Four things to consider before selecting an ERP system

Selecting an enterprise resource planning (ERP) system is a big step, and companies should consider their overall strategy in the short- and long-term before making a major commitment.

By Brian Potts January 25, 2019

The approach in selecting software for an enterprise resource planning (ERP) system hasn’t changed too much, but the prep work required to define what it is we are selecting has become significant. The reason for this is due to the explosion of technology innovation over the past decade.

Companies can no longer state that you just “need a new ERP” unless they are replacing a broken system. If that is the initiative for bringing in new technology, companies may be missing out. In addition to streamlining the ERP vendor evaluation process, companies will want to consider the four following steps before they begin evaluating solutions:

1. Define a strategic objective for the initiative. It may be as simple as “we need a new ERP because our current platform is sunsetting.” However, it’s a good idea to think beyond that and consider the strategic objective. The defined objective should correlate with the organization’s greater corporate strategy as well as have executive input and support. This will then feed into defining the best digital strategy for your organization that needs to be in place before selecting an ERP.

2. Define the digital roadmap. While still a critical piece, ERP is no longer necessarily the driver of technology within an organization. In any company, there are a multitude of solutions in place. Companies need to determine technologies that need to be replaced, those that won’t be replaced, and those that should be kept in the evaluation to see what other options exist. Companies need to determine what defines “ERP” within the organization and where they fit into the greater strategic plan.

3. Consider the need for emerging technologies. Artificial intelligence (AI), robotics and machine learning, advanced analytics, augmented and virtual realities (AR/VR), Internet of Things (IoT), blockchain, edge computing, etc., sound exciting – and they are. While an ERP implementation doesn’t require them, companies should see them as an opportunity to gain a competitive advantage. It is critical to map the sources and flow of data and associated technology requirements that will more than likely touch ERP.

4. Define data and security requirements. Data security and regulatory requirements (i.e. GDPR) continues to be extremely important. If existing processes or technologies are not up to date, they will need to be updated or replaced. This may or may not influence a company’s ERP choice. However, it is important to have this determined ahead of time in case it helps define the IT roadmap.

Completing these tasks ahead of selecting software will help ensure a company gets the right type of application. Doing these tasks will prevent companies from going through the whole selection and implementation process again in a few years.

Brian Potts, chief operating officer, Third Stage Consulting Group, a CFE Media content partner. This article originally appeared on Third Stage Consulting’s blog.

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Author Bio: Brian Potts, chief operating officer, Third Stage Consulting Group