Five considerations when selecting an ERP system
Chris Goguen, Principal at McGladrey’s technology consulting practice, provides five considerations for IT managers when selecting an enterprise resource planning, or ERP, system.
1. Identify your key stakeholders and include them throughout the selection process.
Embarking on this journey alone can be treacherous. Not everyone will support the initiative, and in some cases may prove to be roadblocks to the process. Reach out to the leaders in the specific parts of the organisation that will be impacted by a new system (e.g., sales, finance, information technology, operations) early on. All groups must feel as if they have a voice in the system selection; you will need their support and resources during the implementation. Create a strategic steering committee composed of these key stakeholders to ensure that they have "skin in the game" not only during the selection but also throughout the duration of the implementation project life cycle.
2. Create a set of key business requirements that the system should meet.
Before you sit through your first system demonstration, work with your key stakeholders to develop a list of requirements that any new system must fulfill in order to achieve success. Many times, organisations enter into system demos and make decisions based on bells and whistles or the "wow" factor. Instead, use this list of requirements to accurately "score" each system.
This will level the playing field and enable you to make an educated decision on which application is best suited for your organisation. Also, ask yourself where the organisation will be in five years and make assumptions based on that strategic plan to ensure that you are looking to the future as you begin preparing for the system implementation. Many organisations simply try to replicate what they have in place today without looking to introduce best practices or more streamlined processes for long term improvements.
3. Identify a short list of packages and technologies that will meet your requirements.
Is a "cloud" or "on-premise" system better for you? You may already have a cloud strategy in place at your organisation, and you should be sure to pull in the appropriate stakeholders to discuss the approach further. In addition, it’s important to consider the scope and breadth of the various ERP packages in the market to determine which ones might be the best fit given your industry and core business processes. Inquire with other peer organisations to understand what systems they have either evaluated or implemented recently. Take note of any specific third-party tools that similar companies are using in addition to their core ERP systems. Include this information in any implementation estimates for ongoing software costs.
4. Ensure that you meet the implementation partner with whom you will be working.
Many software vendors will offer their own professional services organisation and others will work with a sales channel of value-added resellers (VAR) to implement the software. Be sure you understand the implementation approach that each package offers. Will it be locally based, or will the team need to fly in for the project? Does the vendor provide on-site implementation services or is it all done remotely? It’s critical to balance the pros and cons of each implementation model with the culture and work style of your organisation. If possible, meet the individuals that will be staffing the implementation—and make sure you are comfortable with the level of expertise and personal fit of each team member.
Lastly, ask how the application is supported after go-live. How will you receive help down the road? Remember, this will be the team that will drive you through the application and go-live process and will continue to support you in the years to come as you continually optimise your system.
5. What is the total cost of ownership (TCO) for the solution?
Before you sign on the dotted line, create and socialize the three-year total cost of the solution. This will include implementation services, software, hardware, annual maintenance fees, upgrade fees and internal resource costs. Don't forget consideration for ongoing projects that will allow the system to evolve with your business needs.
