Enterprise Resource Planning (ERP) Evaluation
“Choosing a new ERP software to run your business on is one of the most important decisions your company will make. It can greatly impact financial performance, growth and productivity. The team at Innovation ERP can help make sure it is the right fit for your organization.
Questions to consider before beginning an ERP Evaluation:
- Why do we need a new ERP package? You may be looking to your new software to help facilitate:
a) process improvement
b) better management reporting
c) streamlined inventory & warehouse operations or any number of business goals.
Review of expectations and benchmarks will help to confirm that a new ERP solution is warranted.
- Business requirements? If ERP is the route you need to take, it is important to look at your desired operational model and use that as a starting point in determining which software to implement. Executives should define and document key business requirements for any package they may select.
This includes not only nice-to-haves but also requirements that are “deal-breakers” if the software is unable to accommodate them. In addition, executives should use the process of defining ERP business requirements as an opportunity to improve current operations, efficiency and effectiveness. The last thing a company should do is implement software to automate the same flawed business processes. Instead, the focus should be on achieving measurable business value for your organization, and you should choose the software that best enables you to do this.
- What is your business case and ROI? This is where many companies fall flat. It is important to understand and document what your total costs will be for each ERP vendor under consideration, as well as your anticipated business benefits. This is important in gaining approval from other executives or your board of directors, and it helps to ensure that you realize the potential benefits of implementing ERP. All costs— including hidden project costs such as internal project resources, data conversion, and lost productivity immediately following go-live—should be included in the business case and ROI calculation for each ERP vendor you evaluate. If the resulting ROI for a particular ERP vendor neither makes sense nor meets minimum investment criteria for your company, then it’s probably not a good idea to undertake the project.
Six steps to an effective ERP assessment and software selection
To simplify the evaluation process without overlooking a package that may be a strong fit for your organization, we recommend a multiple-phase process to evaluating vendors. This process includes identifying your “to-be” business processes and business requirements, which are both critical to an effective ERP assessment:
1. Identify both industry-specific and general ERP packages. Based on your business requirements and budgetary needs, you will probably eliminate most vendors. We typically recommend developing a “long list” of six to eight vendors.
2. Once the long list has been compiled, identify the key requirements that a package must have in order to make the short list. These “deal-breakers” should help you arrive at three to four short-listed vendors. Typically, discussing business requirements with each of the long-list vendors and getting an RFI (request for information) response will be the basis for moving to a short list.
3. Conduct a detailed assessment and analysis of the short-list vendors. Identify and prioritize the detailed business requirements that your organization needs in a potential ERP package. From these Manufacturing ERP software selection demystified: How to evaluate ERP platforms.
4. During the short-list and demo evaluation, involve key users and ask them to complete evaluations for each of the vendors. These evaluations should be quantitative assessments of how well the vendors’ products address the key business requirements in demo scripts.
5. In parallel with the functional assessments, assess the technical capabilities of the short-listed vendors. This should include areas such as scalability, ability to integrate with legacy systems, openness of the architecture, etc. These technical factors may be as important as your functional business requirements.
6. Make a decision based on the input from the vendor evaluations and technical assessments. Gather the input you’ve received from the various assessments, and prioritize the vendors’ strengths and weaknesses. Finishing your selection may require more of a quantitative ranking and weighting to evaluate how well each of the packages meets your business requirements.