Key Issues with ERP Selection

January 28, 2010 | Donna Hedge Burns | Comments 0

Most companies select and implement an ERP system once every 10-15 years. So for most operational and IT staff, it’s something they only experience once in their careers. Here are few general rules to remember when selecting an ERP vendor. You and your team should keep these issues in mind throughout your selection and evaluation process.

* There is no such thing as a “one size fits all” ERP system, since each should be tailored to the needs of the individual company.

* For many, risk mitigation is a priority in the ERP vendor selection process. This is a valid goal. Careful planning, clear communication rigorous vetting of candidate vendors is a good initial step in minimizing the risk of an implementation disaster.

* Realize that getting people to change how they do their daily jobs is the most formidable challenge in getting any ERP system successfully implemented. That’s why it is critical to have high levels of involvement in your company from the beginning.

* All products have specific strengths and weaknesses that are more dependent on your objectives than they are on technology.

* Most systems are either built to specialized needs or have evolved from a specialty application, meaning they are naturally stronger in some areas and weaker in others.

* Beware of any software vendor that says their suite of applications can totally fulfill all of the unmet needs your organization has for an ERP system. There is no perfect fit—every company’s needs are slightly different and customization is always required.

* You might need help. It’s fine to solicit help from a third-party consultant, but be diligent about who you choose. Be sure that they really are totally impartial, vendor neutral and objective. Many can bring certain biases or prejudices to the party.

* Beware of turnkey implementation promises. You should be heavily involved in the implementation so that you can be sure you will derive the value you paid for.

* Your final selection will more than likely come down to certain intangibles, such as your level of trust with one vendor versus another.

* Ask for several references in your specific industry, and then visit those implementations (if possible) in person to see how they are using the ERP system to attain their goals.

Finally, there is your team. Remember that an ERP system will touch or affect almost everyone in your company at some point. Almost every business function will need to interface with, be directed by, supply information to, or extract decision-support information from your system.

Teamwork_lumaxart Your team will need representation from all areas that will be touching the system in their day-to-day activities. Their intimate knowledge of inadequacies and strengths with existing processes will be critical to your success. The teams and their respective departments need to have a high level of ownership in the design and rollout to ensure that the ERP implementation is a success. This is the only way you will overcome the resistance to change in your organization during the selection process. People have to trust the system to use it, and that’s much more likely to happen if the system is designed to fit their specific needs. Stay focused on unmet needs to make sure the implementation is as relevant as possible to the greatest number of people.

An important “first” on the team agenda is to identify what capabilities need to be prioritized, based on an assessment of unmet strategy and process needs within your company. This will help you with your first cut in the selection process and to prioritize vendors who can in fact meet these needs. Having a tight focus on the needs you are trying to respond to will enable you to quickly cut through all the whistles, bells, frills and glitz that are irrelevant to your organization’s getting to its goals. Avoid making requirements a “shopping list” based on whims and fancy rather than absolute unmet needs. Ensure you don’t have conflicting requirements.

Once you have established the basic system requirements, you will need to establish some budget parameters related to the overall costs associated with the new system. Keep in mind that your budget will need to cover more than licensing fees. You will also have training and implementation expenses. These two items can easily outstrip the licensing fees themselves.

This is an edited excerpt of “Making the Smart Choice — A practical guide to evaluating ERP systems and vendors.” To read the full paper, download the form here.

Images:

Working Together Teamwork Puzzle Concept by lumaxart

Share and Enjoy: