ERP Migration Guide for Small Businesses

Whether you’re swapping your legacy systems with modern manufacturing software or making a strategic decision to switch vendors, ERP migration is a strategic business process that needs careful deliberation and execution. Let’s dive in.

What is ERP migration?

ERP migration is the process of swapping your Enterprise Resource Planning software for a new one and moving critical business data, configurations, and workflows from the old system to the new one. Most often, businesses that undertake this process have been using a legacy system that becomes outdated. However, migration might also be necessary when a previous solution has failed to deliver or its implementation has gone awry.

Migrating an ERP is no small task. A migration project needs to be developed, a team must be appointed, the potential of involving consultants needs to be deliberated, etc. Migration presumes comprehensive research and executive-level decision-making on suitable alternatives, data management, security concerns, appointing implementation resources, etc. It’s a critical question, as your ERP system affects the way you conduct daily business and even your supply chain in a big way.

ERP technologies have matured a lot in the past 10 years. A diverse market has emerged from what was, in the recent past, a goliath software package meant only for large corporations. Today, ERPs come in many forms, catering to specific industries, different business types, and company sizes. Cloud-based solutions, mostly far easier to implement, are increasingly replacing on-premise solutions.

Why switch ERP providers?

Many sectors that once had limited access to technological solutions or found productivity software prohibitively expensive are increasingly adopting modern ERP systems. In many cases, these businesses are transitioning from outdated legacy ERPs or, more commonly, from spreadsheets and paper-based systems. A prime example is the small manufacturing sector, which has experienced a significant wave of manufacturing ERP adoption in recent years.

However, with constant technological advancements and a lot of provider diversity, ERP migration is becoming increasingly common among all kinds of businesses looking to modernize their operations. So much so that even software specifically designed to simplify and manage ERP data migration has emerged.

Reasons for switching ERP providers include:

• Your business is scaling – new requirements or volumes have emerged that the current solution cannot accommodate.
• You can elevate your return on investment (ROI) –the price per functionality has dropped to a point where switching providers offers better cost efficiency, even after the added cost of migration.
• You need more integration or functionality – your business has come to rely on third-party apps that the current system doesn’t integrate with, or can leverage functionality it doesn’t include.

Choosing the right ERP system

Although ERP providers are plentiful, switching systems should be a matter of close deliberation. ERP migration is a strategic process that affects the whole business from your production line to your clients and even suppliers. For all the productivity boost it can bring, botched implementation can also derail your finances.

When choosing ERP software, you should cover a range of questions with the company’s strategic stakeholders. These include things like:

• How would the ERP system accommodate my business needs or enhance my processes?
• Is the software designed for my business scale?
• Are there industry-specific ERP solutions available for my use case?
• Does the system offer sufficient scalability down the line?
• Does the ERP’s price, cost of running, and implementation provide sufficient ROI to justify adoption?
• Does the solution provide sufficient traceability to satisfy my compliance requirements?
• Is the system intuitive enough for my employees to use?

For more info, check out our list of the top 10 mistakes small manufacturers make with ERP software.

Challenges of ERP software migration

As mentioned, migrating your entire productivity system to a new software is challenging, even if everything goes right. Here are a number of common challenges you might face when starting the ERP migration.

• Resource availability and avoiding downtime. Successful ERP migration projects require significant time and human resources. On average, successful ERP migration can take anywhere from a few months to a year, depending on business complexity. Allocating the right people and sufficient resources is essential to prevent compromising daily operations and ensuring business health.
• Implementation complexity. ERP implementation is demanding in its own right. Coordinating workflows and configurations across multiple departments incurs both technical and logistical complexity. However, migration incurs added complexities because it requires transitioning from your old system and launching a new one simultaneously.
• Adapting vs. reimagining business processes. While challenging, ERP migration presents an opportunity to overhaul inefficient workflows. Consider whether it makes sense to adapt the new system to fit your current processes or take the opportunity to optimize certain operations around best practices built into the new software. 
• Compliance concerns and data security. Transferring sensitive business data between systems can expose your company to security breaches or compliance violations. It’s vital to ensure that the migration process meets relevant regulatory standards. Data must be securely extracted, transferred, and validated with proper encryption, role-based access, and documentation to maintain integrity and accountability.
• Change management. ERP migration inevitably entails stress for employees.  Proactively managing internal resistance, communicating benefits, and providing training and support are key to a smooth transition.

