Seven Steps To Choosing The Right ERP Solution

by Ian O’Toole, Senior Consultant at BSM

ERP SolutionNot all ERP (Enterprise Resource Planning) systems are right for all businesses. Scale, cost, functionality, technology and implementation partner are all key considerations when selecting an ERP system. Addressing the following seven steps can help to ensure you select the system that is right for your organisation.

1. Have a Clear ERP strategy
Before engaging vendors in a selection process your organisation needs a clear vision of what it is embarking on and what a system can and should deliver. Developing this strategy can be thought of as the start-up phase for the overall project. The strategy should clarify scope (functional, organisational, and geographical), expected costs and benefits, technology and any other constraints.

2. Assemble the Project Team
The project team for the selection project should represent all key internal stakeholders. This will help avoid biased definition of requirements and will also help to foster buy-in to the new system. The selection project team is likely to form the core of the implementation project team once the system is purchased.

3. Prepare Comprehensive Procurement Documents
Your selection process may include a number of iterations of procurement documents at increasing levels of detail (Requests for Information, Requests for Proposal, Invitations to Tender, etc.). The key points that these will seek to solicit from vendors are;

  • Accurate costs for the solution (based on user numbers, functional scope, level of integration and customisation, expected implementation effort, technical solution).
  • Functional fit of the system to the requirements. It is our experience that it is most effective to focus on what we term “differentiator requirements” in this process. These may be requirements that will deliver specific business benefits, relate to processes that are unique to your business or sector, relate to integration with other systems or might be considered non-standard to many ERP systems. Focusing on differentiator requirements means that you and the vendors are spending most of your effort looking at those aspects of the requirements that are either most valuable or most problematic or complex.
  • Vendor quality. This will relate both to the software vendor and the implementation partner (these may be different organisations). Factors that are important here include financial stability, track record (in your industry sector), and depth of experience within the implementation organisation.
  • Other specific constraints – such as technology. You may require a specific platform due to your internal I.T. skill base. You may require a cloud based solution.

4. Conduct Structured Demonstrations
At some point in your selection process you will want to view demonstrations of a shortlist of candidate systems. In order to compare like-with-like it is important to structure this process correctly. You should prepare and distribute scripted guidelines for the demonstrations ensuring you see the key functional areas that are important. Again this should consider the differentiator requirements, but should also give a wider sense of the system operation as well as “look and feel”.

It is important to structure the timing of the demonstration segments carefully to ensure that vendors cannot spend a long time demonstrating the parts of the system that work very well while glossing over weak parts. Your project team should score the tests in detail to ensure that all aspects are considered in your final comparison.

5. Perform Reference Checks
While you will have asked for reference examples in your procurement documents it is important to back up some of these references with visits or conference calls during the later stages of the process. This should be unaccompanied by (though arranged via) the vendor to ensure you are getting an accurate account.

6. Don’t Forget the Implementation Partner
At each stage of the process you should be assessing the implementation partner as well as the system. The implementation partner will work closely with you to implement the system and most likely will provide you support after you go live. A functionally rich system implemented badly may provide less benefit and cause more problems than a system with functional gaps implemented well.

7. Take Care When Finalising the Commercial Agreement
Once you have selected a preferred vendor you must finalise contract documentation. It is advisable to have master contract documents reviewed by your legal team as these are usually written in “legalese” and relate to topics such as Software Acceptance, Intellectual Property Rights, Confidentiality, Liability, Insurance, Warranties and Dispute Resolution. In addition to the master contract there should be linked documentation relating to Statements of Work, Software Agreements, Consultancy Agreements and Support Agreements. Take care reviewing these to ensure you are clear on who is responsible for delivering what and when. The vendor may assume you are responsible for something that you had not considered your responsibility. This is a common cause of conflict during implementation.

While much of the above structure is general good procurement practice some of the detail will require ERP specific experience and knowledge to help you avoid common pitfalls. It is advisable to get external independent help if you do not have this expertise in house. Executing a well-structured ERP selection process will help ensure you select the right ERP as well as reducing the risks for your implementation.

This blog was written by Ian O’Toole, Senior Consultant at BSM – Independent ERP Consultants. BSM provide independent services and objective advice to organisations who are thinking about upgrading or changing ERP systems. For further information on BSM checkout  http://www.bsm.ie

  • Have you ever considered about including a little bit more than just your articles? I mean, what you say is important and everything. But imagine if you added some great pictures or video clips to give your posts more, “pop”! Your content is excellent but with images and clips, this blog could definitely be one of the most beneficial in its field. Wonderful blog!

  • Hello admin, i see your site needs fresh content. Daily updates will rank your website in google higher, content is
    king nowadays. If you are to lazy to write unique articles everyday you should search
    in google for:
    Ightsero’s Essential Tool