iStock_000020409028_XXXLarge (2)Selecting the right ERP solution for a company is as much about understanding the current business landscape within the company as finding the ERP software package that fits best to capitalize on that business landscape. A poorly managed selection process can severely hinder a company’s adoption of ERP and create long term resistance in the organization.  The selection committee should have a clear understanding of what the business needs, the limitations found in the current system and best practices for the industry.  With this information, the selection process will be more effective.

Choosing the Right Vendor

When evaluating the actual ERP solution, every company must use caution as the number of vendors and resellers for ERP is increasing.  So while the functional fit of the software to business process needs is critical to decision making; so is selecting the right supplier. The supplier’s presence and reputation in the marketplace is a major consideration. An upstart supplier may not have the experience to support critical business processes while an established supplier may not be as flexible with service solutions.  Vendors’ technology direction is a consideration: focusing on Linux environments may lend nicely for a company dependent on that platform but hinders Apple or Microsoft-based IT companies.  Finally, the support ecosystem of the supplier should be considered.  For companies with little to no experience in ERP, a supplier with a comprehensive and world class support infrastructure is a better choice. As the company matures in its understanding of ERP, support may likely become less of a priority.

Proper Evaluation Process

The first step in evaluating ERP is identifying the vendors. As the number of vendors is increasing, criteria for identification should be established, such as locally-based vendors or vendors with a known customer satisfaction rating over a certain minimum ranking. Each vendor under consideration must be interviewed. The interview process should be the same to reduce any bias and increase fairness during final selection. The interview must focus on a series of evaluation drivers: that is, a number of agreed points critical to the business in terms of meeting needs and improve current system inadequacies. The selection team will need to develop these evaluation drivers specific to the business objectives and operations of the company.

These evaluation drivers will establish the basis for a criteria table used in deciding which ERP solution is best, as well as the criteria for accepting the solution into the production environment after installation.  Software functionality is a major discussion for deciding the right software package and process-driven demonstration scripts will show how functionality will support business objectives.  Demonstration scripts will show how bottlenecks in workflow can be eliminated by the ERP solution, how transaction processing is improved, how querying and reporting capabilities are improved and how the software is adaptable to changing business needs. Demonstration scripts go beyond being told an ERP solution has meaningful functionality to seeing how that functionality actually works and can be used to meet current business objectives.  These demonstration scripts may be part of or in addition to the vendor’s product presentation which reviews the standard ERP package and basic functionality being offered.  Vendor’s should share their evaluation process used to determine how the proposed ERP solution will benefit the customer.

Evaluating the vendor’s implementation capabilities is another major consideration.  Will installation and training be performed by a third party, by the vendor or by the customer? The company may not have the skill to implement ERP and some risk will exist when bringing in a third party. These considerations can exclude some ERP vendors who do not have much capability in installation across a variety of circumstances.  As a general rule, customization of the ERP solution should be minimal in order to maintain integrity with the core software package.  If vendors are stressing customization over process improvement, this should be a sign vendor implementation may not as reliable as required.

Finally, pricing and negotiations is the last concern in ERP decisions.  Greater capabilities on the part of the vendor will naturally raise the price of the proposed solution. The increased price is not necessarily a bad thing if the different in price is justified in clearly identified value adds in a particular solution.  Contract negotiations is a related consideration. Vendors with standard contracts where very little flexibility in terms is possible will be successful with common operating processes with similar requirements or compliance to a set of regulatory requirements is necessary.

Vertical Industry Solutions

ERP solutions specifically designed for the vertical industry are likely the best solution for a particular company.  A vertical industry solution should already consider industry-related regulations, compliance concerns, best practices and process requirements. The same solution will likely have a set of known custom options and configurations specific to the industry.  Vendors of these vertical industry solutions would have developed specialized support structures for industry-related scenarios.

A well-thought out strategy and plan for evaluating the current environment, software package and vendor capabilities will ensure the most effective and efficient solution is chosen.

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