If you’ve done a recent search for ERP, you may have noticed the overwhelming amount of options on the market. Most people begin the search by looking at industry specific solutions or systems available on the cloud. We encounter hundreds of people each year that don’t know where to start. Most ERP searches require the same few steps to be successful. To help navigate the choices, follow these 8 tips for ERP evaluation.
Make sure that upper management is on board with upgrading or replacing the ERP system. Talk with them about acceptable time frame, features, and budget. Doing this will prevent finding out late in the process that prospective products don’t meet requirements. Searching for the right system can take time, make sure everyone understands the time commitment involved in the search.
One of the quickest paths to an ERP implementation failure is forgetting to include representatives from each department. Including everyone is the best way to make sure the systems are being compared and evaluated from all perspectives. Department personnel can communicate what features they must have, and what they can live without. Inclusion also helps adoption, people are more likely to use a system that fits their processes.
Understand Your Business
Having a full understanding of your business is the most important of the 8 tips for ERP evaluation. Start with documenting your internal processes. Much of this work may already be done as a requirement of corporate training records, internal quality systems, or ISO certification. Review the documentation. Is there anything that is confusing or redundant? ERP automates existing processes, but it can’t fix bad processes. Take a hard look to determine if there is any room for improvement.
Identify any processes that could be automated. Determine what information needs to be accessible. Think about when and how employees will enter the data into the ERP system. Be realistic about entry methods and time commitments.
Talk about your organizations strengths and weaknesses at present. If you do not understand these, it will be difficult to nail down how your ERP selection will impact them. Will they make your weak areas stronger? Will they somehow damage your stronger areas? How?
Determine Technology Requirements
Don’t forget that ERP may interact with or replace other systems. Awareness of any technology affected by a new ERP system is a frequently forgotten part of the 8 tips for ERP evaluation. IT personnel will typically offer insight for what new ERP adoption means for existing technology. Establish if existing technology will support potential new systems.
Questions for IT:
- What other systems does the ERP software need to work with?
- What is the IT budget?
- How is data stored?
- What are future data storage plans?
Identify Necessities vs Bonuses
A core goal of ERP is to make processes easier. You should not have to alter processes for the sole purpose of ERP organization or data entry. Even if the system is a great fit, there will always be a few areas that will need an adjustment after implementation. Which processes can you be flexible with and which ones must absolutely remain the same? Document all findings, some people find that using a checklist helps during evaluation. These requirements will make it easier to narrow down options.
Anticipate Growth or Contraction
It is inevitable that your company will change over time. Your ERP solution needs to be able to adjust with your organization. If the business expanded operations, what systems will still meet requirements? If your largest client goes out of business, would major processes or product lines change? Look for a solution that offers full functionality out-of-the-box and has multiple add-ons available. Extra modules can provide functionality without necessitating purchase of a new system. Make sure your ERP system does not set strict limits.
ERP pricing has gotten complex due to a number of different costs. Most teams make the mistake of focusing on the upfront investment. Identify long term and recurring expenses. Take a close look at support and training. Pricing for these can be very hard to estimate. This can make a large difference between the lifetime costs of each system.
Common ERP costs:
- Software implementation
- Annual maintenance fees (software updates and upgrades)
- Support (annual, hourly, or tier)
- Technology requirements
- Additional licenses and renewals
Complete a Side by Side Comparison
At the point, most organizations are evaluating 2 to 4 ERP options. Compare all potential ERP systems to each other. This may be the most difficult of the 8 tips for ERP evaluation. Objectively compare the same functions and features from one system to the next. An ERP matrix or scorecard can make this much easier.
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