Most business people only select enterprise grade software once or twice during their entire lifetimes, if at all. Companies hire consultants to help with the Request for Proposal (RFP) and to guide them through the search process. Selection teams create extensive RFPs that cover the most minute details of functionality. They consider a multitude of other factors, both tangible and intangible. The final choice can make or break a career, so people take it very seriously and ensure they cover every detail. The ERP selection process is rigorous. There are thousands of search consultants vying for the chance to help. The process has given rise to more than 10,000 books on the topic available on Amazon. The process is well defined. And it’s all wrong.
The ERP selection process described above focuses on minutia, and it skips over some of the most important factors that contribute to long term success.
Problems with the Existing ERP Selection Process
The accepted process is time consuming for customers and suppliers. It’s confusing for the selection team members, as different vendors jockey to put their solutions in the best light. There’s a new vocabulary to learn that differs from vendor to vendor. All the vendors have goofy products in their demo databases that aren’t like yours. Even if vendors agree to use custom data for the demo, screens fly by so fast it’s hard to digest what you see. Slick sales people can make anything look good, and they can talk around any objection.
Confusion Leads to Inertia
The accepted process creates as many questions as it resolves. As a result, companies end up choosing software based on pretty screens or a personable sales rep. Or they give up and stay with what they have. It’s less risky, and much less confusing. But they lose out on the benefits that a modern ERP system can provide.
Why Do Companies Use This Method If It’s So Bad for Customers?
The current ERP selection process grew out of the early days of packaged software. Before then, companies worked with manual systems, or customized software. As MRP and then ERP became a business requirement, prepackaged systems hit the market. Not every package had the same capabilities. It was important to make sure that any package considered had all the basic necessary functionality.
Doesn’t Functionality Matter the Most?
Sure, it matters the most. Although verifying that it was there mattered a lot more in the days when ERP systems could be successful and still be missing a wide swath of functionality. That’s no longer the case. The functionality wars are long over. Most ERP packages that target a specific industry have almost identical feature sets. That doesn’t mean the packages are interchangeable commodities though. There are six key factors to consider that matter just as much. Focus on these aspects of the search and the functionality will take care of itself.
1. Does the ERP solution work for your industry?
While many of the processes covered are the same from one ERP system to another, there are subtle nuances in business processes from industry to industry. Make sure the vendor designed its solution for your industry. Otherwise, it may work, but it won’t be efficient. And if the vendor “specializes” in such disparate industries as insurance companies, government agencies, and manufacturing — run, don’t walk away. The complications are endless, and you don’t need the extra overhead.
2. Does it run in the cloud? If not, what does the technical infrastructure look like?
If a solution runs in the cloud, the infrastructure is the vendor’s problem. That is, assuming you can do customizations and integrations if you need them. If you can’t, you should cross the vendor off your list. They don’t really understand their customers’ needs. If they allow customizations and support third party integration, super. Just give that item a check mark.
If you plan to run on premise, make sure the infrastructure consists of mainstream or open source technology so you know it will be around for the long haul.
3. Does the company have other customers like you?
That doesn’t mean that they have to have an existing customer that’s a match in industry, size, region, product mix, distribution model and primary language. But they should have a customer that is like you in some of those ways. And another customer that’s like you in some other ways. If the customer has other companies like you, you know the functionality you need is there. Skip the detailed functional RFP and take it on faith that no company gathers thousands of customers without a fully featured ERP solution.
4. What is the product’s upgrade cycle? Does the company provide a migration path to new generations?
ERP products shouldn’t change every day, or even every quarter. That’s too much upheaval for a manufacturing company. But you should see new features added at regular and reasonable intervals. The ERP vendor should provide an upgrade path for customers to move from generation to generation of the product.
5. Is the company financially sound?
The annual revenue isn’t as important as the stability you see on the balance sheet. You don’t want to align your company with a vendor saddled with debt that exceeds their revenue. Or a vendor that’s been sold multiple times. Look for a vendor with a solid financial history and a reputation for sound fiscal management.
6. What’s the customer experience like?
Some ERP companies get sued by their customers on a regular basis. Negotiating a contract with these vendors is like tiptoeing through a legal mine field and requires additional training in negotiation really as they worry about protecting themselves, not their customers.
Look for a vendor that makes it easy to do business with them. Clear pricing. Easy standard terms. Maybe a customer award or two (or three, in the case of QAD) for providing a superior customer experience. A history of doing the right thing for customers. A warm and nurturing partner, not a dictator. Flee from a vendor that says “You must implement this way because we know better than you.” Look for one that offers options, helps you configure and customize your solution so that it becomes the tool you really need. Offers a full suite of solutions but supports third party integrations if you need them.
It Really Can Be That Easy
As you read through these questions on ERP selection, you may think the process is omitting a lot of the expected due diligence things you should look at. In fact, it’s completely the opposite. Instead of wasting your employers’ time and money watching demos and poring confusing over RFP responses, you are streamlining the search process by focusing on the things that make a difference. You are finding a true partner that will care about your company’s success as much as it cares about its own. Because in the end — it’s the same thing.