrations are connected, data imports take place, warehouse configurations are made, etc.
- Training: A formal walkthrough is provided on the fully configured environment to key user groups in the merchant’s operations to match their requirements. These trainings are meant to equip merchants to become subject matter experts in their environment, so they can later provide broader training to their internal teams.
- User Acceptance Training & Dry-Runs: Merchants ensure they are confident using the platform and test to ensure all their requirements are met in the platform. The dry-run allows users to conduct their operations in the new solution before phasing out their previous solution(s).
- Go-Live: All fulfillment processes and activities are handled in the new solution.
- Following go-live, merchants continue to add depth to their ERP usage, through additional adoption projects that could include migrating production, warehouse, or accounting capabilities into their eCommerce ERP platform.
- After implementation, a clear system for support and success should be established. This system should help with any customer support related requests, such as asking for help on the product or troubleshooting the odd bug, while also proactively supporting your usage of the platform and making sure your team is able to accomplish what they need through dedicated account managers with your technology solution.
Take a Deep Breath
While this all sounds like a lot of commitment, not to worry, it’s for good reason! An ERP implementation has major potential to bring about significant improvements for your company and scale the success of your business for years to come. It deserves a certain level of attention to get there.
This is an exciting time for you and your team! Breathe deep and talk it through with key stakeholders in leadership and execution. And be empowered to know that your ERP implementation can go really well, the first steps just require some internal preparation.
Frequently Asked Questions
What if I want to customize my ERP?
While flexibility and a level of customization is important in your tech stack especially as it relates to integrations, your eCommerce ERP shouldn’t be too quick to customize every single feature and capability in their software just for you. Each capability is there today because the functionality is native to eCommerce. Ideally, your implementation team can thoughtfully work with you to understand why your customization may be necessary based on how you operate and either offer configuration on the most essential requirements that you have, or work to understand why this might be applicable to many merchants and get slated for the product roadmap.
Remember, an off-the-shelf solution with limited customizations is what makes an eCommerce ERP so powerful. If you’re trying to customize everything to your own thing, this could in turn add inefficiencies for your team as you try to go live on the platform, as well as lead to downstream maintenance issues when their system pushes updates.
Should I hire an implementation consultant?
The best ERP software implementations have in-house implementation teams who are intimately connected to the solution itself. While third-party consultants have diverse experiences to draw upon and can be a tempting neutral voice, their lack of connection with internal teams tend to delay adoption of the new tool and increase the costs to the your team. In certain situations they can be a helpful resource to augment your in-house ERP implementation team, but they shouldn’t be relied on exclusively.
How much does an eCommerce ERP Implementation cost?
There are a wide variety of factors that contribute to the cost of an eCommerce ERP implementation. To start, the specific modules that are required for your unique business directly dictate the amount of time implementation and onboarding will take. For example, a merchant who only buys finished goods and uses a 3PL for fulfillment, will have a much shorter time than the merchant who tracks raw materials, uses manufacturers, and also does their own in-house fulfillment. Each additional module that your team adops will increase the cost of implementation, but will also drastically improve your team’s operational efficiency. For a fully custom quote on your implementation, please schedule a demo.
How long should I expect my ERP implementation to take?
Similar to the implementation cost, the implementation timeline also drastically varies depending on the specific modules that are required for your operations. Using the previous example, setting up products with complex Bill of Materials, production workflows, and pick/pack/ship functionality in the WMS, will take significantly longer than a more simple workflow using finished goods and a 3PL. Additionally, data integrity can play a huge role in determining the length of the onboarding process. If there is significant data collection and cleaning required, this can increase the length of implementation. For example, sometimes a merchant will not have a completely unique identifier for each SKU, which requires the restructuring of the naming convention prior to go-live. This is not uncommon to see in merchants migrating from more simplified solutions like spreadsheets, which do not have the data integrity requirements of a more formalized eCommerce ERP system like Fulfil. All of that said, you can anticipate the implementation process to take anywhere from 6-12 weeks, on average, depending on the factors highlighted above.
What out of the box integrations should I look for?
An eCommerce ERP is fundamentally meant to be a single source of truth for your business and operations. This often means that you are able to replace many legacy point solutions that have overlapping functionality with your new ERP. For example, you no longer need a separate system for purchasing, inventory management, WMS, order management etc. Therefore, if you’re using a point solution for one of these areas today, an integration is likely not required. However, there are aspects of your operations that will not be covered by your ERP, and if there are critical systems that are used for these areas, then an integration is worth considering. A great example of this is your 3PL - it’s important to consider whether your 3PL and ERP either have an existing integration, or have a technical stack and expertise that will enable a possible future integration.
Still have questions?
Schedule a demo with Fulfil to learn more about our platform and implementation process.