Selecting the right ERP solution
Integrated ERP solutions have helped many companies transform their supply-chain management processes, by streamlining their sales, order processing, manufacturing, inventory management and distribution processes onto one enterprise-wide systems backbone; enabling them to produce and deliver their goods more quickly and manage working capital investment more effectively.
In this post, we look at some pointers to help you select the right software solution for your organization.
Step 1 – Know your requirements
To help you determine your most important system requirements, consider setting up a cross-functional Evaluation Team that reviews your current systems; identify existing pain points and setting down the problems that you expect the new system to solve.
The Evaluation Team should review what works well with the current system/s and what doesn’t. In addition, the team should also look forward and consider ways in which the current procedures and workflows could be improved with the new solution. Some simple examples are mobility applications and workflow technologies that builds tasks, roles and rules in your standard operating procedures.
Step 2 – Selecting the right software
At this stage your Team has probably spent a lot of time considering their requirements. They are under pressure from top management to make a recommendation and yet they are still likely to be confronted with a confusing array of potential solutions – all of which appear to offer all the necessary systems functionality. What to do next?
The biggest mistake is to pick half a dozen solutions out of the hat and then invite vendors in for a beauty parade of demonstrations. This is a wonderful mechanism for creating the illusion of progress whilst invariably creating more confusion.
Fortunately, there are simpler and safer criteria for selecting the right software solution, as well as the most suitable software solution implementation and support partner. These are;
a. Vendor longevity/ coverage of software vendor
Vendor viability has become a major issue, especially with the recent pace of merger and acquisition activity in the business software market. For many well-known software products, acquisitions have resulted in the discontinuance of R&D and ultimately product support. Your business doesn’t need this level of uncertainty and disruption.
Similarly, software development is no longer a cottage industry, with more than 60% of all business software now being developed by just three vendors with global coverage and very large R&D budgets. Unfortunately, the reality is that local software vendors are increasingly likely to be here today and gone tomorrow.
b. Systems architecture and ease of integration
This criterion is closely related to vendor size and scale, as well as the size of their R&D budgets. You need to be sure that your new system will work with all the latest technologies; supporting integration with mobility solutions, business intelligence applications, bar code scanners and new technologies such as in-memory processing.
You also need to ensure that your chosen solution can be easily extended and adapted to meet your changing business needs. For example, does it incorporate a software development kit that enables functional extensions to be made without changing the original software source? Can it be integrated easily with third-party point solutions?
c. Systems/ partner support
Most of the world-class ERP software solutions are marketed, implemented and supported through a network of accredited partners. Choosing the right partner is therefore crucial to the success of your new systems implementation and ongoing support. How do you do it? There are a few simple steps;
- First, get to know your prospective partners; how do they manage their customer support operations? What systems do they use? What service performance metrics do they use? What customer satisfaction ratings do they achieve?
- Next, what references do they have, particularly in your sector? It pays to check-out reference accounts thoroughly.
On paper, all the potential solutions that you are considering will claim to have the functionality you need. Remember that live software demonstrations can also be very deceptive. You should get your shortlisted vendors to carry out a structured demo that uses a sub-set of your actual data and show how the system will actually handle the required workflows.
This will also help you determine how user-friendly the system really is and the extent to which the vendor/ implementation partner really understands your business.
Setting an arbitrary investment ‘budget’ and inviting vendors to submit their cost estimates and then selecting a shortlist of those vendors that most closely meet your ‘budget’ is another common mistake.
This approach completely disregards the improved ROI that you may achieve with a higher initial investment cost. Also, more often than not, this approach doesn’t look at the true cost of ownership involved in different solutions.
Ask your vendor to help you prepare a quantitative analysis of the cost-benefits of the new system, the payback period and the ROI. If they are unwilling or unable to help you do this, you may be talking to the wrong vendor.