11 min read

Transforming Enterprise Software with Independent ERP Selection Consultants

Transforming Enterprise Software with Independent ERP Selection Consultants

Implementing a new ERP solution is a significant undertaking that requires serious planning and resource allocation. Navigating the ERP selection process solo can lead to selecting a system that doesn't fully align with your organization's needs, resulting in user dissatisfaction and operational constraints.

Having a well-defined ERP evaluation process is necessary when selecting from the multitude of ERP software options on the market today. It's essential to identify the best ERP vendors that align with your industry and budget, ensuring a tailored solution for your business needs.

By partnering with an impartial, ERP vendor-agnostic consulting firm, we can significantly increase the success of your ERP implementation, helping you steer clear of potential buyers remorse or setbacks.

This comprehensive ERP buying guide offers valuable insights into the ERP software selection process and underscores the importance of relying on a reputable firm like KnowledgePath for expert guidance in ERP vendor selection.

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The Importance of an Independent ERP Selection Process

Today's ERP systems are intricate and sophisticated business tools, encompassing a wide array of capabilities that impact virtually every facet of an organization.

Despite the bold claims made by vendors about the superiority of their solutions, the industry has witnessed a notable trend towards consolidation.

This is evident in Oracle's strategic acquisitions of major players like PeopleSoft, JD Edwards, and NetSuite, as well as Microsoft's proactive approach in expanding its portfolio of ERP products through acquisitions within the Dynamics series (e.g. GP, AX, NAV).

Furthermore, SAP's significant investments in cloud-based solutions and Infor's strategic acquisitions, including the integration of MAPICS and Geac ERP into their suite as Infor M3 and S3, have further shaped the landscape of the ERP market.

Each of these strategic decisions highlights the industry's ever-evolving landscape, aiming to transition platforms to the cloud, shift towards subscription-based revenue models, and enhance capabilities to better align with the changing demands of businesses.

For those unfamiliar with the history of the ERP industry, it can be a real challenge to determine:

  • which ERP products/capabilities were acquired
  • which products will have the most the most R&D investment in the near future
  • which products are being phased out over the next few years
  • which products have a strong partner network and software ecosystem
  • which products have had successful (or unsuccessful) ERP implementations in the past

Do you really want to invest significant time and money with a ERP software vendor only to find out about these shortcomings after you’re live on your new ERP software?

In other words, don’t get caught up in flashy marketing and a high-pressure sales process, you have options and significant resources at your disposal

That’s where ERP software selection consultants like KnowledgePath can help with your ERP evaluation and selection process.

ERP selection consultants have experience selling and implementing various ERP software packages within many different types of industries. This expertise is crucial, considering only 50% of ERP customers are satisfied with their system's functionality, the importance of selecting the right ERP vendor for your business is super important.  

With their extensive experience and knowledge, they have a deep understanding of the ins and outs of different ERP software applications and implementation partners.

In fact, the KnowledgePath team has substantial experience with practically all of the major vendors (Oracle, SAP, Microsoft, Sage, Infor, Epicor, IFS and many more) and contains deep expertise within the manufacturing and supply chain sectors.  

By partnering with an independent ERP selection consulting firm you gain a level of assurance that your ERP project will succeed and deliver lasting value to your business for years to come.

What Does ERP Software Selection Consulting Consist of?

Each ERP selection has unique needs and processes - here’s what you can expect from reputable ERP selection firms like KnowledgePath.

Identify the ERP Project Team

To ensure the likelihood of success of your ERP implementation, it's important to assemble a diverse and skilled project team that represents each functional area within your organization. This team ideally should consist of individuals who are very familiar with their daily tasks and how they engage with the company's current systems, ensuring a well-rounded perspective on the needs and challenges faced by different departments.

Furthermore, it's important to have an executive sponsor from your company's leadership team on the ERP project team. This individual plays a crucial role in making strategic decisions, garnering support from leadership, and providing both the resources and authority needed to move the project forward.

Equally important is the role of the change management lead. This individual should come with a proven track record of successfully managing the transition between ERP systems in prior organizations. They must possess great communication skills to articulate the vision, benefits, and details of the ERP implementation effectively.

