Follow these steps when choosing an ERP system

The ERP software market has many solutions that can improve workflows, save time and money, and reduce errors. Follow these steps to pick the right one.

With so many enterprise resource planning options in the marketplace today, selecting a package for your business can be an overwhelming task. While many companies feel that any software will work and their organizations will simply conform to the functionality of the software, widely publicized ERP failures indicate that this isn’t the best solution.

Further, since enterprise resource planning should be a transformational business initiative providing key competitive advantages to your company, the decision shouldn’t be taken lightly or made with incomplete information.

SEE: Top 5 ERP systems that will help your enterprise digitally transform (TechRepublic)

So, what’s the best way to find the ERP solution that’s going to be the best fit for your organization? Here are seven steps to help you choose the right software for your organization.

Conduct a process review and analysis for ERP

Since ERP is first and foremost a business initiative, you should first define and document your current business processes, pain points and strengths. This analysis should also include what you think your processes should look like in the future (your “to-be” state) and the corresponding business requirements.

These processes and requirements should eventually be used for potential software vendors to demonstrate their product’s capabilities within the context of your business needs.

Evaluate the technical fit of an ERP solution

Although ERP should be a business rather than a technology initiative, it’s also important to understand how a potential software solution will align with your current infrastructure. For example, if you’re a Microsoft shop, you’re likely to find a better technical fit with ERP software products built on a .NET platform.

Understand the total cost of ownership of an ERP solution

During the sales cycle, ERP software sales reps are interested in downplaying the costs and risks associated with purchasing their software. However, it’s a lot easier to accept potential costs early in the process rather than after you’re already committed to a particular solution.

Be sure to uncover “hidden costs” associated with enterprise resource planning, including implementation costs, hardware upgrades, backfilling your project team resources and software maintenance.

Develop a realistic ERP implementation plan

While you’re still in the sales cycle, you should take vendor implementation duration estimates with a grain of salt. It’s important to develop a comprehensive project plan that includes not just the activities required to install the software but the ones that are required to ensure the solution is fully functional, tested and accepted by end users.

This plan should be developed prior to your final software decision, so you fully understand the cost and resource commitments required to make the project a success. Your implementation project plan should include everything from business process and workflow design to data migration, conference room pilot, multiple test iterations and key organizational change management activities.

Track the potential business benefits of the new ERP system

If you don’t measure it, you likely won’t achieve it. ERP projects are no different. Chances are your organization is looking at enterprise resource planning as a way to reduce costs, increase revenue or scale for growth. Therefore, you should estimate and measure benefits against these metrics if you are going to realize the full potential of ERP.

SEE: Your on-premise ERP software is getting old, but is the time right to retire it? (TechRepublic)

Keep your ERP options open

Contrary to common belief, there are more than just two to three primary ERP software vendors. Although two to three software vendors constitute a majority of market share and marketing dollars, there are at least 70 viable ERP software solutions in the market — all with varying degrees of functionality and strengths.

Too many companies choose a solution based on brand name or based on what competitors are doing. Instead, organizations need to consider the options that are going to best meet their unique business requirements and sources of competitive advantage.

Look for objective and independent advice about ERP solutions

Ask colleagues, employees, and other contacts what they use or recommend for a company like yours. Conduct research on the internet or hire an ERP consultant if necessary. In any case, don’t assume you have all the answers if you don’t have experience with ERP. Find other sources of independent ERP advice to validate what you’re hearing from software sales reps.

Eric Kimberling has more than 15 years of experience in the ERP and CRM consulting industry, including software selection, project management, organizational change management and benefits realization. He is the founder of Panorama Consulting Group, an independent ERP business consulting firm focused on ERP software selection, implementation and organizational change management.