Enterprise Resource Planning (ERP) is the software you use to manage your business, merging applications that manage and integrate your financials, supply chain, operations, reporting, manufacturing and human resource activities. As a result, ERP streamlines and integrates business processes, lowers the cost of operation, improves reporting capabilities, data security, and increases productivity.
Selecting the right system to support your organization’s needs can sometimes be overwhelming. So, it is important to follow a step-by-step process to ensure you are armed and ready to make a decision. If you do your homework, you will make the correct decision.
Below, we have put together tips that outline key steps for selecting the right ERP software for you.
What are your Business Requirements for the ERP Project?
The most critical step of your ERP selection is the planning stage, where you visualize how the ERP system will work with your organization’s business processes. These processes already align with your organization’s overall goals and strategy, and understanding them from the beginning will save time later during implementation.
During this first step, you will need representation from all departments using the system to elicit the appropriate requirements—this also helps with buy-in from the team after the system is implemented. Most importantly, you should all agree that you will configure, not customize, your ERP.
In a perfect world, you would be able to find an ERP software that can take care of all your requirements for the right price. But, unfortunately, in the real world, you’re more likely to make some sacrifices. So, deciding which ERP software requirements are more critical will help you keep an objective mind as you shortlist ERP products.
Research ERP Software Solutions
Next, you begin the step of researching software solutions that will best fit your needs. There are well-known ERP systems, up-and-coming systems, multiple editions of one system, and the list continues. You should use the 80/20 rule for technical fit because you likely want a system that meets your requirements naturally (80%). That will leave the remaining 20% for tweaking or tailoring the software to fit your unique business processes. Because some platforms are easier than others to configure, you need to understand how flexible the software is. It should allow you to add custom or user-defined fields at a basic level, but if you need more complex customizations, make sure you know how they will affect future upgrades.
Understand your Total Cost of Ownership (TCO)
Once you’ve narrowed down your ERP software list, the time is right to request detailed price quotes from the vendors. Then compare their offers, including support, training, pricing models, third-party software, and hardware and include 1 upgrade in a 3-year cycle if purchasing the software. Services and other consulting efforts are needed so be diligent when estimating these costs.
This is the time when you need to beware of scope creep. Most projects (nine out of ten) run over budget due to additional items added to the wish list after the system’s design is signed off.
If you are tempted to expand the scope of the requirements, it is good to revisit your original project objectives to examine if the change in scope will help you achieve them and if the added cost is worth it. However, it is prudent to budget for contingency as no ERP implementation is perfect. Where some may come in under budget, it is more common for ERP implementations to exceed budgets because of issues not anticipated, requirements missed, lack of ownership, and clients or partners missing deliverables.
Be Realistic with your Implementation Plan
Remember, implementing an ERP solution takes time; however, the timeframe can differ depending on your chosen solution, your business needs and your implementation partner. To allow for different timelines, consider your timeline and expectations.
Before making your final choice, you should ask each partner for a comprehensive implementation plan, including the following:
- Business processes and workflows
- System design
- Software installation and configuration
- Data migration (make sure your data is fully scrubbed and usable – remember the data you get out of your new system will only be as good as the data you put into it.)
- Functional testing
- User acceptance testing by key users
- User training (including super users and the rest of your team)
- Change management activities
This plan will help you completely understand the costs and resources required to kick off your new ERP implementation successfully.
Track the Success of the Project
Don’t just evaluate with a gut feeling. Pull out your original list of objectives and measurements for success. Have you improved visibility, reduced costs, increased customer service levels, or any other items on your list?
Check your KPIs and compare them against your ‘before’ values. You now have easy access to your data, so your performance metrics are at your fingertips!
There are so many ERP solutions available on the market today that it is critical to spend time figuring out what is important to your business. The more information you have when entering the selection process, the more seamless it will be.
If you are looking for a new ERP System, we can help as this is what we do. Please contact our team at The BHC Group, and we will be happy to chat and take you on this exciting journey.