When you embark on your ERP selection process, following expert advice can help you select the right software solutions for your business. If you do not, it is almost a certainty that you will find yourself in a world of difficulty, saddled with the wrong solutions. ERP selection has a standard process, and you should know the basics of what that process is.
High-Level View of ERP Selection
As a high-level concept, remember that ERP is a software foundation that properly handles and networks the flow of data through your business processes.
Knowing that is the goal, the first echelon of evaluation in the selection process is to define the general areas of the business that you are looking to automate with the software. Does it include sales, HR, financial consolidations, inventory, supply chain, e-commerce, and so on? Look at each department of your organization to understand at a high level what the requirements are for each of these major enterprise system components in the ERP solution for your business.
The next set of steps involves gaining understandings of the problems that ERP software can alleviate in your business. For each of the major components listed above, invest the time and analytical intelligence to establish answers for the following:
- Look at your business processes
- Map them from beginning to end
- Identify problem areas, complaints and bottlenecks in your existing software
- Focus on and identify problem areas and manual processes that can be fixed with software
- Then for each software-driven area of problem, ask the users what is needed to solve that problem
In short, what you are doing is pinpointing the functional areas of the business that need to be covered in the new ERP solution. Then you can look at exactly how the proposed ERP solution will perform against what you need it to do. You can establish unequivocally, “Can this product we are evaluating do it or not?”
If you follow these guidelines and do an honest, thorough job on these actions, you are going to be in good shape when it comes time to pick the right software solution.
Are there any more factors we can discuss which will make picking your software solutions even more certain? Yes, there are.
Every business is a part of an industry, and as a general guideline you should certainly evaluate the software that supports your industry.
Take a close look at the proposed software and the functionality that is offered to determine how well it supports not just your industry and your vertical markets, but also your micro-verticals.
Beware of Micro-Vertical Vendors
Let’s take restaurant management as an example of a vertical market segment in the food industry. A micro-vertical software application could be an online delivery and pickup software package, enabling customers to easily order food from local restaurants at reasonable prices and live-track orders on a map.
The industry sub-segment in this example requires specific functionality to address specific problems that are unique to that micro-vertical. If an application you are evaluating solves those problems, put it on your list to evaluate further.
However, it isn’t wise to select an app solely on its feature function fit. You also want to select an application based on its long-term product roadmap. Try to find out where the business is going — not just the software, but the organization itself. Are they investing in R & D to enhance the software product? It is best to find out this kind of data before you buy.
There is a potential risk with implementing a micro-vertical solution because it is usually developed by and offered by a small group of people. Because the market is smaller, the vendor tends to stay small as well, which means there could be a long-term viability concern that you have to evaluate.
With a micro-vertical solution, make sure it is a strong company that has a contingency plan in place, as well as a transition plan for their leadership team. You can also protect yourself with a software source code escrow agreement if something were to happen.
The watchword is, with micro-vertical solutions, be a little bit more aware of what you’re getting into.
Choosing Between Two Good Platforms
What if you are down to two software solutions that both look good: how do you make a final decision between two solid platforms?
Functionality Deep Dives
No two software solutions are the same. Their functionality can look exactly the same — but this is never the case, and it usually means you haven’t done enough work to identify the differences between the two to know which one is really the best fit.
You need to do a deep dive on important functionality for your business. Revenue recognition, for example, is never done exactly the same way across two different products. Multi-company consolidation is never done the exact same way across different platforms. In supply chain software, advanced planning order and promise calculations are never done exactly the same.
Technology Deep Dives
If you compare NetSuite’s cloud strategy versus Intacct’s cloud strategy, or if you look at Microsoft, SAP, Financial Force, or Workday, you will find that their cloud strategies are all different, one to the next. Inevitably when you do the final deep dives on technology, you will find one or more topics that are different. Examine integration capabilities, security, and scalability to determine which ERP solution will be best for your needs.
Implementation Deep Dives
The third area is the implementation deep dive, and there are a lot of important questions to answer here:
- Who is going to implement it?
- What is their methodology?
- What are the deliverables?
- What is the timeline for the implementation?
- Who are the individuals that are going to be on our project?
- What experience do they have in our industry?
- What experience do they have with businesses that are similar to ours in terms of size?
- Are they close by? (Maybe geographic proximity matters.)
- Do we like them?
- What other kinds of best practices can this specific team bring to us?
Answering these questions is where you begin to understand, “Oh — I thought I was buying a software solution, but what I'm really buying is an implementation partner to help me successfully set up the software solution.”
The Importance of Executive Sponsorship
There are going to be problems on your project. It’s inevitable on any software project: situations are going to come up that need to be handled. When the going gets rough, who is going to help you?
You must identify the executive sponsor during the sales process — somebody that you know you can depend on to make things happen. This might be the CEO of the company, or the number two or number three person. But it is vital to find out who this person is and start building a relationship with them.
Vendor’s Product Roadmap
Get the software vendor to describe their future roadmap for the product you are considering. You need to understand what their development roadmap looks like for the next couple years. They should be investing revenue back into their product to make it better — and if they aren’t doing it, let the buyer beware.
Advice Regarding Customer References
It is always helpful to get some customer references from the vendor. What you will get from those references is people who have just gone through what you are about to go through. And those people are your best friends, because they want to share with what they wish they would have known. That's the benefit of the customer references, and you may glean a few important things you’ll be glad to know.
Advice Regarding Contracts
Take a careful look at contract agreements — because they are all different. For example, Microsoft's agreement, SAP’s agreement and NetSuite’s agreement have little in common. (You tend to see significant differences in the terms and conditions of the various contracts.)
It should also be noted that some vendors will be able to offer an impressive discount, because software prices are usually inflated, and the discount price is not as important as other factors impacting your cost.
Here’s one example: in the case that your price is locked to the term of the contract, what happens when the contract ends? It’s a good idea to establish some price protection by negotiating price renewal caps in your next contract.
So it's not just about discounts, but making sure that the right software is in the contract, that the vendor is not including unnecessary applications in the contract, and the vendor is including the implementation statement of work. Make sure that you are buying what you really need.
All of these factors go in to selecting the right software solution.