Additionally, they should possess a deep understanding of the typical factors that contribute to employee reluctance towards change. With this info in mind, they can develop and implement strategies to alleviate concerns, foster a positive attitude towards the new ERP system, and smooth the path for a successful ERP implementation.

Current State Analysis

Once the ERP project team has been identified, the Current State Analysis is initiated, beginning with the gathering of information on all current software systems, key personnel, and business processes in use.

The analysis takes the form of requirements-gathering sessions. These sessions are designed to pull in employees from across the entire organization so that everyone can fully understand the business processes from end to end, avoiding potential pitfalls that may eventually have harmful downstream effects.

KnowledgePath helps you understand the information systems you are currently using to carry out processes, make decisions, and engage with suppliers and customers. We collect information about the environment in terms of physical components and capabilities, including computer hardware, physical plants, logistics, and their maintenance. Remember to consider appointing a change management team lead as an essential part of this process. Changing software applications may also involve altering established processes and potentially hiring new staff to support your ERP initiative. KnowledgePath assists clients in taking a comprehensive approach (people, processes, and technology) to grasp the full extent of the changes needed for a successful ERP outcome.

ERP Software Vendor Evaluations

After analyzing your organization's Critical Success Factors (CSF) - the key areas crucial for your business's success, your ERP selection consultant will assess ERP vendors based on these factors. Subsequently, a list of potential ERP vendors will be suggested for consideration.

KnowledgePath utilizes its expertise, process, and research to carefully evaluate hand-picked vendors based on their extensive experience and track record. At KnowledgePath, we compare your CSFs with the proven – not just stated – capabilities of the software vendors to assess their potential impact on your business. Subsequently, we curate a short list of vendors that we believe will fully meet your business needs without any compromise.

In order to provide added value, we conduct thorough research to keep you informed about the future plans of the vendors we recommend. Our aim is for you to select a vendor that prioritizes investing in R&D for future releases that align with your business objectives.

The right ERP solution needs to last almost a decade or more, so we aim to give you the full spectrum of information so you can choose the vendor you are most compatible with in order to have a viable, long-term relationship.

After you’ve heard about the proposed vendors, KnowledgePath will take the lead on proposal solicitation. We engage in tested negotiation strategies to make sure you’ll get the best value for your new ERP application, taking care of vendor licenses and professional service contracts. We will ask vendors to come in and provide product demonstrations, too, addressing specific use cases that directly tie back to the CSFs we identified earlier. 

We know that there’s always a need to stay flexible, so we are able to do most of this phase of the evaluation either remotely or in person. We have had great success with this approach in either situation so we are here to adapt to you.

Pro Tip: Buyer Beware

Unfortunately some ERP selection consultants in this industry are biased due to the fact that they have financial incentives tied to the sale of certain ERP products. While they may recommend solid, reputable software vendors, the financial motivations could skew their recommendations toward what would not be ideal for you. KnowledgePath is 100% vendor agnostic and we never sell software or take commissions for recommending their ERP products.  It’s critical to identify these conflicts earlier in your evaluation process, ask the tough questions, or ask us and we’ll tell you!

It’s critical to identify these conflicts earlier in your evaluation process, ask the tough questions, or ask us and we’ll tell you!

ERP System Implementation Considerations

A critical factor that plays into your choice of vendor is how you intend to deploy your new ERP solution.

For example, do you plan to house the ERP platform on servers within your own server closet or data center, that your company owns/maintains, or are you looking for a vendor to provide you with a turnkey, browser-based, hosted solution?

The majority of ERP vendors are pushing customers towards a subscription-based, cloud-ERP solution. For example, both SAP and Oracle have retooled their large on-premise ERP solutions for the cloud via a subscription-based model (SaaS).

And while their cloud ERP solutions are highly capable, some of the more specialized capabilities found within the on-premise solutions are not as fully baked as their cloud-based counterparts.

When you consider cloud-based deployments you have a couple of options. You can go with a public cloud option assuming the software vendor provides it or you can go with a private cloud option.

