ERP – Where to Start?

Starting an ERP selection and Implementation seems like a huge undertaking. It can be, but it can also be straightforward if you do things properly.

Where to Start with your ERP Selection and Implementation
Where to Start with your ERP Selection and Implementation

If you are a small to medium sized company, here are some tips to get you going:

1. ERP Vendors – who should you look at? There are many different ERP vendors. The easiest way is to use a free evaluation service such as SoftwareAdvice.com. Their advisors ask you some questions to profile the type of business you are in and then from that they can give you a short list of candidates to focus on. One good article you should examine is to help you understand how ERP vendors are categorized is “ERP – What Tier are you in?” You can also reference our ERP directory for a listing of various ERP vendors.

2. What questions should you be asking the ERP vendors? This is really a questions of how well do you know what you do. Take a look at “How to determine your ERP Evaluation Criteria” to learn more about how you should self examine your company to then have the criteria for evaluating the vendors. You can also get some free templates that will help you in evaluating erp vendors here on our site.

3. ERP Negotiation – How to reach a successful outcome? Negotiation can be stressful, but really it doesn’t have to be. It is a dance that the vendors go through everyday, so they know how to work it and how to make you come to their desired decision point. You can learn more about negotiation through various books, or you can start with this article on ERP Negotiation.

4. ERP Implementation Planning – There are a lot of details to implementing an ERP solution. Here are the Top 20 ERP Implementation tips. Find out also What makes for a successful ERP Implementation. You can also learn about four corners stones to any successful implementations with this article on RICE. Here is a great article on the 12 Steps to a better ERP Launch. Lastly, here is a tongue-in-cheek look at implementations.

We hope these links and articles will help you sort out resources as to where you can start with your ERP project. For more information, please also see our ERP Bookstore where we have a lot of useful books on ERP Selections and Implmentations.

How to determine your ERP Evaluation Criteria

Defining your ERP Evaluation Criteria is essential for paring down the vendors and getting to the final choice.  There are two focus areas for determining your selection criteria:

ERP Evaluation Criteria

Determining your ERP Evaluation Criteria

1. ERP Evaluation Criteria – Process

The Process analysis for determining your ERP Evaluation Criteria is the method you would use to determine the flow of data through the system and how it would follow along your established or to-be business processes.  For example, following a process flow of quoting an order, receiving the order, manufacturing or purchasing the product, shipping, and finally invoicing the order is known as the order-to-cash process flow.

There are other anther ERP Evaluation Criteria processes such as procure-to-pay, which maps the inventory requirement through the accounts payable billings. Another example could be the HR process of recruiting though retirement.

ERP Evaluation Criteria

Using Process Flow documentation to determine your ERP Evaluation Criteria

By mapping out these processes in a tool such as Microsoft Visio Standard 2010ERP Evaluation Criteria and developing a detailed flow diagram, you will have a good understanding of how your business operates.  With this knowledge, your evaluation of various business management software will be a lot easier.  Further, you can see how closely the software’s process flow mirrors your company’s or how disjointed the software is when it comes to your business.

2. ERP Evaluation Criteria – Functional

ERP Evaluation Criteria for the system is the detailed list of all of the things you need the system to do, from processing purchase orders, processing a sales order, to invoicing a client and producing financial reports.  These are the nitty gritty things that your system should do.  A good place to start is to evaluate your current system.  What are the functions that the current system does well?  Include these in your list.  What are the things that your system does poorly, include the desired functionality in your list.

Your list should not be 10,000 lines, but rather it should look at those items that make your business unique.  For example, most every business has to cut A/P checks.  So most systems can do that.  So do not list as a requirement that the software should be able to cut A/P checks, rather make your requirement specific to your company, such as “System should be able to cut 3 copy laser checks, with reprint capability.”  That very specific requirement will help you distinguish the vendors from one another.

A good place to start is with an ERP Evaluation Criteria Template.  ERPandMore has many different templates to assist you in evaluating various ERP software venders and have best practices built in.  In using these as a starting point, you will save yourself countless hours in both preparing these criteria templates as well as in differentiating the vendors your are looking at. We hope this has helped to answer How to determine your ERP Evaluation Criteria

ERP Evaluation

ERP Evaluation

If you have ever been through the ERP Evaluation process, you understand the stress and pressure that is involved with selecting ERP Software. Selecting ERP software is like getting married. It can have a lot of unknowns. If you are just beginning the process, hopefully this article will provide you useful tools to streamline your efforts. An ERP Evaluation process takes time and the level of effort for properly selecting a provider and implementer can be tremendous. Here are some key things that you need to keep in mind.

