Many companies think that an ERP software selection project is about simply choosing an ERP software package. However, there is much more to it than that. There are five key things that should be considered during an effective ERP software selection process. Some of these may seem like common sense, but it’s surprising how many companies overlook these important items.
Five Key Things to Consider in an ERP Software Selection Project
- Functional Fit. This is the probably the most obvious one, but it’s an area that is important to thoroughly address. As part of our proprietary PERFECT Fit ERP Software Selection methodology, we encourage clients to develop detailed business process workflows and demo scripts for vendors to demonstrate to. Vendor demos should be less focused on being a sales presentation and more on being a “day in the life” simulation based on your company’s specific needs. Scripted demos are one of the best ways to do this.
- Technology Fit. Most “hidden costs” that haunt companies during implementation are related to poor technology fit. It is important to understand what skills sets, servers, databases, PCs, etc. will be required to support any potential ERP solution, as well as the corresponding costs.
- ERP Industry Analysis and Vendor Viability. It is important to understand the ERP industry, as well the stability and financial viability of potential vendors you are considering. On one hand, it is good to do business with an established vendor that you know will be around to support your ERP system in the future. On the other hand, there is some value that can be realized from doing business with a smaller or less established ERP vendor that may provide better service and focus than a larger firm. Some of our most successful client implementations have involved smaller, niche ERP vendors that were willing to bend over backwards to make the project a success.
- Total Cost of Ownership and Business Case Analysis. According to our research, the average ERP project goes over budget by 23% (click here to learn more about our ERP Benchmark Research). It is important to fully understand the cost commitments that you are getting yourself into. Keep in mind that during the ERP selection process, it is in the software vendor sales reps’ best interests to downplay the cost and risk of their solution. It is your job to make sure you are validating and identifying a more realistic cost picture. In addition, you should also understand and quantify the potential benefits that an ERP solution may bring to your organization.
- Implementation Plan Analysis. Again, it is important to get a realistic picture of implementation duration and resource requirements. Your implementation plan and expected duration should include items that vendors are often not involved with (and therefore don’t include in their implementation estimates), such as infrastructure migration, data migration, conference room pilot, training, testing, etc. Many of these items are on the project’s critical path and can create delays if they are not appropriately accounted for.
These are just a few of the key elements of a successful ERP software selection process. Click here to review our entire 10-step process for ERP software evaluation and selection.