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ERP Selection Methodology Success

ERP Selection Methodology

ERP Selection Methodology refers to the process and steps you take to evaluate and choose a new Enterprise Resource Planning System. Wikipedia defines a methodology as “A documented process for management of projects that contains procedures, definitions and explanations of techniques used to collect, store, analyze and present information as part of a research process in a given discipline.” This seems to be very appropriate when it comes to evaluating ERP Software. Your ERP Selection Methodology can determine the success or failure of your subsequent implementation.

If you choose to forego an ERP Selection Methodology when evaluating new systems, you will run into problems. The most prevalent issue is the ERP Vendors driving the selection process. You, as the buyer, end up hanging onto their coattails and ultimately go where they lead you. A proper ERP Selection Methodology will lead the vendors down your path and provide you with the details you need to make an informed decision.

This ultimately affects the outcome of your implementation in a number of ways. If you have chosen a software that fits your business, then the implementation will be easier due to the fact that you will not need to bend your processes dramatically to make the software effectively process your transactions. If however, you end up choosing an ERP software that does not fit your business processes very well, you will have to change your business processes and could ultimately create a situation where your unique value in the market is diminished. For example, if you have to change a process that previously required two steps, but now requires five steps in order to ship a product, this could lead to delays and bottlenecks and can potentially can create customer issues.

An ERP Selection Methodology Example

ERP Selection Methodology
A typical ERP Selection Methodology Flow

The following is an example ERP Selection methodology that you can model.  It is not a complete process and should be used for reference purposes only, however, it does show typical tasks that are involved in selecting an ERP software solution.

Phase I – Strategy and Requirements Definition

This phase develops the vision for the future ERP system taking into consideration the key drivers for the company from both inside and outside the company.

The following are the major tasks that occur in this first phase:

  • Develop a clear understanding of your current business and information systems
  • Interviews are scheduled and held to understand the company’s future plans and focus
  • Working with top management, develop the top four or five strategic objectives required to achieve the company’s plans for the future
  • Review technology status and trends based on your understanding of the “best of class” organizations
  • Develop a high-level “Future State” model that describes the attributes of the future system required to support the company’s vision for the future.
  • Develop a detailed list of specific and distinctive requirements that must be supported by the new ERP software system
  • Develop a Long List (8-10) of ERP Vendors based on initial understanding of your requirements
  • Research each vendor’s product functionality and features as well as key vendor issues/deficiencies to arrive at the short-list finalists
  • Identify the two vendors who shall provide an end-to-end demonstration of how they will support your future vision
  • Optionally, evaluate ERP software Value Added Resellers (VARS) for each candidate software to participate as potential implementation partners
  • Based on the requirements and business processes, a demonstration script is developed
  • Optionally, develop a high-level business case to justify the investment in a new ERP system

Phase 2 – System Evaluation and Selection

This phase is the detailed analysis and comparison of the two software vendors chosen above.  Your role as project manager is to ensure that the information provided by the vendors during their demonstrations, functionality and features discussion, hardware configuration recommendations and reference assessment is as accurate and factual as possible.

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During the vendor evaluation phase, the following key tasks need to occur:

  • Review the demonstration script with the selected vendors
  • Create scoring sheets based on the demonstration script
  • Manage the vendor demonstrations closely.  Work to avoid exaggeration and embellishment and keep the demonstrations on course
  • Score and rate the vendors
  • Conduct reference checks
  • Visit and interview vendor customers at their site
  • Rank the two vendors based on all the relevant business and technical criteria
  • Review vendor proposals and determine key areas for negotiation
  • Hold software vendor contract negotiations
  • Prepare a high-level implementation plan, schedule, and budget
  • Communicate to vendors the selection outcome

ERP Selection Methodology Summary

As stated above, the ERP Selection Methodology shown is only an illustration of the various tasks that need to occur and should not be used as a final template for your selection.  Rather, use it as a checkpoint for ensuring you do not miss any key tasks in your own ERP Selection Methodology.  Spend the time to build out your plan and research other alternative approaches.

When building your personal ERP selection methodology, be sure to keep in mind that you are the one who will be driving the project.  Not the vendors.  If you follow the ERP selection methodology closely, you will have a higher chance of  bringing the selection in on time and within budget.

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ERP Selection Methodology Guide to Evaluating Accounting Software Demonstrations

ERP Selection Methodology

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ERP Comparison Tips For Finding Your Ideal System

ERP Comparison – Finding Your “Best-Fit” Software

An ERP comparison is usually one of the first tasks that people take on when looking for a new ERP solution. But what is it that you should be comparing? Is it the feature set? Is it the pricing? Is it the support offerings? There are a lot of various components to choosing the best ERP software system. In your ERP comparison, is it possible to find the best-fit software for your feature needs, but totally fail on the software company’s availability to deliver or support. You may find the software that is the right price, but may not meet your functional needs.

Finding the right software in an ERP comparison is like finding the right spouse. There will be a lot of courting and a lot of flirting, but there are many factors that can affect the relationship. You can think that they are the perfect one for you and yet there is the potential that a few years from now, you will be looking all over again. Carrying the analogy further, if you can find the right one who not only fits your requirements and is committed to not only your short-term happiness, but also is fully committed to making the relationship work, then you will have a successful marriage.

