How to Evaluate ERPs?
More than 74% (1) of ERP implementations fail to stay on time. Some of those will fail to deliver the solution. How can you safely champion a change to a new cloud ERP system? It starts with a great ERP evaluation plan.
You probably started the process of changing systems within your company. If not, you can review Outdated clunky ERP? Start an ERP Evaluation with this Simple Plan for more information.
If you completed your internal work, you’ve identified gaps between your present systems and an ideal ERP solution. Then you uncovered the hard costs associated with these solution gaps. Finally, your team received the approval to start a formal ERP evaluation.
So now what? Evaluating cloud ERP systems for possible acquisition is a significant undertaking – you and your selection committee/stakeholders have a lot of research material and operational data to consider. We have tried to alleviate some challenges by providing you with a practical list of cloud ERP evaluation procedures based on our extensive research and experience working with different customers and vendors.
Have a Vendor Selection Plan and Execute it
1. Establish Vendor Selection Criteria
The vendor-selection process can be complicated and emotional if you don’t know how to approach it from the start. Therefore, evaluating ERP vendors for their expertise in your industry is a good idea. The ideal vendor will have a successful history of prior ERP installations for companies in your industry and roughly the same company size.
Some of the questions you need to answer include:
How well does the vendor know my industry?
Does the solution offered by my vendor solve my needs?
What value does the vendor add to the solution?
Can the vendor provide customer references similar in industry or location?
2. Establish Budget and Timeline
It’s estimated that 75% of ERP planning transformations fail to stay on schedule or budget (1) , with 74% of ERP projects taking longer than expected. Therefore, it is critical to establish clear and realistic project goals.
Proper planning and documentation of detailed assessment of business processes beforehand can prevent scope creep. This will ensure that the project is completed within the budget and timeline.
Cloud ERP solutions typically cost less and take less time to set up due to zero investments in hardware and the necessity to stick to standard industry best practices for successful implementations. Therefore, cloud deployment models are popular among growing companies.
The critical takeaway is that the timeline and budget need to be realistic. Setting proper expectations allows the team to accept them, increasing the chances of meeting them.
3. Conduct a Comparison
Once you’ve taken a good hard look at all your shortlisted vendors — eliminating any that didn’t meet your requirement analysis or budget — you can compare the remaining vendors and see which best fits the bill.
The best way to do this is to create a scoring number system/comparison chart based on their strengths and weaknesses. Ensure also to include the ROI or value of each solution.
4. Verify Vendor Reliability and Expertise (For Vendor Selected)
Now that you are at the final stage of selecting your preferred ERP solution, it is time to drill down into your chosen vendor’s experience, reliability, and expertise. This would be the best time to clarify with their references on work done as you now know the right questions to ask and are close to signing the contract.
Do not dismiss crossing your Ts and dotting your Is as you do the final background checks. Remember, this relationship will sometimes last more than five years (particularly if you select a cloud ERP solution). You will work closely with your vendor and partner to ensure that the implementation is successful, and that the solution works for you.
Remember, making a significant financial investment in your business is never easy. However, spend the time doing your homework and asking the right questions. You will improve the chances of having a positive vendor experience instead of overpaying for a less than adequate product or service.
For more information about ERP vendor selection, contact the experts at Softype.
References:
(1) Agile in enterprise resource planning: A myth no more by McKinsey research, August 29, 2019.