The importance of ERP data migration

Data migration is one of the most critical topics in ERP migration, and it presents its own set of challenges. For instance, data from a legacy system must be reformatted to ensure compatibility with the new software and any third-party software you plan to use, such as a CRM (customer relationship management) or eCommerce app. Data quality issues, such as partial or outdated data or non-standard formats, must also be addressed. The list goes on.

Generally, the data in an ERP system can be divided into two categories:

• Master data is information about processes, items, and other non-transactional data necessary for running the business.
• Historical data is the history of business transactions and events processed by the system.

Master data migration is essential, and usually involves restructuring to match the new system’s logic and new ways of working.

Historical data migration, regardless of systems, is a very time-consuming project. It’s seldom easy to do, and can usually be partly migrated at best. Historical data migration inevitably requires an effective data archival strategy.

The steps of ERP data migration

1. Data mapping and analysis. Understand your current data landscape, identify and choose what data sets to migrate, what to archive, and what to discard. Focus on core master data like customers, products, bills of materials, and suppliers.
2. Data cleansing and transformation. Standardize formats, remove duplicates, and correct errors to ensure data quality and consistency. Then, reformat and align existing data fields to match the structure, constraints, and requirements of the new ERP system.
3. Security planning. Secure the migration process with sufficient encryption and access controls that adhere to required regulations. Furthermore, create a secure backup of your data to negate the chance of data loss.
4. Migration execution. Depending on the system’s capabilities, execute the migration using built-in ERP data import tools or custom scripts. Make sure the data is loaded in the correct format and follows predefined mappings. Larger or more complex migrations may also benefit from automation or middleware to reduce manual errors.
5. Validation and testing. After the migration, test for formatting issues and data integrity to confirm that the records were transferred correctly. Then, carry out broader tests for complete workflows from order processing to production planning and shipment handling. This ensures the new system will function reliably in real-world scenarios.
6. Documentation. Each stage of the data migration process, including decisions, changes, and mappings, should be documented to support auditing and future updates. Proper documentation also helps future-proof the system and simplifies troubleshooting or further migrations down the line.

Modern ERPs usually have built-in data import features, allowing large amounts of formatted data to be imported through CSV or other formats. In cases where large-scale migration of complex data is a given, it might be worthwhile to consider import features as an ERP selection criterion. 

ERP migration checklist for small businesses

Breaking the migration process into concrete steps helps manage it more effectively. No two implementations are the same, but the core sequence mostly is. Below is a step-by-step ERP migration checklist, grouped into key stages.

Phase 1: Stakeholder alignment and process mapping

1. Communicate with stakeholders.
Involve key stakeholders from every affected department early in the migration process. Clear communication will align expectations, help surface potential risks, and gain buy-in for a smoother transition.

2. Map and evaluate existing business processes.
Document current workflows and identify inefficiencies or gaps with your team. This is essential to ensure that the new ERP system doesn’t replicate existing limitations but improves operational efficiency.

Phase 2: ERP research and migration planning

3. Research and choose a suitable ERP vendor.
Evaluate ERP vendors based on your business size, industry, and requirements. Consider functionality, scalability, integration capabilities, total cost of ownership, and vendor support quality.

4. Develop a migration plan and appoint a team.
Establish a detailed project plan with timelines, milestones, key metrics, and defined responsibilities. Then, appoint a cross-functional migration team to lead the planning and execution of the process. The team should include at least one employee with a comprehensive understanding of your systems and sufficient time allocation to dedicate to the migration. External help from consultants should also be considered if necessary.

Phase 3: Data preparation and migration

5. Prepare your data migration strategy.
Decide which data is essential, what should be archived, and what can be left behind. Focus on clean, relevant master and operational data that will support your business moving forward.

6. Migrate and ensure data validation.
Migrate the selected data securely using ERP import tools, middleware, or automated scripts, then validate formatting and data accuracy. Run functional tests to ensure the migrated data supports real workflows in the new system.

Phase 4: Implementation and go-live

7. Implement the new system and test everything.
Roll out the new system in phases or all at once, depending on your resource availability and use case. Test the ERP database and functionalities separately, and also for complete workflows. Be sure to address any arising issues before going fully live.

8. Go live with full data.
After successful testing, switch to the new ERP. Consider running both old and new systems in parallel for a brief period to catch any hidden issues and ensure continuity. However, we recommend setting a viable deadline and only processing new orders in the new system from there.