This is so true of an ERP software vendor’s relationship with the client. If in your ERP comparison activities you find the vendor who is truly committed to your success and the success of the mutual relationship, then you will have someone you can work with even when times are difficult. This should be your underlying focus of the ERP comparison activities.
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Key ERP Comparison Factors

There are a number of things that you should evaluate in your ERP comparison, however here are some of the top evaluation criteria you should consider:

1. What is the platform and what is the support for this platform, both from the vendor and from your staff?
When we are talking about platform, we are really referring to the operating system and the database that you will be using with this system. If you are looking at Windows for the operating system and MS SQL server, you are looking at a very common platform with many options for getting support. If you are looking at UNIX and Oracle as your operating system and database platform, then you are again choosing wisely.

However, if you do not have the internal support for the platform you are choosing then your training costs will be increased. But don’t let this be the only consideration. If you need to do extra training to get the right solution for your needs, then do so. If you can get a solution that your IT department can support immediately, and it fits your other ERP Comparison requirements, then make that choice. The main point is that you want to find a solution that fits overall.

Now, you have another platform consideration option to factor into your ERP comparison. Cloud computing. There are more and more ERP vendors who are offering a hosted solution. But keep in mind that this may only be a hosted server, or it may be a true multi-tenant environment where upgrades are easily maintained. This will require little if any internal IT support so it could be a less expensive solution to support. It could also have a negative impact on IT moral since you would be taking responsibilities away from them. The key solution here is to make sure that IT is involved from the beginning of the ERP Comparison when it comes to platform discussions. Early decisions on the platform often determine potential vendor candidates.

2. How do the prospective systems meet your functional requirements?
When most people perform an ERP comparison, they look at the functional requirements. For example: “Does the system offer the ability to issue A/P laser checks?” or “Can the system freeze stock levels for inventory processing?”. These are just a couple of the potentially hundreds of functional requirements with which you will be screening the erp software candidates.

A good way to establish requirements in your ERP comparison is to focus on the uniqueness of your business and ensure that the system supports those specialized functions. Too often people spend a lot of time and effort on documenting the trivial… “Can the system issues a/p checks?” or “can the system do double entry accounting?” Okay, that was an oversimplification, but you should see what we are driving at. The questions to the software providers should be along the lines of “Can the system support a third-party logistics integration?” or “Does the system support lean manufacturing in project based company?” The more focused on your specialized business you can write these questions, the better the differences between the various systems in your ERP Comparison will be demonstrated.

3. How well does the vendor’s support meet your needs?
As mentioned earlier, an ERP comparison and selection is like getting married. And the support agreement is your assurance that when times are difficult, that the vendor will be there to support you. Make sure you consider the potential problems that you may encounter. Will you need 24 hour support? If you are a global company with people working around the clock, you may need it. If you are a single location with 9-5 hours, then a standard 12 hour support may work for you.

Find out the type of support representatives that they have and the levels of training. Understand the levels of support escalation. Get and read the service level agreement documents. All of these will give you an understanding of how well you will be supported.

Find out about upgrades, patches and other software enhancements. What is the standard release cycle? Is it yearly, bi-yearly, or quarterly? What will be needed from your team to make sure the system is at the latest revision? If you get too far behind in patches and upgrades, you may fall out of the support agreement terms. Understand what you are getting into.

4. How true is the vendor’s management commitment to your success?
This is a bit subjective, but during your ERP comparison, meet with the provider’s service management. Find out how committed they are to you as an individual client to ensure that you are successful. Find out how easy it is to engage the service division’s management with an escalation should you have a support issue.

You want to make sure that the vendor isn’t just moving licenses, but rather has a desire to make you successful.

5. Does the price fit your budget? (short and long-term)
Pricing is always a sticking point. Make sure that you negotiate and negotiate well. During the negotiation phase of an ERP Comparison, the vendors are often expecting to drop the prices by double-digit percentages. Don’t leave money on the table. At the same time, realize that there is a final number that they are willing to come to and if you are asking for more than that, they won’t budge.

Don’t forget to factor in the costs of hardware and network upgrades into your budget. These can have a significant impact on your budget. Too often people only focus on the software costs and do not factor in the hardware and upgrades.

That covers up-front costs. In your ERP comparison, make sure you understand the long-term costs, including software license renewals, support renewals, and if there are any limits to the amount of price increase on the contracts. You likely negotiated a good up-front cost, but what about the ongoing costs?

Other ERP Comparison Considerations

There are other ERP comparison considerations to think about, but many are subjective and really up to you to evaluate, such as how well do you feel you work with the vendor? ERP suppliers who are easy to work with often are easy to work with in the implementation. Get a feel for the company culture. Does it fit with your company’s values and attitudes? Sometimes a company with a more easy-going attitude will not work well with a rigid ERP provider. Understand the personality of the company you will be married to for at least the next 7 to 10 years or more.

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Guide to Understanding and Comparing Accounting Software Price Quotes

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