With a public cloud, you typically pay the vendor a subscription fee to use the software through a Software as a Service (SaaS) licensing model. You’re essentially renting the use of the ERP software. The benefit of a public cloud option is the most economical. You can generally save time, money, and physical space by leveraging the hardware, software, and infrastructure of a third-party provider.

Deploying an ERP solution on a private cloud gives clients more control over the ERP solution while still maintaining the economic and functional benefit of a SaaS ERP product. In addition, the vendor may still assume responsibility for remotely managing and updating your ERP solution.

You can also opt for a hybrid ERP solution, where you maintain some aspects of your ERP solution on-premise while accessing others via a SaaS option. Hybrid solutions provide clients with the most flexibility and a well-worn path to fully moving to the cloud at a future date.

The KnowledgePath team can guide you through all the advantages and disadvantages of the various deployment models and how it exactly pertains to your ERP goals and objectives.

Understanding the Real Cost of ERP Software Solutions

When considering the implementation of Enterprise Resource Planning (ERP) software, it's crucial to recognize the significant impact it has on every facet of your business operations. The investment extends beyond the initial licensing fee, encompassing a range of costs that contribute to the total cost of ownership (TCO).

Primary Components of ERP Costs

At the outset, an ERP solution quote typically includes the software license, the first year of support, and the implementation fees. However, the overall financial commitment involves additional elements, such as:

Deployment Options and Their Impact

When considering the choice between on-premise, cloud-based, or hybrid ERP systems, it is crucial to understand the unique cost structures and benefits that each option provides to meet your unique business requirements.

The decision on deployment methodology forms the foundation of your ERP strategy, with on-premise solutions offering control and customization but requiring significant infrastructure investment. In contrast, cloud-based solutions provide scalability and cost-efficiency through subscription models, while hybrid solutions offer a balanced approach, allowing for flexibility and gradual migration to the cloud. 

User Licensing and Its Cost Implications

Understanding the pricing model is crucial when it comes to determining the overall cost of your ERP solution. Whether it is based on named users or concurrent users, this decision can have a significant impact on your budget. Named user licenses are assigned to specific individuals, meaning each user has a designated license, while concurrent user licenses allow a set number of users to access the system at the same time.

It's important to assess how these licensing options align with your business needs. Named user licenses may be more suitable if you have a consistent user base with individual access requirements, while concurrent user licenses could be more cost-effective if your users do not all need simultaneous access. By understanding the distinction between the two and choosing the right model for your organization, you can effectively manage costs and optimize the value you get from your ERP investment.

Transactional and Data Volume Costs

It's necessary to identify the impact of increasing transaction and data volumes as your business grows. As more transactions are processed and data is generated, there may be additional costs associated with storage, processing power, and system performance. By anticipating these variables in your ERP budgeting, you can proactively plan for scalability and ensure that your system can handle the increased workload without incurring unexpected expenses. 

The Price of Customization and Integration

Integrating third-party services and tailoring the ERP system to your specific processes can incur substantial costs. This is where the importance of thorough planning and understanding your customization and integration needs upfront becomes important. By clearly defining your requirements at the outset, you can effectively manage your budget and avoid any unexpected expenses down the line.

Customization and integration are key components of maximizing the value of your ERP investment. Tailoring the system to align with your unique business processes ensures that it operates seamlessly and efficiently, ultimately driving greater productivity and ROI. However, it's essential to carefully assess the cost implications of customization and integration to ensure that they align with your budgetary constraints.

Working closely with your ERP implementation team to outline your customization and integration needs, as well as evaluating the associated costs, will help you make informed decisions and prioritize investments where they will have the most significant impact.

ERP Advanced Features and Modules

When evaluating the complexity of your business operations, it's essential to consider the potential need for additional modules or advanced features within your ERP system. These specialized functionalities can enhance efficiency, streamline processes, and provide valuable insights, but they often come at an added license and implementation cost.

By assessing these requirements early in the planning stages, you can accurately budget for the implementation and licensing of these advanced features. This proactive approach allows you to prioritize the modules that align with your business objectives and ensure that your ERP system is tailored to meet your specific needs and within budget.

