How to Select Your Next ERP Software System
Selecting your next ERP software system can become a complex decision. Taking an ad-hoc approach in your ERP selection process can result in high unnecessary costs and interruptions to business productivity. In many cases assessing ERP systems is based on:
- market reputation
- referral from a friend or a colleagues’
- past experiences with an ERP system.
Often, the selection is done with incomplete requirements gathering, generic vendor demos, over-emphasis on total costs, employee bias, attempted self-implementation, and misunderstanding of requirements by the ERP vendor.
We have all experienced at least one or more of these events, and the financial impact can be significant. Thus, the likelihood of a successful ERP software selection diminishes significantly. The importance of taking a structured approach will increase the probability of success – here are a few points to consider:
1. Perform a business process review and analysis
To avoid the major pitfalls in an ERP software selection requires a structured approach. A company’s first and most important task is a Business Process Review (BPR) and Needs Assessment/Analysis (NAA). By performing by BPR and NAA, either internally or by engaging a professional services firm, you will be able to define the specific business and end-user requirements and determine the impact of the business process. As a result, you will find opportunities to increase efficiencies, reduce overhead costs, and gather alerts and reporting requirements at critical stages of the business workflow. In addition, by clearly defining your business process and system requirements, you can share your finding with the vendor to perform a solution presentation relevant to your business rather than a generic demo of their software.
By performing a complete needs assessment/analysis, you will be able to calculate the financial impact of each business process to determine hard and soft costs to your business. When selecting a new ERP, it will be much easier to determine the return on investment (ROI) by the effort needed to address the inefficiencies and gaps in your current system.
2. Evaluate ERP technology platforms supported
As technology platform offerings vary, such as on-premise, cloud, and managed services – selecting the right ERP solution for your business should be first and foremost in your decision-making process. Technology platforms are an essential part of your ERP software, but each offering does have its pros and cons. For example, implementing cloud-based ERP systems has become more acceptable in our business cultures today.
3. Understanding TCO
As all business owners do, we over-emphasis the cost of a new ERP system and associated technology platforms. Many companies reassess their ERP requirements between five and seven years, depending on changes in the business environment. However, many companies have maintained the same ERP system for over 10 years. Therefore, understanding the Total Cost of Ownership (TCO) is essential in your decision. We tend to look at the first year investment as the impact on the business, but looking at the initial investment plus additional support costs over a 5, 7, and 10-year period will give you a better sense of the total cost of a new ERP software. Today, several ERP software publishers offer a subscription-based pricing model. The total initial investment is much lower, but the entire future costs can increase sufficiently. Under a subscription pricing model, you need to determine the total cost of ownership over 5, 7, and 10 years compared to other pricing models, including leasing options.
4. Determine potential business benefits of the new system
Understanding the potential business benefits of a new ERP system to your company should be measured quantitative, qualitative, and financial. Assessing your business’s key functional areas to determine the impact gives insight into the advantages to all stakeholders, including customers, vendors, and employees. Many business owners believe they intuitively understand the effects on all stakeholders. Still, a needs analysis will validate and confirm the investment needed to maximize the return and genuinely understand the measurable benefits.
5. Determine the impact on personnel
Let’s not underestimate the impact of a new ERP system on your personnel, especially if they are not involved in the decision-making process. Your employees have a detailed understanding of the requirements to assist them in their day-to-day job responsibilities. Empowering those in the selection process will help attain the commitment needed during the implementation process to achieve success.
6. Selecting the right business partner
Engaging a professional service firm specializing in the ERP system that best fits your company will help expedite the implementation of the solution. In addition, you will need to determine the services and expertise offered by the business partner beyond the ERP system since many technologies impact your entire IT infrastructure. You should partner with a professional service firm that provides a one-stop shop approach, including CRM solutions, Enterprise Content Management, Infrastructure Solutions, and Web solutions. The professional service firm can help you determine the best platforms across multiple offerings that best support the selected ERP system and can work directly with vendors and publishers on your behalf when needed.
Selecting a new ERP software for your company can be daunting and time-consuming. By partnering with a professional service firm with industry experience and knowledge in ERP system selection, you’ll minimize the impact on your company and employees while maximizing efficiency gains and return on investment.
Find the full article here: https://www.netatwork.com/how-to-select-your-next-erp-system/.
Some list to help you finding the right solution:
How do I choose enterprise software?
- Focus on Your Business Processes.
- Select Software Tailored for Your Industry.
- Check the Software Company’s Project Team and Experience.
- References are Important.
- After Sales Support Team.
- Don’t Ignore the Return-on-Investment (ROI).
- Flexible, Transparent, and Auditability.
Top 10 ERP selection criteria:
- Business requirements.
- Upper management support.
- User support.
- Functional requirements.
- Integration with existing systems.
- Budget and resources.
- Technology and future scalability.
- The total cost of ownership and ROI.
How to Select Your Next ERP Software System
- Perform a business process review and analysis.
- Evaluate ERP technology platforms supported.
- Understanding TCO.
- Determine potential business benefits of the new system.
- Determine the impact on personnel.
- Selecting the right business partner.