ERP Selection Guide

What is ERP Software?

Enterprise resource planning (ERP) software is an integrated suite of applications designed to manage business functions, such as finance, human resources, sales and manufacturing.

How to Select an ERP System

You didn’t stumble upon this guide by accident. Perhaps you are looking to purchase new ERP software. Maybe you are in the middle of implementation and want to make sure you are on the right track. Maybe you are just a curious person. Regardless of the reason know this: selecting an ERP system can be a daunting task.

12 Steps for Selecting an ERP System

Many organizations invest in enterprise software simply because other organizations are doing so. While keeping up with the competition is smart, you need to understand the specific ways ERP will improve your business.

We recommend clearly defining your business goals prior to ERP selection so you can more effectively gather ERP requirements.

For example, if your organization wants to improve its customer service, one of your ERP requirements might be the ability to automatically order inventory when it reaches a certain level and automatically update this information for the sales department. 

(If you’re evaluating CRM functionality to improve your customer service, you may find our ERP vs. CRM blog post helpful.)

Once you’ve clarified your business goals, you should define how new technology will help you achieve these goals. This is where the value of independence comes in. An independent ERP consultant helps protect the integrity of your selection process by providing vendor-neutral guidance and ensuring your business case is driven by your specific needs—not referral relationships, reseller incentives, or implementation quotas.

Which Companies Use ERP Systems?

Historically, only large organizations were ERP customers. Today, organizations of all sizes, across all industries use ERP software. For example, many public sector organizations are pursuing digital government initiatives to modernize their operations with ERP software. In addition, the mortgage banking industry is using ERP software to improve their loan process management.

With the huge leaps in technological advancement and lowered costs to entry, ERP software is becoming more affordable, flexible and industry-specific, allowing small and mid-sized organizations to modernize their technology.

In fact, SAP and Oracle are not just for large enterprises anymore. These vendors have developed and acquired niche solutions that are affordable for smaller organizations.

A perfect example of this is when Oracle acquired Netsuite in 2016.  These types of mergers and acquisitions lower the barrier to entry while opening up more support and integration options.

Chances are, your current IT infrastructure has pain points and needs to change to support your organizational goals. An ERP selection and implementation is only part of this strategy, but is a large part and shouldn’t be overlooked.

In addition to deployment options, you’ll need to consider integration strategies. One approach is implementing a single ERP system with all the functionality you need. This is often the simplest approach requiring the fewest technical resources. However, it may not enhance your competitive advantage. Oftentimes, you will need different enterprise systems for different functional areas.

For example, a dedicated supply chain management system is often critical for organizations with complex distribution networks, high inventory variability, or multi-site manufacturing environments. In these cases, advanced demand planning, warehouse optimization, and transportation management capabilities may exceed what a core ERP module can realistically support.

Do you have a customization strategy?

While every ERP system requires some amount of customization, you should strive to minimize it. This will make upgrades a lot easier in the future.

It is essential that you have your customization approval process documented and adhere to it. If not, you may experience scope creep. We have seen this happen to dozens of companies, and people do lose jobs over it. Scope creep can easily start to cost tens of thousands, if not hundreds of thousands, of dollars.

When deciding whether to fulfill a customization request, consider whether you absolutely need that functionality and what it affects. In many cases, you may just need to train employees.

A selection team assists the project team with software requirements gathering and attends ERP vendor demos. The team should include at least one member from every department, business unit and location.

Also, be sure to include subject matter experts (SMEs) who understand how the business operates in relation to their particular department. They should understand both the upstream and downstream processes of their functional areas. 

Your selection team will have decision-making power, so you want people who aren’t afraid to share their opinions, even if these opinions are unpopular. You can’t identify pain points unless people are honest about their day-to-day challenges.

Who Should be Your ERP Project Manager?

We recommend designating one of your selection team members as the project manager.

The project manager will be responsible for keeping the ERP selection process moving and assigning roles and responsibilities. Strong project management ensures your selection (and eventually implementation) stays on time and on budget.

What if You Don’t Have Enough Resources? 

