ERP implementation – key considerations for your ERP Package Selection

As companies adapt and transform to meet market and customer needs, they often look to replace or enhance their Enterprise Resource Planning (ERP) backbone to gain efficiencies and take advantage of the latest technology enablers across their finance, HR, supply chain and other core back-office processes.

Due to the scale of change required, organisations will only select a new ERP platform on a very infrequent basis. The ERP market is extremely competitive at all levels and as a result continuously evolves as the players vie for market share, developing vertical industry solutions, and seeking to extend their footprint beyond the traditional back-office functions.

A robust selection is therefore a key component of driving a successful transformation.

What are some of the considerations you should take?

Business drivers and outcomes

The first consideration is to make sure there is a sound footing for the decision making. Take time up front to ensure that you establish clarity and agreement across your Leadership Team on why your organisation needs a new ERP platform, and why now. This will become your ‘North Star’ as you navigate through the selection and implementation phases.

As part of this, consider future business needs, aligned with your business strategy, but be pragmatic about what your size of business actually needs i.e. do not buy a Ferrari if a Mini will suffice.

Sponsorship and ownership of outcomes

Once clear on your drivers, you need to ensure very clear accountability for achieving them. Identify who in your Leadership Team will be responsible for achievement of which business outcomes, make them measurable, and bake them into individuals’ personal objectives, across both business and IT.

Develop a crisp business case setting out the financial and non-financial benefits to be delivered by the project. Otherwise, how will you know when you have succeeded?

Also, importantly, be aware of, and manage, the ‘baggage’ that you and other stakeholders are carrying into the selection process.  Some of that baggage might be ten years out of date and unless checked, could lead you down the wrong path.

Requirements and business processes

ERP vendors have made significant investment to ensure their solutions give the most effective business processes, so it makes sense to take advantage of this and to really push for adoption of standard out of the box functionality. Change your processes to fit the tools/functionality, not the other way round. This will give you the most efficient solution in the long run, especially with a cloud-based solution which will have regular updates and enhancements. You don’t want to be retrofitting customisations with every release, unless absolutely necessary.

It is important to have the current processes documented so you can plot the change management journey from current to future. Don’t underestimate the effort required to win the hearts and minds of your teams and to help them adapt to new ways of working.

Also, start work on your data early on. There may be significant work required to cleanse existing data and to determine ownership and master source, before then working out the requirements for data migration.

Identifying an initial list of vendors/solutions

For your long list, establish a short, clear set of minimum acceptable criteria, for example multi-language, multi-currency and multi-company capabilities can add cost and complexity and may not be in your current business needs, or future plans.

Tier 1 ERPs have industry-specific solutions, and some Tier 2 ERPs are focused on certain industries (engineering, retail etc.) In drawing up your long list, consider what others in your sector are using.

In drawing up your shortlist, make the result fact-based by agreeing a weighted scorecard up front, based on the acceptance criteria and questions from business and IT sponsors.

Running the vendor Request for Proposal  (RFP) and selection process

When creating the RFP documentation, you need to include technical criteria alongside the business requirements, for example, ease of integration with existing applications, cyber-security, cloud-hosted vs on-premise, mobile apps. It is also worth asking about the future product roadmap. The Tier 2 market, in particular, is volatile. Asking the right questions about their product roadmap can elicit some insight into the longer-term prospects for the platform.

As well as the RFP document, you can gain considerable insight from demos, both into the product and the organisation selling it. And consider asking for customer testimonials or reference site visits. Use your own professional network to gain insights beyond the references offered by the vendors.

Another important step is to make sure that you agree the selection criteria prior to finalising the RFP. In that way you can make sure you are covering all of the required questions, and you will  align all stakeholders prior to the review process.

Partnering with a Systems Integrator (SI)

If this is a complex implementation, then it is likely that you will need a systems integration partner to provide the horsepower required. Don’t automatically rely on the Product Vendor to be the SI – separate and objective drive is often required to bridge the gap between the business and the product.

You need to be honest about your own capability, resources and capacity. Look at exactly what skills/expertise you have in-house and what you need to source externally. Examine whether the SI will provide knowledge transfer as part of the delivery so you are left with enhanced in-house capability. And very importantly, think about how you would effectively manage and govern an SI – you will need a layer of very capable programme management in-house to do this.

Commercial considerations

When comparing commercials make sure you understand the total cost of ownership for the new ERP platform, including initial live support, ongoing maintenance, upgrade process, costs for future project/enhancement work. Also ensure you understand what is included as vanilla standard, and what is extra, and how expensive it would be to scale if your requirement grows.

A number of things to think about, all of which will require close management. At Project One, we have worked with several customers to help them select and then implement the most relevant and effective ERP platform.

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theteam@projectone.com