Whether it's modules for inventory management, advanced reporting capabilities, or industry-specific functionalities, understanding the potential impact of these additions on your budget is key to making informed decisions. By factoring in the additional software cost from the outset, you can create a comprehensive budget that encompasses all aspects of your ERP investment, ensuring that you maximize the value of your system while staying within your financial constraints.

Ongoing ERP Support and Maintenance Cost

Technical support, software maintenance, and updates are crucial components that contribute to the overall success and expense of your ERP solution. These ongoing expenses not only ensure the smooth operation of your software but also play a vital role in adapting to evolving business needs and technological advancements.

When considering the long-term budget for your ERP implementation, it's essential to factor in the costs associated with technical support, software maintenance, and updates. These expenses are an investment in the continued functionality and optimization of your ERP system, providing you with the necessary resources to address any issues, enhance system performance, and stay current with the latest software developments.

By proactively accounting for these ongoing expenses in your budget planning, you can effectively manage your resources and ensure that your ERP system remains a valuable asset to your organization. Additionally, prioritizing technical support and maintenance demonstrates a commitment to maximizing the benefits of your ERP investment and leveraging its full potential for long-term success.

ERP Vendor Selection and Comprehensive Proposals

With a deep understanding of your organizational needs, you can work with a shortlist of vendors to obtain detailed proposals that encompass all aspects of software and service costs.

The Value of a Methodical Approach

Taking a formal, paid approach to an ERP selection process, though time-consuming initially, pays off by minimizing the need for mid-project change orders. This thorough upfront planning helps avoid costly revisions, unmet expectations, and a system that falls short of expectations.

Pro Tip: ERP Contract Review

A pivotal aspect of your ERP investment, beyond the initial software licensing fee, lies within the intricacies of the ERP software contract itself. It's a common oversight for businesses to be swayed by substantial upfront discounts offered for new client acquisitions, without fully considering the long-term implications of their ERP license costs in subsequent years.

ERP systems are known for their 'stickiness'—once implemented, the likelihood of switching vendors within the next 7-10 years, or even longer, is quite low. Vendors are well aware of this, which is why the initial discount, while appealing, can sometimes be a misleading indicator of future costs.

Understanding and negotiating the nuanced language of ERP contracts can be daunting. This is where expert guidance becomes invaluable. At KnowledgePath, our extensive experience with leading ERP vendors positions us to advocate for your best interests, ensuring that your contract protects you and provides clear insight into your ERP expenditure, both now and in the years to come.

Do not underestimate the importance of a thorough contract review in your ERP selection process. The right contractual terms can make a significant difference in the long-term value and cost-effectiveness of your ERP system. With expert assistance, you can navigate these complexities confidently, securing an ERP solution that supports your business objectives and budget.

Choosing the Right ERP Vendor & ERP Implementation Consultant

Once you’ve received detailed proposals from the selected vendors, together we’ll compare how they align with your identified critical success factors and we’ll want to perform a cost/benefit analysis for the vendors that participated in the selection process.  

At this stage in the evaluation process, we will generally have a clear front-runner in terms of product capabilities, price, and ability to deliver. It’s just a matter of “dotting our i’s and crossing our t’s” to get over the finish line.

The last point to keep in mind is that a typical ERP purchasing process would culminate with a signature, shortly followed by a discovery process to fully gather all the requirements necessary for an implementation, which could take several weeks to several months.   

A structured ERP selection process with KnowledgePath is quite different, your ERP implementation partner can roll up their sleeves and get to work on configuring your ERP system in short order because we did all the heavy lifting on the front end, bringing immediate business value, and cost savings since you’ve already licensed the software.  

Again, you’re going to spend the money one way or the other. We think it’s wise to invest in the front end to ensure a successful outcome that you and your team will feel good about.

Open Invitation for ERP Consultation

We're here to support your ERP initiate at any stage of the ERP adoption lifecycle. Whether you're just starting to explore new ERP solutions or are further along in the process, KnowledgePath welcomes the opportunity to discuss how we can assist in achieving your ERP goals.

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