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ERP Selection Best Practices Best Practices in ERP Software Selection


Skip the RFI

Most veteran ERP consultants agree: Skip the request for information (RFI) step. ERP vendors are highly competitive and some may answer yes to everything you ask just to get an opportunity to demo their product and thus render your RFI essentially useless. Instead, provide ERP vendors a list of prioritized and specific goals you expect the Enterprise Resource Planning to achieve for your company.

For example, your request for proposal (RFP) could say you want ERP software to deliver real-time spend analysis and you want to tie your supply chain to your manufacturing processes in order to achieve ‘just-in-time’ supply deliveries. This goal-setting language clarifies your objectives to ERP vendors so that they can clearly communicate the strengths and capabilities of their product and the ways you can benefit.

Conversely, if you name features or state too vague an objective you may unintentionally muddy the picture both for yourself and the vendors.

Lastly, use unbiased third-parties to help identify strong ERP vendors. At minimum, ask for vendor referrals from people in your industry, consult leading publications and review independent ERP evaluations by leading analysts or thought leaders in the space.

Balance Business with Technical Needs

Common wisdom rings loud in favor of putting ALL the emphasis on your business needs but it is a mistake to overtly ignore technical requirements in your ERP selection process. You need to know if the technology the vendor is pushing is legacy or modern. You need to know how much IT support is needed to operate and maintain it. You need to know if your hardware can handle it or if you’ll need to replace some servers or PCs. If you have to replace hardware, you’ll need to add these costs to the cost of the system otherwise you’ll break your budget.

It is vital to evaluate the full impact of a new ERP system on your business and to unearth all related costs before you commit.

When it comes to ERP, 'marry' your business and technical needs and treat them as equal parts of the whole.

Reality Check the Promises

ERP software demos can really sway a buyer’s decision. That’s why the demos all look so great. The vendors pour a lot of money and effort into making their products shine. However, it is fairly common practice for the canned demos to show highly tailored versions of the product rather than the base version. It's quite possible the demo'd ERP product or service does few or none of the things you are so impressed with in the demo – at least not out of the box or without some costly customization.

Do yourself a favor and skip the canned demo. Instead, present the vendors with an itemized list of the most important things you actually need ERP software to do and then ask them to demo the base product version on those items first. This way you can get a better feel of how the product will actually work for you instead of getting distracted by features which look impressive but don't deliver the most needed benefits.

Be careful that you do not present an unreasoned laundry list to vendors. Make sure you have a prioritized list of real needs and goals listed in order from 'must haves' to 'like to haves.'

Also ask for a detailed explanation of how the ERP software will address your needs complete with any need for customizations. It is not that customization is a bad thing; you just need to know if customization is necessary and if so, how much those customizations will cost to acquire and maintain.

Evaluate Cloud ERP

Most experts predict the Cloud will continue to take the enterprise by storm and therefore Software as a Service (SaaS) may ultimately become the most popular choice in almost every business software category. This applies to ERP as much as it does to customer relationship management (CRM). The lower installation and administration costs are part of the reason for the surge in popularity, but not all of it. Beyond those savings, SaaS slashes hardware and energy costs, deploys faster, allows businesses to focus on their core competencies and adds the benefits of 'going green' by cutting energy spends in local data centers.

In reality, your decision may not be cloud ERP versus on-premise ERP, but a combination of both. Many companies are achieving the best of both worlds with hybrid deployments. For example, enterprise companies are increasingly taking a 2 tier strategy by deploying on-premise ERP at headquarters, and cloud ERP at regional locations or smaller lines of business.

When selecting ERP software, consider your entire software platform and how legacy applications will integrate with one another to achieve your goals. In the end, as always, the best way to determine the platform that works best for you is to start with a solid list of what you expect ERP to accomplish.

Measure the Integration Effort

What’s worse than no ERP system in place? Multiple ERP systems simultaneously in play can be just as onerous. Therefore, your ERP selection process should focus on the need to bring all your business processes into one central system. Otherwise, you will not realize the full benefits of ERP: simplified access to information, in-depth reporting, meaningful data drill-downs, real-time transaction postings, single system updates, better vendor management and accountability, and ease of training to name but a few.

Be sure to ask competing ERP vendors if their software can seamlessly integrate all your business processes into one system. Understand how much, if any, customization is needed to achieve a unified business system. Get specific answers and ask for a demonstration and a trial so you can see how the software works and what precisely is involved with integration issues in your company.

One word to the wise: do not assume multiple applications from the same maker will easily integrate with one another. Such may not to be the case. Conversely, some brands will have difficulty aggregating data from software made by other manufacturers. Don’t assume all your software will or will not integrate; ask, test and verify.

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Your software delivery decision may not be cloud ERP versus on-premise ERP, but a combination of both. Many companies are achieving the best of both worlds with hybrid deployments.


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