ERP Evaluation

A company only goes through an ERP Evaluation, on average, only once every seven to ten years. As such, they usually do not have resident experts in selecting software. Companies do everything from the extremely methodical analysis taking years, to the rash signing of the contract at a software convention with no investigation at all. How long should a proper search take from start to finish? If done in a thoughtful and yet expedient manner, it should take anywhere from three to six months. This really depends upon the number of candidate software vendors you are looking at and the degree upon which you investigate the implementers.

Reducing time on you ERP Evaluation

One of the best ways to keep the selection time down is to hire a coach. This coach can be a consultant, a seasoned colleague from a trade association such as APICS, or a Software Selection Service. In either case, they will be able to steer you clear of some of the obstacles that you are likely to run into. You want to choose someone that has a clear understanding of the ERP Software landscape. They must have been through several ERP Evaluations previously.

ERP Evaluation of Internal Processes

Once you choose your guide, you then need to look at your internal processes. Ideally, you can document your business and answer the following questions:

  1. What is the general industry of the business are you in? (ie. Manufacturing, Distribution, Professional Services, Retail, Property Management, or Construction, etc.)
  2. What are the things that distinguish your company from others in your industry? (ie. We have a retail store, we only sell through distributors, we manufacturer locally [or offshore], we have a strong customer support staff.) Don’t stop at one item, list out as many as possible.
  3. What is your budget? Are you looking at $50,000 or a $1,000,000 system? (Including implementation services and maintenance contracts)
  4. What does your current system do today that you want to keep as functionality and what does it do horribly that you want to improve upon?
  5. What are the key requirements for each of your various departments or functional areas? Both #4 and #5 should be documented in a spreadsheet with columns to indicate if they are “Must-haves” or “Nice-to-Haves.”
  6. What are the key business process that the system must enable? This is usually a flow from Order to Cash receipts (ie. Order, Inventory management, manufacturing, shipment, Invoicing, and finally payment) or on the other side, Procure to Pay (Inventory Shortage, Requirements Planning, Purchase Requisition, Purchase Order, Delivery, Stocking, Invoice Receipt, Accounts Payable) and ultimately financial reporting and analysis. Today, Customer Relationship Management (CRM) plays a large part in a business processes. This includes marketing to lead to account management to sales opportunity processes and product support with customer service processes. These processes should be mapped or at least documented to both a current state and a wishful future state.

With these ERP Evaluation factors, you now have the basis for an objective review. You can use the list of requirements for your analysis of the vendors. Often the requirements are sent out as a Request for Proposal (RFP) and the vendors are scored based on their requirements. The top two or three vendors are then invited in to demonstrate their product. Usually that begins with a walk through of the company and an extensive question and answer session so that the vendors can get a sense of who you are as a company and learn more about your requirements in preparation for the demonstration.

Using your process documentation, a script should be provided to the vendors who will be involved with the ERP Evaluation process. You can then use the script as an evaluation factor to compare the process flow of the various software candidates. The vendors should be held closely to the scripts processes. Many times, they will want to deviate to the latest release module that has nothing to do with your business, but looks “really cool.” Keep them on track.

Once all the demonstrations are completed, there is usually a sense of which vendor showed their software in a way the more clearly demonstrated that they could fulfill your requirements. You may have eliminated the last place contender, But this is not the decision point yet! Along with the demos, the vendors also need to provide a price proposal. These proposals should include the following:

  1. Software License cost
  2. Annual Support Agreement cost
  3. Implementation costs
  4. Estimate of hardware infrastructure costs
  5. Any other miscellaneous costs

You can also get references that you can either call or visit. In our experience though, these are only good to find out about the user’s experience with the software as they will tell you nothing but good things about the vendor, since they were selected because they are favorable references. But it might be good to hear about their implementation and their user’s reaction to the software.

Once you have all of these facts, you are ready to begin the next phase, which is the negotiation. Your evaluation still needs to look at the financial and contractual obligation you will be signing up for. At this point, you usually are down to the final two. One strategy is to play the vendors against one another, but this is sometimes not a good strategy. They are wise to this and will often dig in their heels. The best thing to do is to give them financial and contractual targets that will convince you that they are the right vendor for them. Don’t be afraid to ask for a lot more than you think they will give. They might just give it to you. Another key strategy is to negotiate at the end of the month. Ideally, the end of the month at the end of their fiscal quarter or year is ideal. The vendors are hungry to show the sale on their books and will often give deeper discounts.

Now with all the facts, you can make your choice. Once chosen, both you and the software provider will need to learn to compromise and respect the other’s view as you proceed to implement. Software can only be configured so far, before you need to change your processes. However, if you ran the evaluation process correctly, you will have selected the best fit for your business, so if there is any change to your processes, it will be by adopting the software system’s best practices. Thus, with your well-run ERP Evaluation, you have laid the groundwork for an even happier marriage!

Download the Ten Steps to Selection ERP Software now!

Ten Steps to ERP Evaluation
Download the Ten Steps to Selection ERP Software now!

ERP Evaluation