Many organizations face resource constraints when building an ERP project team to assist with software selection. There are several ways to address this challenge depending on your unique situation:

• If your organization doesn’t have sophisticated internal IT resources, consider hiring external IT resources.
• If your organization already has sufficient internal IT resources, focus on backfilling these roles with temporary contractors.
• If your organization has identified an ideal ERP project manager, but they are having difficulty balancing their day job with the project, you may want to backfill their day job. Strong ERP project management is important, and an internal project manager has the intel necessary to make difficult decisions when your team faces challenges.
• If your organization lacks ERP selection experience, then hiring an ERP consultant is essential. An independent advisor can structure an unbiased evaluation process and ensure that software decisions are based on functional fit and long-term scalability rather than sales pressure or partner affiliations.

Cross-departmental requirements gathering workshops are an essential component of ERP selection.

ERP software is ultimately a business tool, and an ERP implementation is a business initiative. That means ERP selection should be driven by operational leaders who understand process breakdowns, compliance risks, and performance gaps—not by IT teams documenting system features.

We recommend dtributing requirements gathering workshop guides to aid team members in starting conversations with their respective departments.

As ERP selection consultants, we have experienced the full gambit when it comes to companies being prepared vs. unprepared. An unprepared requirements gathering team will cost you significantly more money, not only in terms of hours lost explaining what is happening, but you also increase your consulting fees as your consultants have to wait for you to get coordinated.

What to Focus on

During requirements gathering workshops, you should focus on the “what” and not the “how.” While you do need to know each step in a process, you don’t need to know what buttons employees push to complete each step.

Business process mapping is a good tool to use when gathering requirements on how your business operates. Using a process map, you can extrapolate business requirements. 

When determining which requirements are most important, ensure team members understand that needs and wants are not the same. Split requirements into three groups:

Define Your Requirement Priorities

If a requirement isn’t absolutely necessary, it should not determine your choice of ERP software. The final list of requirements should be a fair representation of each department’s needs.

This stage focuses on identifying where breakdowns occur today and validating that your requirements address the root causes. If a requirement cannot be traced to a specific pain point, risk exposure, or strategic objective, it may not belong on the critical list.

This phase is not about fully designing future-state workflows. Detailed reengineering should only occur once software constraints are understood.

Instead, focus on:

• Where cycle times break down

• Where data becomes unreliable

• Where exceptions routinely override standard process

By identifying pain points and validating requirements before engaging vendors in deeper evaluation, you can ensure that selection decisions are anchored in operational reality rather than abstract feature comparisons.

While you won’t be migrating data until implementation, now is the time to start planning and assigning data ownership. Without reliable data, new ERP software cannot provide value to your organization.

Your data likely isn’t ready for migration.

Your data may be spread across multiple systems that each use different structures and formats. To account for this complexity, you should establish a data management strategy as early as possible. This strategy should define data ownership, establish data cleansing standards, identify legacy system dependencies, and outline how master data will be standardized before migration.

Data reliability is especially important for AI readiness. If your IT roadmap includes AI-powered ERP software, then inconsistent master data and transaction errors will undermine model accuracy and erode executive trust in system-generated insights.

Before building a long-list of ERP systems, you’ll need software selection criteria. These might include price, corporate values, industry focus and anything else your selection team deems relevant. Most importantly, your ERP software selection criteria should include your prioritized business requirements.

Examples of ERP Software Selection Criteria

Industry Experience

The ERP vendors on your long list should have multiple references from organizations similar to yours that have implemented similar functionality. Checking references helps you validate vendors’ claims about industry-specific functionality. Remember that software vendors aren’t going to provide “bad” references so be sure and do a little research outside of what they provide.

Cost

Scalability

You want an ERP system that can grow with your business. For example, increasing your customer base increases your required number of users and transactions. When evaluating ERP software scalability, look at vendors’ pricing models to determine the cost of additional users.

Vendor Viability

If a product is lacking important functionality, it probably hasn’t been recently updated, and the vendor may be planning to sunset it. Even if the vendor continues to support this product, the outdated functionality will hurt your organization in the long term. You’ll likely have to invest in extensive customization to keep up with your competition.

Innovation

Innovation should be evaluated based on measurable product investment and real customer adoption—not PowerPoint slides or roadmap promises. 

When it comes to buzzwords, like artificial intelligence (AI) and IoT, different vendors have their own definitions of these terms. While some vendors consider AI to be a system that autonomously learns and solves problems, other vendors may simply consider AI to be an automated workflow.

