ERP projects are tough to pull off and your ERP software selection process is the first step in a long journey, so it's essential to get it right.
In this post, we'll show you some of the key issues to avoid and best practices to follow in order to nail your ERP software selection process.
2. Defining your ERP Selection Criteria
The number one mistake that you can make when selecting your next ERP software is to get your ERP requirements gathering process wrong. Gathering your ERP requirements needs to be done before you even consider your ERP software selection.
50-60% of companies we speak to fail to even document their ERP requirements and this has disastrous consequences ranging from wasting your own time, the time of ERP vendors and partners as well as jeopardizing your ERP implementation by not being clear on what you want.
A good ERP requirements gathering document is like a contract.
It sets out what you are looking to achieve and what your needs are as a company. When you implement an ERP system, you're about to do open heart surgery on your business. You need to have some documentation if you want to get it right.
So first things first, work out what you need to buy using our free ERP requirements gathering template.
As well as defining your functional and technical ERP requirements, you will need to ensure you understand what your overall ERP selection criteria is. Just because your chosen ERP software meets your functional needs doesn't necessarily mean you should select it.
There are other key factors to consider, such as:
What's the future of my chosen ERP vendor? What's the cost of their solution? Have they got a robust technology roadmap? Are they used by your peers or competitors?
There are several other factors to consider, so make sure you fully document this before you get started.
We have prepared an ERP selection criteria guide which you can find here.
Oftentimes, we see companies evaluating and selecting the wrong ERP software for their requirements in the first place. Perhaps your CFO is buddies with an ERP vendor or provider, but is that a good reason to choose to implement it?
No.
Instead, you should choose between 4 to 8 ERP software vendors and providers to evaluate based on their suitability to your company size, industry and specific ERP requirements. There is no one 'best ERP' software for every single company.
So which ERP software could you consider in your ERP software selection?
Netsuite is commonly on most ERP software selection shortlists as it's one of the most popular Cloud ERP solutions available for small and medium sized businesses. Netsuite ERP provides functionality for financial management, accounting, inventory, supply chain and professional services automation and more.
Should Netsuite be on your ERP shortlist? Read our full guide to find out.
Full Guide to Netsuite ERP >>>
Acumatica is quickly becoming one of the most popular ERP solutions we see being evaluated in ERP software selection processes. Acumatica is Cloud ERP solution which is built for small and medium sized businesses in a variety of industry flavours.
If you're considering a robust Cloud ERP solution, then Acumatica could be a great choice.
Full Guide to Acumatica ERP >>>
Sage Intacct is a Cloud based financial management system more than it is an ERP software, but it makes it onto many ERP selection shortlists for professional services firms, non-profits and those in service based industries.
Full Guide to Sage Intacct >>>
Microsoft Dynamics 365 is an ERP solution which is considered in many ERP software selection and evaluation processes for it's tight integration with the wider Microsoft Office application portfolio.
Full Guide to Microsoft Dynamics 365 >>>
Infor CloudSuite Industrial is found on many ERP shortlists for small and medium sized manufacturers, retailers and distributors. The solution is flexible and provides deep capabilities for product based businesses.
Full Infor CloudSuite Industrial Guide >>>
Epicor Kinetic is an ERP software which needs to be on any ERP selection shortlist for manufacturing, distribution and retail companies.
Full Guide to Epicor Kinetic >>>
SAP Business One is SAPs entry level ERP software which is built for small and medium sized businesses in manufacturing, retail, distribution and many other industries too.
Full Guide to SAP Business One >>>
Like Sage Intacct, Workday isn't neccesarily an ERP system, but still makes its way onto many ERP shortlists. Workday boasts a robust HCM product suite, but also provides finance and accounting capabilities plus professional services automation capabilities.
SAP S/4 HANA is a must have ERP solution for any fast growing midsized company or large enterprise regardless of industry. It provides rich functionality for almost any requirements and comes in both On-Premise or Cloud deployments - both Private Cloud or SaaS.
Once you've shortlisted and selected your chosen ERP system, you're not out of the woods. You now need to negotiate your ERP software and implementation contracts.
The first thing you need to consider if your ERP software costs. In this domain, we see companies falling into a lot of the same pitfalls.
Firstly, they get what looks like a great deal on a 1 year Cloud ERP subscription. 12 months later, they find out their subscription cost is increasing by 50%.
Whats the remedy?
Rip out the ERP system you just spent 9 months and a lot of blood sweat and tears implementing?
Lesson one - don't fall for a low Year 1 cost without any renewal or price increase protection.
Secondly, companies fail to correctly license themselves for their chosen ERP software and fall foul of the small print.
For example, one client purchased an ERP software that needed to integrate with a high volume billing system. The billing system was processing hundreds of thousands of transactions per year. The client assumed that this integration would be free of cost.
The problem?
They needed to be licensed for every single transaction made by the billing system which wrote data to their ERP system. This was a nasty surpise which cost them 20% of their planned ERP costs to correct.
The lesson? Make sure you read the small print and get expert help when selecting your ERP software.
A key consideration during your ERP selection process is whether to opt for a fixed price or time & materials implementation. There are pros and cons to both approaches.
Fixed price implementations provide some level of certainty and set an expectation as to the upper limit of the project cost. On the other hand, they can be caveated to high heavens by ERP implementation providers which can undo the price certainty they are supposed to provide.
On the other hand, time and materials projects can spin out of control if the right governance model isn't in place on both sides.
When choosing your ERP software and provider, make sure you go into detail on how you will pay for and contract your implementation too.