As an ERP advisor, I am often asked about selecting and creating an internal ERP team to manage the selection and implementation process. ERP selections are generally long, very complicated, and consist of many layers of materials, presentations, and meetings. This will, realistically, put stress on the company. What should your approach be in this process?
The traditional answer to building an internal team is to have a good cross-section of team members who understand their respective areas of the business (e.g., marketing, fulfillment, accounting, production, distribution, and so on). This works if a company can afford the disruption of the team members’ core duties during the selection process, but this can also be a very expensive proposition. An average ERP selection, before even getting to the implementation, can conservatively represent 40 hours per vendor reviewed. Even if only 3 vendors are considered, this totals 120 hours of your team’s time not spent on core business issues. If there are 5 people on the search team, this totals 600 hours of time and does not include extras like customer reference visits and other events that might occur to make a viable decision. Assuming a burdened cost of $75 per hour per person, this could cost well over $45,000 of internal effort before getting to the decision line.
One company I worked with had almost 20 people on their selection team. They were over a year into the selection process before hiring me to help them. While inclusion is a great strategy in many disciplines, an ERP selection process can be hindered by an over-abundance of cooks in the kitchen. As vendor presentations begin, followed by the product demonstrations, information starts to meld into a single pool of minutia. During this process, the team members’ opinions and personalities can create more chaos than it resolves.
It reminds me of church committees trying to decide what kind of music to sing in their services. For the sake of inclusion, a music committee is formed, and members are selected from every group represented in the church, so they end up with a team with its members from the toddlers all the way up to the seniors. Each group, although well represented, has potentially a totally different taste and opinion on the style of music that should played. These types of dilemmas are generally solved by leadership and are deferred to the overriding principles and worship objectives of that particular church. Just as with a large disparate group on a selection committee will eventually get decided by the leadership and the decision to do what is best for the company’s strategic goals and key stakeholders.
When the time comes, I recommend keeping your selection team fairly small, but still large enough to avoid disruption if a team member is lost along the way. My advice to company executives is to assemble a team of 3-4 people led by the CEO. Yes, the CEO! ERP selection is one of the most critical decisions a company will ever make, and it’s the CEO who drives the vision of the company’s future. Who better to lead the ERP selection team? After the CEO, I typically recommend someone strong from finance like the CFO or the Comptroller, someone from Operations, and then a strong administrative person to keep things orderly and documented.
Keep in mind that this selection team is not the first step I recommend companies take when embarking on their digital or ERP journey. Actually, this step is 3rd or 4th down the list. Before even thinking about the team, there should first be a road map or process flow definition of how the company works today. The next step is to create clear objectives for system transition. Once these steps are clearly defined for the entire company, then a smaller group can manage the selection process because these internal barometers have now been established. These two steps are not always easy to accomplish and are areas where outside consultants can be worth their salt. Many times it pays great dividends to have an objective party to come in and 1) define/document the company workflow, 2) discuss and assist with internal workflow changes, and then 3) create a requirements document for the team to use to review and make their selection.
Once you have taken those critical first steps, however, the smaller selection team will help you move with agility and efficiency through the actual selection process. Your ERP team will be the all-star players for your project, and you’ll have the critical buy-in needed for the confidence your company needs to move forward.