The Nine Steps of ERP Selection

Enterprise Resource Planning / Financial
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Choosing an ERP solution may seem overwhelming, but it doesn't have to be.

 

Too many enterprises become blinded by a blizzard of technology features when selecting ERP products. The process can drag on, and employees and management suffer ERP exhaustion before the real work of implementation even begins. Choosing the appropriate product involves far more than comparing product features and prices. Adhere to a rigorous selection process to simplify ERP selection.

The Process of ERP Selection

The enterprise has made the strategic decision to invest in new ERP software. The process of selecting a vendor and implementing the software begins. This process involves a clear set of steps:

 

  1. Establish the business case basic requirements. ERP selection is a strategic decision that will have an impact on core business processes. Begin the process of selection by articulating the business case for a new ERP platform and by outlining the basic requirements for the system.


  2. Create a list of vendors. The list can contain vendors of all sizes and capacities. The purpose of the list is to determine what vendors exist in the marketplace. The list can be very extensive since most of the vendors will be eliminated from contention after the third step.


  3. Send out a Request for Information (RFI). The purpose of this RFI is to determine which vendors have applicable industry or domain experience and can serve clients in the enterprise's geography. For each responding vendor, ask the following questions:
    1. Do they have experience with companies in our industry and of our size?
    2. Can they provide consulting and support to our geographic area?
    3. Do they have a history of working with our competitors?
    4. Do they have a relationship with our industry enterprises?

           Eliminate vendors that answer "no" to these any of these questions.

  1. Create a shortlist of vendors and issue a Request for Proposal (RFP). The shortlist will likely contain only three or four vendors. Issue an RFP asking the vendors to outline their capability to deliver the specific features that are necessary for the enterprise. Ask for reference clients to validate the functionality.


  2. Judge the proposals. On the first viewing, all ERP proposals look very strong. To separate the wheat from the chaff, ask the following questions for each proposal:
    1. Does the vendor's financial strength match our expectations?
    2. Is its corporate culture compatible with our own? This question is particularly relevant to strategic questions concerning ongoing support.
    3. Where is it on the technology spectrum? Is its product roadmap compatible with our own in terms of hardware, operating systems, and technology platform?
    4. Do we have confidence with the implementation process? Are the implementation consultants experienced? Do the integrators have references?
    5. Will the breadth and quality of the vendor's support and service organization meet our requirements?
    6. How easy is the system to use? Will end users require extensive training following implementation?
    7. Does the product have the necessary features?
    8. How much does the product cost? Price is not necessarily the primary driving factor for ERP selection but it is a valid consideration.


  3. Hit the road. Visit reference sites and talk to enterprises within the industry that are using particular ERP platforms. Reputable vendors will facilitate these site visits. The visiting team should include executives, IT personnel, and end users that will have insights into the way that the application is actually implanted, used, and supported. Have closed-door sessions where vendor representatives are not present.


  4. Evaluate upgrades. ERP selection may involve additional investment in infrastructure. Consider the costs for upgrades in:
    1. Database software
    2. Application server software
    3. Storage capacity
    4. Terminal or end-user software or hardware
    5. Server software
    6. Server hardware
    7. Authentication software
    8. Network infrastructure


  5. Select a vendor. A top-ranked vendor may have emerged during evaluation. Selecting between two or three qualified vendors can be facilitated through the use of a score-carding process that assigns scores to various considerations such as product features, ease of use, or vendor support.


  6. Negotiate terms. Negotiating terms is a long process. The first salvo should be fired by issuing a letter of expectations and terms to the vendor. These expectations should then be incorporated into the ultimate contract.

Bottom Line

Follow a specific plan for selecting ERP software to reduce both project risk and the amount of time required.

Want to Know More?

"Get ERP Right - The First Time" from SearchCIO.com

 

Editor's Note: This article was reprinted with permission from Info-Tech Research Group.

 

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