Go to Top

10-Point Approach for ERP Selection

Implementing an ERP in an organization is not like implementing just another accounting or billing software. Implementing an ERP is like a lifelong engagement of the software with the organization which involves sizeable investments and complete realignment of organization’s processes. If the implementation is not successful, it can lead to loss of productivity and waste of investments instead of increased efficiency and profits.

Selecting an ERP for any organization requires proper understanding of its requirements and business processes. Sometimes organizations go with the best ranked ERP in the market but later discover that it is unable to fulfill their core requirements. This is just like buying a sword for something which can only be done by a knife.

So, here is a quick 10 step guide to help you through ERP selection process.

1. Set up ERP selection team : Important thing to be noted here is that ERP selection is not prerogative of IT department or CIO. ERP impacts entire organization, hence, key users need to be a part of decision making. Every organization must constitute a team to select the appropriate ERP for the organization. The team should also include key users. The size of the team is dependent on the employee base of the organization and domain in which it operates. Usually team consist of representatives from IT department and heads of all major departments such as marketing, finance, HR, Production etc.

2. Define expectation from ERP implementation : When an organization decides to go for an ERP, it must be clear about the goals and objectives it wants to achieve by implementing an ERP such as streamlining processes, reduced inventory, reduced lead time, informed decisions etc.

3. Can ERP system adapt to your organization : Do some research to find out the most adaptable ERP solutions available in the market. No ERP can be ‘hold all’ ERP for any organization is spite of its ‘best practices’. Idea of adapting to ERP seems good, but it may compromise organization’s personality which has brought it where it is. More is the adaptability of an ERP system, better are the chances of its customization to fit into your business needs.

4. Integration or Interfacing with third party solutions : Sometimes an ERP package has to be augmented with other third party softwares to fully utilize its potential like a BI tool, or a Document Management System The team needs to find out how open the vendor is for such integration and how easy or complex it is.

5. How scalable is the ERP? Are upgrades provided? : Technology keeps evolving continuously. A new technology rolled out today might become obsolete within 2 years. To guard your investments in an ERP package, it must be easily upgradable and also scalable. The ERP selection team must find out costs of such upgrades and check out the scalability of the ERP.

6. Insist on live demo to evaluate its effectiveness and ease of use of GUI :  A live demonstration of the software helps you understand and evaluate the GUI in terms of ease of use, accessibility, response rate and lead time consumed in performing different tasks

7. Life expectancy of ERP vendor : Check vendor history, its growth during previous 5 years to judge whether this vendor would still be in business in coming 5 years. The vendor should have good experience of implementing ERP in various domains and especially yours. You can conduct a market survey regarding reputation and feedback of the vendor from its customers. Ask for customer referrals and make it a point to talk to them. ERP is a long term investment of 5-8 years at least. Vendor should be around at least its life cycle.

8. International exposure : Does the vendor have proven experience with international projects? This is especially important for international deployment or multi-country deployment.

9. Total Cost of Ownership : Compare ERP vendors over a 5 year period using the TCO table. ERP is not a one-time investment. Some vendors do offer perpetual licensing. However, there is implementation and support cost. Since ERP being such a large system it requires maintenance and upgrades to adapt to the latest business requirements of a dynamic business. It is necessary that you evaluate all the shortlisted vendors over a 5 year time frame to get a clear idea of Total Cost of Ownership.

10. Let heart rule over bare facts : At last when you have done all the hard and fact based analysis, sit back a little and let your heart decide. A vendor should be pleasant to get along, should be able to generate faith and confidence in you and not too tied down with his/her own processes. Vendor would be primarily interested in raising your organization’s efficiencies and making the implementation a success.

Contributed By: ESS Marketing Communication Team.