How to Select an ERP
With so many ERP systems out there, it is a daunting task to make the right selection. You have the Tier 1s, Tier 2s, Tier 3s, and the rest. You have the sales people to deal with, each one doing their song and dance why their system is the best. You have the fancy words and the new technologies coming out virtually every day. Then you have the actual implementers, the good ones and the bad ones. And if you have never been on an implementation team, or know someone that has, God help you.
Selection of an ERP is a once in a lifetime undertaking, unless of course the first selection was so good that you realized your investment and your company grew in ways you only dreamt of, that a more advanced system became a must. Then congratulations because you belong to the 30% of the global successful ERP projects (According to global research).
Through my 40+ years in the industry I have seen my share of good and bad ERP projects. From that experience, here is what my humble opinion on the steps to be taken when you are about to undertake such a decision in the sequence that I believe is the best practice:
First, establish a BUDGET. How to do that? Well first you need to setup a small executive team to lead the project, then task them with documenting the real requirements, requirements that focus on the real pains you are facing from; growth inhibitors to areas of efficiency, from excessive expenses to diminishing profits. Then put a financial figure to each of these points over a fiscal year. Here lies the trick, do you use this number for the budget or do you use multipliers of it over 2-3 years? This is where all your years of experience will come in handy. Of course, you have to take into account your future business plan; growth, cost cutting, increasing revenue, adding products and services, etc.
Second, product selecting. There are two paths to choose from; are we candidates to Tier 1 or Tier 2. The answer here is in the complexity of your business processes, the size of your company (Revenue) and the amount of money with can healthily invest. Once you realize which tier you belong in, start your search for systems that actually are in that tier, i.e. don’t waste your time looking at everything. At this point start digging into the modules and features because this is where the details are. The best way to describe this point is with an example; you want a budgeting feature. If you ask the vendors, they will all have the same answer; YES. Is that enough to make a selection? No. You have to dig in as well as you need to know what you want from it. Do you want a simple budgeting tool where you simply add a percentage to last year numbers which could be good enough? Or do you need it to be features rich; i.e. Budget Control, Integrated to Cash Flow, What If scenarios, Alerts, etc. This something you have to do.
Third, Partner (Implementer Selection). Not all implementors are created the same. Meaning do not get fooled by them flaunting their certifications and gold or platinum plaques in your face. Don’t get me wrong, they are nice and important to have but experience and track record are more important. You need to ask the following questions? Do they have experience in Accounting, Supply Chain, BI, My line of business (Retail, Manufacturing, etc.). Look into their Project Methodology. Ask for Documentation samples, Training Methodology, Staff Turnover, Future Service and Support methods, i.e. all the tough questions. Do not be timid. Ask them to give you examples of how they solved tough or tricky requirements in the past. Afterall, you are getting married to these guys. It is a long-time commitment. You are giving them the keys to your kingdom.
Fourth, this is a Business Project, NOT an IT project. You must be involved in every step, so does the CFO.
In conclusion, ERP selection starts with you, the company Decision Makers. It is your project, not IT, not the vendors nor the implementors because there will come a day when you have to take ownership of the decisions you have taken. And if it was the right decision, you will shine, but if it was the wrong decision, God help you and your company.