9 Perspectives in ERP selection
Selecting what functions to have in a new ERP and what legacy pain-points to solve may seem like the most important step in an ERP replacement project. We provide you with additional perspectives which complements the functional perspective.
1. Processes and business requirements
Create a high-level process map, containing your business processes. Prioritize which one are the most critical for your company? Define your business requirements at an overall level. Include your future needs as well, in particular such that can be found in your company strategy.
Your business requirements must be supported by the new ERP. Demand a proof of concept (POC) activity from the vendor in which you may verify how their ERP will solve your needs. Sales talk and power-points are not enough. All your requirements will not be supported. Prioritize and identify which you must have, which you want in addition and which are nice to have. Determine which of your processes can use standard software and which ones need to be customized.
“Correct steering information” is one area a new ERP solution is supposed to contribute with. Reporting is very important, and all companies want to standardize their reporting. A standard system includes many pre-defined basic reports but not all. Developing reports can result in a big investment in terms of development costs. Ensure the standard software you are looking at include reporting tools and support development of new reports.
Remember to not only think about what you have today. Think long-term, which is your strategy and plans for next coming three to five years? Will the ERP support your plans? Will you acquire companies, introduce a new business model or start up business in a new country?
2. Digitalization and Automation
All functions and processes, which can run automatically should be executed automatically. Identify which processes in your business that can be run automatically. You will find several, large as well as small. All will properly not be supported so you need to prioritize. Is the standard solution the vendor provides good enough for you?
These days the vendor’s solution should be able to provide multiple access points such as laptop, smartphone or tablet. Further, as vendors convert old platforms to open Application Program Interfaces (API) we can expect more apps, for internal use as well for use by your clients, in the future ERP landscape.
If you find important functions which not yet are digitalized, you may ask the vendor for their roadmap for future releases to find out when the functions will be made available. By doing this you will find out if the vendor and their ERP can be used for many years without a costly upgrade because of a large change to their technical platform.
Simplicity is important. The easier the end-user experience the ERP, the happier and efficient she will be. Take the time to evaluate how much time frequently performed activities will take to perform to ensure you do not slow down your employees. If it does you may not have as good a pay-back on your investment. Happy users will use the ERP much more and in a correct way and will not develop any own work-around solutions outside the ERP.
When it comes to maintenance and to operating the system it differs a lot in terms of simplicity and maintenance cost. You need to ask the vendor what is a normal maintenance effort with their platform. How much time for maintenance is normal, which specific skills are needed in your IT organization? Below you find some more questions, which we recommend you know more about.
Almost all vendors offer a cloud solution. You need however to ask for how “cloud-compatible” their solution is today and about their future plans. It is common that a vendor claim they have a cloud solution but still maintain their software in the old way. Meaning you still have to schedule service-windows in your system as soon you need to do any maintenance work. Will their move to 100% cloud solution require a complex transition activity?
Single sign-on (SSO); It may sound like a very basic topic but if the ERP system does not support SSO, it will cause your IT department a lot of extra work and extra cost. Is the cloud solution supporting
Security functionality must be a part of the standard package. You need to ask; is it possible, as part of standard, to secure functions, menu’s, data etc. so unauthorized people do not get access to sensitive information? It will cost a lot to develop this as a customization. Does the package have pre-defined roles, groups etc. which you can use when you configure the security? How secured is the database itself, is the data e.g. encrypted, is any traceability functionality included, which help you to see who has changed a record, when and from what?
All companies integrate their ERP with other software. You will need to create integrations between your new ERP and additional software and applications you use in your information landscape. Does the ERP support such integrations by having predefined API´s which you can use? Further, is the technology which is used based on new or old techniques or a mix? How well prepared is the ERP to integrate with other vendors app’s and modules? Does the vendor recommend any specific integration platform or do they have their own?
On-premise verses cloud. If the vendor offers on premise only you need to know their plans for cloud. A transition from on premise to cloud is very complex.
It’s normal to have more than one environment/database, also after the go live. During the implementation phase it’s normal to have test-, training-, migration- and development systems. You want to copy data from one database to another and when you later have a production system you want to copy production data to your test and training systems. This is very simple with some ERP and very complex with some other. This is a maintenance task which may increase your maintenance costs. You need to understand what is required in order to avoid surprises.
If your business exists in more than one country you need to ensure the vendor support country unique legal requirements and the local language as well. Is the ERP translated to the local language or will this be an additional cost for you? Legal requirements can be very expensive to develop. In addition, all customizations will have an impact on the project schedule as well as the project budget.
How easy will it be if you extend the use or increase the number of users. You may in the future acquire a new company, will such a scenario generate a new investment or is it just to add a little bit more disc space? Do you need to invest in new servers etc.?
What will happen when your database has e.g. doubled the size? Is it still possible to access all data in real-time?
Will you pay for what you use or is it a fixed license fee no matter of how much you use the system. Many users might only register their time in the system, such users will then be considered as “light” users and the fee should be adjusted based on this. If you select a cloud solution, which means you hire capacity, then you should pay only for what you actually use.
6. Return on Investment
We recommend you develop a business case to quantify the benefit you expect. (You can take help from Panorama consulting’s ROI Calculator).
7. Product viability
Long term outlook. What will be supported and what will not be supported. Ensure the functionality you will use will be supported and maintained also in the future.
Will the vendor continue to focus on your type of business also in the future?
Ask for references! Set up a call with them and prepare with questions. We propose some below;
Which functions and processes were implemented
Did they reach the defined goals?
How good are the deliveries (consultancy, documentation, software, corrections, met the delivery schedule) from the vendor?
Did the implementation project run according to plan and budget, what went well and what went bad (lessons learnt)?
Is their delivery organization available or does it take long time until you get access to a consultant?
How well organized is their support and is the quality good enough when they deliver?
Which plans has the reference regarding continues partnership with the vendor?
Are the end-users satisfied with the response-time from the system?
It’s recommended that you define your company’s digital strategy. This will help you to understand if the ERP will support y
ou or not.
Identify the pain points in your current ERP and IT-solution. Will the new ERP remove all or some of those?
10. More learnings
We have analysed and identified several ERP implementation failures. Our conclusion is that in almost all cases the source of the failure (delays and overrun of budget) is caused already before the implementation of the ERP. At ERP & Friends we have developed our own methodology which will mitigate and, in most cases, eliminate mistakes. You can read more about the method, Ready Set Go, on our home page; www.erpandfriends.se .
We recommend you download (for free) the diagnose “Startklar” which help you to understand your current situation before you start or during your implementation of a new ERP. The diagnose will indicate where you have your weaknesses and your strengths. Feel free to contact us for more clarifications and support.
We recommend you to read more articles related to ERP at www.erpandfriends.org , the articles will develop your understanding requirements, challenges and give you good advises with your future work in the area of ERP.