Ask vendors to demonstrate live use cases and clarify whether advanced capabilities are native to the platform, require additional licensing, or depend on third-party integrations.

What are the Top ERP Systems?

While “SAP vs. Oracle” is a popular search term on Google, that doesn’t mean those vendors are the best fit for your unique processes. When looking at lists of top ERP systems, be sure to differentiate between lists based on popularity and lists based on functionality.

Independent ERP experts create lists based on their experience implementing various systems across a variety of organizations.

For example, if you’re a manufacturing company looking for an industry-specific solution, there are several niche products that may be a better fit than SAP or Oracle. Panorama’s ERP consultants have evaluated and implemented many lesser-known but highly-functional manufacturing systems, such as ECI Deacom and Priority.

To turn your long list into a shortlist, you’ll need to issue requests for information (RFIs), which outline your organization’s most important ERP requirements as well as your short- and long-term goals.

It’s possible that all vendors will say they can address all your requirements. In this case, you may need a independent third-party to read between the lines. Ask vendors how they address each requirement. Can they address it with standard functionality, or does it require configuration, customization or a third-party bolt on?

Another advantage of using an independent ERP consulting firm is that they can act as a buffer so you don’t end up on the receiving end of hardball sales tactics. 

For example, they can push back when vendors introduce deadline pressure tied to quarter-end discounts, expand scope during demos without acknowledging cost implications, or frame bundled functionality as “included” when it actually requires additional licensing and services.

By filtering out sales noise and clarifying what is truly standard versus what carries cost and risk, you can narrow your options based on functional fit, implementation complexity, and long-term viability.

Even after you’ve spoken with vendors on the phone, you may still have a hard time trusting that they can support your processes. This is where ERP demos are useful.

The first step is sending requests for proposal (RFPs) to each of your shortlist vendors asking for specific information on solutions, pricing, and implementation plans.

At the same time you’re sending RFPs, you should also send demo scripts. We recommend writing your own demo scripts to ensure vendors create personalized demonstrations that address your business requirements. You may also want to offer up a small set of actual data so the demo has meaning to employees.

While vendors are preparing, it is important to keep in contact with them. Fairly often, we see vendors come in unprepared and the demo becomes the standard sales demo. YOU DO NOT WANT THIS. Your organization is unique, and the demo should be as well.

After each demo, your selection team should qualitatively and quantitatively evaluate the software’s ability to address each business requirement. If the vendor did not demonstrate the capability, then mark it accordingly. Don’t just take their word for it.

Once you have the demo scores and the RFP responses, you should conduct technical fit assessments. For each system on your shortlist, make notes on exactly how it meets each business requirement.

Ultimately, this assessment will help you develop an organizational change management strategy and plan, outlining details such as how you will communicate with employees and what specific training each employee needs.

The goal of ERP vendors is to sell. They don’t care as much about setting realistic expectations regarding budget and timeline. If you want realistic expectations, you should benchmark against other projects similar to yours.

Another way to set realistic expectations is to hire an independent ERP consultant with ERP contract negotiation experience. These experts are useful when you’re trying to understand and compare vendors’ statements of work.

Look for an ERP negotiation team that will help you develop a negotiation strategy by clarifying which contract terms are most important to you. These experts may create a negotiation workbook providing apples-to-apples comparisons between each system, and they may also conduct a long-term total cost of ownership analysis, including factors such as licensing structures and resource rates.

Pause after the ERP selection process to ensure you’re fully prepared for implementation. Does your team understand your future-state processes well enough to answer design questions during the technical implementation? How effective have your change management activities been at reducing employee resistance?

While your selection team may have been enthusiastic about requirements gathering and process improvement, they may become resistant during implementation. Now is the time to ensure they support the implementation plan by allowing them to provide input.

Other implementation risks to prepare for include:

• Scope creep
• Resource changes
• Early schedule slippage and unmanaged change orders
• Weak project governance and stalled decision-making

Those are some of the top risk areas we see in our ERP project auditing work during the implementation phase.

The Value of a Thorough ERP Selection Process

This step-by-step ERP selection process will help you select the right software system and maximize your business benefits. Use this guide as your ERP selection checklist to help you budget and plan for all essential activities. 

Contact us below to see how Panorama’s independent ERP consulting team can help you with your ERP selection.