How to pick the right ERP for your organization

Treat the selection process like a project

Choosing and implementing an ERP system is more than a task for your IT department. It’s a major undertaking that will require input from multiple departments and span weeks or months. With that in mind, approach this selection process like you would any other structured project or initiative at your organization.

Start by setting a strategy, which will include your decision-making criteria and business requirements. Clearly define your goals, scope, priorities and ideal outcomes so everyone on the project team will be on the same page.

Speaking of the project team, make sure the right people are in the room from the beginning. Involve stakeholders from across the organization—not just IT, but also functional areas with hands-on competency, such as HR, finance, operations, and so on. As with any major project, strong executive alignment drives success from the top down.

Remember that this project doesn’t end with making a system selection. Ensure that implementation and deployment planning are part of the process as well.

Maximize your RFP and demo

Two critical components of the ERP selection process are the request for proposal (RFP) and demo. These two touchpoints are your primary chances to get specific details from your top ERP providers, so it’s important to get the most out of the opportunity.

In a traditional RFP, your organization will lay out a long list of technical requirements and vendors will respond to each line item. One way to enhance this process is to include a “vendor packet” with information about your organization’s background, current issues and goals. Clearly lay out your existing technology stack and integrations, along with future technology plans.

When you receive proposals, push for deeper answers than a simple yes/no response, particularly for critical requirements. Even a well-meaning provider may over-promise during the proposal process, wanting to win your business.

When it comes time for a system demo, ask for your demo to mirror key business processes at your organization. This way, your team can envision how you’ll use the ERP after implementation. Don’t settle for a pre-recorded demo that shows how the system ideally works out-of-box; you want to see how it will actually interact with your current system architecture.

Save these interactions for your short list—perhaps 2 to 4 top candidates. Otherwise, your team might suffer from information overload and deadlock the decision process.

Vendors vs. partners

There are two types of ERP providers to consider as you make your selection: vendors and partners. But what’s the difference? And which should you pick?

Vendors are the technology companies that create ERP systems. Well-known industry giants include SAP, Oracle and Epicor, to name a few. Typically, your interaction with a vendor is a one-time transaction.

Partners distribute and implement ERP systems. Your interaction with a partner is typically an ongoing relationship. A vendor may have an in-house implementation arm, but this is not always the case Many vendors use third-party implementation partners.

Some organizations only evaluate the ERP vendor and neglect to evaluate partners. This can put you in a sticky position later. A good implementation partner is just as important as a good technology vendor, perhaps even more important. Your ERP selection process may yield better results if you choose your ideal technology implementation partner—in other words, try reverse engineering the process.

Choosing a finalist

By this point, your short list should include only a few ERPs that roughly meet your specifications. Once you’ve narrowed down the field to a few promising candidates, it’s time to make a selection.

Choose a cross-functional evaluation team that can represent diverse interests within your organization. This team will be responsible for watching and evaluating demos as fairly as possible. Give your evaluation team scorecards to rate important features so you can compare systems numerically after all of the demos are completed.

When comparing costs, remember that proposal scopes vary widely. You may need to do some calculations to make apples-to-apples comparisons. For example, Provider A may offer 50 user licenses with equal access plus a lump-sum implementation fee, while Provider B offers 100 licenses with various access levels plus an hourly implementation fee. Extrapolate the total cost of ownership for each solution for the next 5 years as accurately as you can.

Once you have your evaluation team’s scores and your cost estimates, use quantitative and qualitative criteria to objectively determine the best fit for your organization. Keep implementation top of mind, as this will be the next big step on your journey to successfully adopting an ERP solution at your organization.

A few reminders about choosing an ERP

It’s worth remembering that a new ERP solution isn’t a silver bullet for your organization’s operational issues. Any managerial fixes that can be made first, should be.

Selecting and implementing an ERP system is a significant undertaking. It’s not uncommon for those involved with the process to hold daily meetings until the task is complete. Be prepared for how this may disrupt your business, albeit temporarily.

Knowing that this will be a disruptive project, you may want to consider a phased roll-out. Prioritize business areas that need immediate access to the new ERP, and work through lower-priority areas on a rolling basis. A good implementation partner can help you with this style of implementation plan.

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