Phase 5: Training and change management

9. Change management and post-launch support.
Support employees through the transition with clear communication and active problem-solving. Monitor system performance closely post-launch, collect feedback, and be ready to fix early-stage issues promptly.

10. Continuous training.
Provide targeted training to all users, tailored to their roles and workflows. Make sure training covers both basic system navigation and role-specific tasks, such as order entry, inventory management, or reporting. Consider ongoing refresher sessions and support materials to help staff adapt over time. Well-trained staff are essential for long-term ERP success.

The benefits of cloud ERP solutions

Cloud ERP platforms offer small and growing businesses a wide range of practical benefits compared to traditional on-premise setups.

For one, they remove the need for costly hardware and reduce dependence on in-house IT teams. Instead of maintaining servers and IT infrastructure, you pay a predictable subscription fee, simplifying budgeting and usually lowering the total ownership cost over time.

Cloud-based ERPs also continuously maintain and improve their software. Updates happen automatically in the background, meaning users can access the latest features, security fixes, and performance improvements without disruptions or needing to schedule downtime.

Another field where cloud systems shine is scalability. Growing your business is much easier if there’s no need for manual server upgrades or significant infrastructure changes. When you need more functionality, a higher subscription tier is usually the only significant cost of scaling the system. Because of their open-ended design, cloud systems prioritize user experience with intuitive interfaces, mobile access, and easy onboarding, making them more accessible. 

Finally, cloud solutions often offer enhanced data security. Reputable vendors invest heavily in cybersecurity, data encryption, backups, and compliance certifications, often beyond what a small or mid-sized business could manage on its own. 

8 ERP migration best practices

Successful ERP migration hinges on strategic planning and disciplined execution. Based on field-tested insights and MRPeasy’s extensive implementation experience, here are eight best practices to guide your transition.

1. Classify your data.
   Take time to logically name and code items, define product groups, and structure bills of materials and routings. Making changes after going live is extremely difficult, so make sure your data structure is future-proof from the start.
2. Test thoroughly and keep testing separate from implementation.
   Never skip or rush the testing phase. Use clean, simplified data for initial testing and save real data for the implementation phase. Separate test and live environments help avoid errors that are difficult to clean up later.
3. Involve and train employees.
   People are just as critical to success as software. Designate key users, offer systematic training, and ensure everyone understands their responsibilities. Empower trained staff to support others in the organization.
4. Develop clear SOPs.
   Create standard operating procedures that reflect how tasks will be performed using the new ERP. Documenting these practices ensures consistency and makes onboarding and scaling easier down the line.
5. Be realistic about customization.
   Instead of customizing the ERP to fit every edge case of your current process, consider adapting some workflows to match the system. This often leads to better long-term outcomes and less complexity.
6. Keep the old system running for a while.
   Parallel operation can be a lifesaver in the first weeks after going live. It allows you to double-check accuracy and catch issues without interrupting your operations.
7. Don’t import historical data.
   Migrate only clean, current, and usable data. Finalize open orders in your old system and start fresh with new ones in the new ERP. This avoids clutter and confusion.
8. Don’t delay the inevitable.
   The longer you wait to migrate, the more tangled your systems and processes can become. If ERP is clearly the right step for your business, plan deliberately and move forward without hesitation.

Key takeaways

• ERP migration is a strategic process for replacing enterprise software. It involves transitioning from an existing system, either outdated or underperforming, to a new one while moving critical data, configurations, and workflows between the two.
• Common reasons for switching ERP providers include outgrowing current tools, needing better integrations, or seeking higher cost efficiency. Modern ERP solutions offer broader features at lower costs, making upgrades more accessible.
• Data migration is the most complex part of ERP migration. Businesses must carefully classify, cleanse, and map their data before importing it into the new system. Migrating only clean, relevant master data ensures accuracy, while historical data should be archived unless essential.
• Cloud-based ERPs offer higher flexibility and return on investment than on-premise solutions by eliminating the need for on-site infrastructure, providing automatic updates, and scaling more easily with business growth. Enhanced security, mobile access, and intuitive design make them ideal for small manufacturers.
• ERP migration success depends on good testing environments, staff readiness, well-documented procedures, and keeping customization to a minimum at first.

Frequently asked questions (FAQ)

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