Enterprise Resource Planning (ERP) software is a powerful tool that helps businesses streamline their operations, improve efficiency, and enhance communication across departments. However, according to Gartner, ERP implementation failure rates range from 55% to 75% (depending on when the survey was done), and McKinsey estimates that more than 70% of all digital transformations fail to meet their objectives.
That means that selecting the right ERP is a critical success factor. Choosing the right one for your organization can be a daunting task given the wide range of ERP solutions available in the market.
In this article, we outline the best practices for ERP software selection, ensuring that you find the perfect fit for your business needs.
If you want more information, then download our comprehensive ERP System Selection guide.
Define your objectives and requirements
Before you begin your ERP software search, it’s crucial to have a clear understanding of your organization’s needs, goals, and challenges. Start by identifying your business processes, pain points, and areas that require improvement. Engage stakeholders from different departments to gather their input on requirements and desired functionalities.
Once you have a comprehensive list of requirements, prioritize them based on their importance to your business. This will help you stay focused on the most crucial aspects during the selection process and prevent you from being swayed by unnecessary features.
Establish a project team and a budget
Form a project team that will be responsible for the ERP selection process. This team should include representatives from all key departments, such as finance, operations, IT, human resources, etc. The team’s role is to evaluate potential ERP solutions based on the requirements.
Next, establish a budget for your ERP project. Establish the Total Cost of Ownership (TCO), considering not only the software’s cost but also implementation expenses, training, and ongoing support fees. A well-defined budget will help you narrow down your options and avoid overspending.
Research and shortlist potential vendors
With your objectives, requirements, and budget in place, you can begin researching potential ERP vendors. Look for vendors with a strong track record and expertise in your industry. Read customer reviews, case studies, and industry reports gaining insights into the vendor’s reputation and the software’s capabilities.
After researching, create a shortlist of vendors that meet your requirements and budget constraints. Aim for a list of 3-5 potential vendors to evaluate in greater detail during the next stages of the selection process.
Request demos and evaluate features
Request demos from your shortlisted vendors to gain a hands-on understanding of their ERP solutions. During the demos, evaluate how well the software aligns with your organization’s requirements and objectives. Keep an eye out for the following key features:
- User-friendliness: The ERP software should be easy to use and navigate, minimizing the learning curve for your employees.
- Customizability: The solution should be flexible enough to accommodate your organization’s unique processes and workflows.
- Scalability: The software should be able to grow with your business, supporting increased workloads and user numbers as needed.
- Integration: The ERP system should integrate seamlessly with your existing software and tools, such as CRM, payroll, or eCommerce platforms.
- Data security: Ensure the vendor has robust security measures in place to protect your organization’s sensitive data.
Assess vendor support and services
Reliable vendor support and services are crucial for the successful implementation and ongoing management of your ERP system. Evaluate each vendor’s commitment to customer success by assessing their:
- Implementation support: Does the vendor help during the implementation process?
- Customer service: Is the vendor’s customer service team responsive and knowledgeable? Do they offer multiple channels for support, such as phone, email, and live chat?
- Ongoing support and updates: Does the vendor provide regular software updates, addressing bug fixes and introducing new features? Are they committed to keeping their product up-to-date with industry trends and technological advancements?
Evaluate the total cost of ownership (TCO)
When comparing ERP solutions, it’s essential to consider the TCO. To make an informed decision, compare the TCO of each shortlisted vendor over a specified period, such as five years. This will help you identify any hidden costs and determine the most cost-effective solution for your organization in the long run.
Consult with all stakeholders
Throughout the selection process, it’s crucial to maintain open communication with stakeholders from different departments, as their input can provide valuable insights into the ERP system’s practicality and effectiveness. Involve end-users (a key stakeholder group) in the evaluation process, as they will be the ones using the software daily. Their feedback can help you identify potential usability issues and ensure that the chosen solution meets their needs and expectations.
Decide
After completing the steps above, you should have a comprehensive understanding of each shortlisted vendor’s strengths and weaknesses. To make a well-informed decision, weigh the pros and cons of each solution, considering factors such as features, usability, TCO, vendor support, and risk assessment. Remember that the best ERP solution for your organization is one that aligns closely with your specific needs, objectives, and budget constraints.
That’s it. If you want more information you can download our ERP system selection guide or contact us and we’ll be happy to give you more specific advice.
