TagERP ERP selection ERP vendor ERP guidance ERP Consultant ERP systems Organizational Change Management ERP Guide
Your Guide to a Seamless ERP Selection Process
In many ways, your ERP is the lifeblood of your business. Its efficiency is imperative to your success both operationally and in revenue. If your current ERP (or lack of one) is holding you back from optimizing your company’s potential, it may be time to implement a new system. We are not here to sugarcoat. Implementing a new ERP solution is a massive undertaking, and it can consume considerable time and resources.
In the Guide:
Going through the ERP selection process alone is not wise. Even if you have selected a system in the past, the industry has changed, your business has changed, and you risk resulting in an inadequate ERP system that frustrates users and limits the operational capabilities of your organization.
With so many ERP software solutions available, you need an evaluation process and framework that helps you identify the best ERP vendors based on your industry, your functional needs, your technology needs, and your budget.
ERP sales reps have only one mission- to sell you their software. And they often use the proven rinse and repeat sales strategy of discovery, demo, proposal, and close. This leaves you as an ERP buyer vulnerable to sales reps who do this for a living and places you at a big disadvantage.
So, what is the solution? A non-biased, vendor agnostic partner guiding you through your ERP initiative can make all the difference. An advisor can help you (and your executive team) avoid buyer’s remorse, or worse, a failed ERP implementation.
This guide will walk you through everything you need to know about the ERP software selection process and why having an ERP software selection firm in your corner is as important as choosing the right software vendor.
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Why begin a formal ERP selection process?
Modern ERP systems are complex business systems. They contain vast capabilities, integrations, and data, and touch nearly every nerve of your business.
ERP industry consolidation due to acquisitions has always been a concern and has increased significantly in recent years. Back in the day, Oracle and Infor were infamous for acquisitions, Oracle with PeopleSoft, JD Edwards, and NetSuite, and Infor with Lawson, Birst, Saleslogix, and approximately 26 others. Infor was then recently acquired by Koch Industries, and this trend is extending across the enterprise software market. Microsoft’s entire lineup of Dynamics ERP products is largely the result of acquisitions, and SAP has spent about $40 billion on various business application capabilities.
If you are an outsider trying to navigate this industry is hard to tell…
- Which products are the result of an acquisition or may be acquired soon
- Which products receive the bulk of R&D dollars
- Which products are being phased out over time
- Which products have a robust partner ecosystem
- Which products have many successful (or not so successful ERP implementations)
You don’t want to invest time and money with an ERP vendor only to find the shortcomings after your ERP is live. The complexity only grows with the variety of applications and necessary integrations. Do not get caught up in flashy marketing and a high-pressure sales process; you have options. That is where ERP selection firms can help with your ERP selection process.
Stages of the ERP Selection Process
Here are the high-level steps you will complete in a software evaluation. There are many options for an ERP selection consultant, but most will follow similar methodologies. Take special note here: Just because a consultant uses the right language or their approach looks good, what ultimately matters is execution. You will ultimately need to decide the consulting firm that is best for your business, and this past post helps to outline the approach for doing just that: thttps://kpcteam.com/kpposts/hiring-a-consultant-dont-gamble/
1. Assemble the ERP Project Team
To build out your ERP project team, consider including leaders in every business area. You will want folks who can thoroughly describe their day-to-day role and how they interact with their current systems. Managing this team will be your internal Project Manager, who will have significant requirements during your transformation.
The project team should include someone from the executive suite, as an executive sponsor or representative. This role is critical for executive decision-making and provides leadership-level support for the initiative.
You will also need a change lead. Ideally, this person will have real-life experience helping businesses migrate from one system or process to another, have excellent communication skills, and understand why employees resist change and how to mitigate these challenges.
The toughest part of constructing your internal ERP team is that you need good people… really good people. These are the folks that you do not necessarily want to step away from their normal tasks to help with ERP, but you will NEED this level of support. Your consultant will help you to identify the right individuals and will help to model how your business can continue without interruption during this process. This may involve back-filling, it may involve including extra people on the project team, or it may involve outsourcing more responsibility to your consultant.
2. Conduct a ‘Current State Analysis’
After identifying the ERP project team, you will perform a Current State Analysis. This process gathers information about all the systems, people, and processes you currently use.
The analysis consists of sessions where we compile the requirements needed for your ERP. These sessions are designed to pull in employees across the entire organization so that everyone can understand the business processes from end to end. This avoids potential pitfalls that may have harmful downstream effects.
These sessions are also where we define what the “future state” could look like. The value of using a consultant who specializes in ERP and the evaluation process is that we can help to draw out future state needs, identify areas where change may be needed, and offer suggestions around best practices.
Your consultants will become familiar with the information systems you currently use to execute processes, make decisions, and interact with suppliers and customers.
We will also gather information about the environment concerning physical components and capabilities, as needed. Your infrastructure might include components such as computer hardware, physical plants, and logistics, and their operation and upkeep.
As you progress through the evaluation, it bears repeating – do not neglect Organizational Change Management as an integral part of this process. You are not just replacing one software application for another; you may be changing long-established processes and/or hiring new staff to support your ERP initiative.
3. Evaluate ERP Software
Once your consultant understands your organization’s Critical Success Factors (CSF) – the factors critical to your business’s success, the next step is to evaluate ERP vendors with these factors in mind, moving from the hundreds of available solutions to a long list, and then a shortlist. A good selection consultant should be able to funnel down vendors VERY quickly.
The remaining evaluation steps are where you will find significant differences between selection firms. When KnowledgePath evaluates software, we will compare your CSFs against the software vendor’s proven— not just stated– product capabilities. We want to measure how much impact each potential ERP vendor will have on your business. The vetting process of validating actual vendor capabilities rather than just taking the salesperson’s word is where KnowledgePath’s approach shines. More on this in later posts.
From there, we create your short list of vendors that we feel confident will actually meet all of your business needs without compromise.
We do the research so you can stay informed on the plans of proposed vendors, too. The goal is that you will find a vendor with plans to invest their R&D into new products that align with your business objectives.
An ERP system should sustain for a decade or more. With this purchase, you will have a viable, long-term relationship with the chosen ERP vendor and implementation partner.
After reviewing the proposed vendors, your consultant should take lead on proposal solicitation. We engage in tested negotiation strategies to make sure you 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 that address specific use cases that tie back to the CSFs we identified earlier.
Pro Tip: Buyer Beware
Unfortunately, some ERP selection consultants are biased due to the financial incentives of certain ERP products, vendors, and implementation partners. While they may recommend solid, reputable software vendors, the financial motivations could skew their recommendations and may not be ideal for you.
KnowledgePath is 100% vendor agnostic, and we never take money from software vendors or resellers for recommending their ERP products. It is critical to identify these conflicts earlier in your evaluation process, ask the tough questions, and work with a team that brings you the comfort and confidence needed for this tough journey.