This is the third in a three-part series regarding ERP System Selection.
Is your organization ready for an Enterprise Resource Planning (ERP) system? Choosing an ERP system may seem like an overwhelming task for those who have never gone through the ERP system selection process.
While most organizations can usually find a few staff members who have used an ERP system in a previous life or have even been involved with an ERP system selection, there are several reasons you will want to employ a third party to manage this process. Before we get to these reasons, let us start by answering three important questions and talking through some factors to consider when choosing a new ERP system.
What is an ERP System?
An ERP system is an integrated suite of software applications designed to automate processes and manage business functions. These business functions often include finance, human resources, sales, procurement, and manufacturing.
See the first article – Get Your ERP System Selection Right | Part 1
See the second article - ERP System Selection Factors to Consider | Part 2
What are the challenges in the ERP system selection process?
Have you heard the story about the CEO who saw a booth at a conference, got excited, let the vendor take over the process, and two years later the organization is stalled in the middle of an implementation of a system they should have never chosen in the first place? Unfortunately, this happens all the time, and illustrates a few of the challenges organizations face in the ERP system selection process.
Vendor Bias. As illustrated above, a member of the leadership team or a functional group enters the process with a clear preference or favorite. Maybe they have used a particular solution in a previous organization or have an existing relationship with an executive from a specific ERP system Vendor. These biases can easily skew organizational decision making.
Steering. Some vendors have strong Sales Representatives that can quickly take over the selection process and steer your requirements gathering toward their solution. Without a structured process and strong leadership, we have seen these Vendors win not because they are the best solution, but because they have the best sales reps.
No Differentiating Requirements. In today’s ERP solution market, there is a convergence of capabilities between various vendors. Requirements gathering happens near the beginning of the selection process and a good consultant will help you build requirements that will differentiate between solutions.
Failure to Categorize Requirements. Everyone has their wish list, but not all requirements are “must have” requirements. Often, decisions come down to just a few critical requirements. When gathering requirements, your ERP system selection team should go through a deliberate process where requirements are categorized using a system such as “Must Have”, “Should Have”, and “Nice to Have”.
Bad Scoring Systems. When it comes to evaluating vendors against requirements, it is imperative that an organization employ a good scoring system. Not all requirements have equal value, and some requirements need to be weighted more heavily than others.
Failure to Employ a Third-Party Consultant. ERP system selection is not the core competency of most organizations. There is usually a gap in skills, knowledge, and internal capacity. These organizations end up reinventing the wheel, getting bogged down in the process, and making poor decisions.
Internal Politics. Getting agreement between functional departments is often challenging. We recently heard an executive mutter: “Supply Chain likes Oracle; Finance likes SAP. Who wins?” This executive was further frustrated by leaders from these business units politicizing the process. It is imperative to have a process that aligns stakeholders early.
Logistical Challenges. Scheduling vendor demonstrations, coordinating time with stakeholders, organizing meetings, getting answers to vendor questions, etc. can be a nightmare. Organizations that do not approach ERP system selection with the appropriate rigor and discipline are often doomed to failure.
Why should you employ a third-party ERP system selection consultant?
We strongly advise you to obtain assistance instead of attempting to manage the ERP system selection process yourself. Here are the top five reasons to employ a third-party ERP system selection consultant:
Acquire expertise you do not have. Hiring an ERP system selection consultant can bridge the internal gaps in knowledge, skill, and capacity.
Leverage selection accelerators. A third-party consultant has a structured methodology/process, tools, and templates, and you will not need to re-invent the wheel.
Eliminate internal bias. A third-party system selection consultant is not aligned with any specific solution or vendor. They are apolitical and have your best interest at heart.
It is a huge decision. You want to get it right. The total cost of ownership of an ERP system can easily reach seven figures. Due to this cost, it is a decision you will be living with for the next ten years or more. The ERP system selection process is not something which most organizations can afford to skimp. Hiring MSSBTA to be your guide is like buying an insurance policy.
Avoid the never-ending sales calls. This might sound funny, but are you prepared for the onslaught of sales representatives knocking down the door?
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