Three questions to consider during ERP software selection
Enterprise resource planning (ERP) projects work best when they are built on process improvement, but companies should ask what an ERP can accomplish for them and why they're looking to choose one in the first place.
An enterprise resource planning (ERP) project will deliver success only when it is built on business process improvement rather than driven merely by ERP system features. These three questions should be front and center when selecting ERP software:
- Why is business process improvement the place to start, even before selecting ERP software?
- What are the key categories of decision drivers?
- How is setting strategic decision drivers different from the traditional RFP process?
Each question is worth diving into and exploring further.
1. Why is business process improvement the place to start, even before selecting ERP software?
The first of three questions to consider during ERP software selection focuses on business process improvement.
The role of an ERP consultant is to guide the enterprise through a transformation to achieve true business process improvement. Merely swapping out old technology for new without reviewing current and future state operations is a flawed method.
The goal is to align the investment in enterprise technology with enhanced business performance. The approach should follow these four goals:
- Improve product quality, service delivery, and customer satisfaction performance
- Activate advanced tools, processes, and change for greater efficiency, decision confidence, and business success
- Promote an organizational culture that embraces change for continuous improvement
- Drive best-in-class process performance.
By starting with business process improvement before selecting new technology, a vision of the future state following an analysis of the current state to define the business value for the project is created. The overarching goal is to reduce the time to benefit for the project.
2. What are the key categories of decision drivers?
The second of three questions to consider during ERP software selection looks at decision drivers.
Ultra Consultants has confirmed that the most successful ERP selection projects are based on ERP selection decision drivers that match critical future state requirements to ERP features. During an ERP project, the ERP project team needs to understand which systems require review and implement a strategic approach to setting selection decision drivers.
The decision drivers for each enterprise will differ based on the unique industry needs and functional areas of the business. Generally, manufacturers and distributors should consider these six decision drivers:
- Features and functionality – Does the software meet the identified future state process requirements? Is it easy to train and use? Does it match industry functionality?
- Vendor synergy – Does the vendor have experience and insight into the industry and business processes? Does it offer best practices based on industry trends?
- Solution agility/viability – Will the software be a long-term service offering? Is the company a target for acquisition or divestiture? Is the vendor committed to continued investments in the solution?
- Technology alignment – Does the vendor follow industry standards for current and future integrations? How does the vendor offer support and administration services?
- Total cost of ownership (TCO) – Does the team understand the required investment in the long term? Does the agreement identify software licensing costs, implementation services, annual maintenance and subscriptions?
- Implementation considerations – Does the implementation methodology truly align with the enterprise’s organization? How is risk managed?
Question 3: How is setting strategic decision drivers different from the traditional RFP process?
The final focus of the three questions to consider during ERP software selection compares the identification of decision drivers to the traditional request for proposal (RFP) procedure.
By identifying strategic decision drivers during the ERP evaluation and selection process, the ERP project team gains a better understanding of how the software performs required activities that meet the identified future state requirements. This is a critical understanding not addressed by a traditional RFP.
Decision drivers can also help vendors create demo scripts that meet the more specific requirements spelled out by the future state analysis process. In this way, vendors are better aligned with the prerequisites and imperatives that the enterprise has established. The traditional RFP process does not usually result in this kind of outcome.
When ERP project teams set their sights on business process improvement that goes beyond just buying a new technology solution, they meet and exceed future state goals and provide the right ROI.
Ultra Consultants, a CFE Media content partner, is a leading independent research and enterprise solutions consulting firm serving the manufacturing and distribution industries throughout North America. Ultra delivers enterprise technology expertise and process management to drive business performance improvement for their clients. This article originally appeared on Ultra Consultants’ blog.