ERP Selection: ERP Selection Steps, Criteria, Comparison, Evaluation
Usually, when companies choose to scale & grow their business, it becomes crucial to work smarter, increase efficiency across functions and ensure optimum utilization of resources. To accomplish this, companies must have complete visibility of their business processes! Most companies decide to implement an ERP Software, at this crucial stage, to run all processes from a single solution!
ERP selection is a significant step in the process of ERP Implementation. With so many ERP software providers available, how to select ERP that best suits your specific requirements? What should be the steps, criteria for ERP Selection? How to compare and evaluate ERP software before making the final ERP Selection?
As a company that provides ERP Software to the Manufacturing industry for over a decade now, we have a thorough understanding of the dilemma & apprehensions of prospects about “How to select an ERP Software” This article provides a systematic step by step process to select an ERP.
Steps for ERP Selection
1. Assess your current business processes
The objective of implementing an ERP Software is to improve your current business processes, standardize your processes and improve efficiency. Hence it is extremely important to know how your business operates right now and what are the bottlenecks in the current processes.
Ensure active participation & involvement of your employees in ERP requirement discussions right from the beginning, as they will be the end-users of the ERP software. Brainstorm with your individual functions how they rate the current processes and workflows and what are the areas of improvement they expect from ERP. Identify primary areas of improvement so as to get maximum benefits from ERP. Once you have a clear picture of this, you can determine how or where exactly ERP will be able to add value.
2. Clearly Define ERP Implementation Objectives & Success Criteria
Some universal objectives of ERP implementation are: standardizing processes, bringing speed and efficiency in business processes, reducing manual work, making the process transparent, getting real-time visibility, shorter cycle times, reduced costs. Define your specific objectives of ERP implementation.
After Defining your specific objectives, you must describe how you will measure the success of ERP implementation at the organization level, at the department level.
Department Level Success measures:
- Purchase Order Cycle Time Reduced by XX days
- Average Inventory Value Reduced by XX amount
Organization Level Success measures:
- Achieve X% Orders Delivered on Time
- Reduce Operating Cost by X%
- Reduce the number of errors by X%
3. Define ERP Vendor Selection criteria
When you have a clear picture of what are the areas of improvement, what are the objectives & key results expected from ERP, you can precisely define your requirements as well as the ERP selection criteria.
An ERP Software typically comprises of modules for each function of a business such as :
Material Management, Production Planning, Finance & Accounting, Sales & Distribution, HR & Payroll, Plant Maintenance, Business Intelligence, Customer Relationship Management & more.
You will need to keep in mind the following criteria for vendor selection:
- Industry-Specific Solution: Every industry type has its own unique business requirements. Hence you need to check whether the ERP you are evaluating caters to the core functionalities of the industry you operate in. If, not then it may require higher customizations to suit your needs.
- Industry-specific experience: Does the vendor have the necessary domain expertise to understand your specific needs? An experienced industry vendor anticipates problem areas and can explain the nuances required for successful implementation. They can help establish standard business practices for ensuring smooth functioning. Do they have the knowledge of strategies for successful ERP implementation in your industry niche?
- ERP Implementation Approach: Whether you want to go ahead with full suite ERP implementation or start with one or two modules and add more as & when you feel appropriate. Whether the ERP vendor offers this flexibility or not? Whether they have a standard ERP implementation methodology? How much time will be required for implementation & Go Live?
- Deployment Method: Whether ERP will be implemented on-site or cloud-based?
- 3rd party software integration: Can it integrate with existing software in your company such as Tally, Nesting Software or any other? How easy or difficult, time-consuming will it be?
- ERP Mobility Features: Does ERP provide mobile apps? Will field staff be able to access it?
- ERP Robust & Scalable: Will ERP accommodate more users, functions, capabilities in the future? Will the ERP be able to capably support the growth of your business?
- Implementation & Post Implementation Support: Will you prefer a local ERP vendor who can walk into your office to support you or you are fine with a remote vendor and telephonic or chat support? What is the ERP vendor’s implementation methodology? Will they provide post-implementation support?
- ERP Training: Will the vendor provide ERP training to end-users or you will have to train them in-house
4. Budget Allocation – Factors to be considered
When embarking on ERP Implementation, you should clearly define the Budgets & Timelines. You have to take into consideration whether there will be any additional costs pertaining to the following:
For On-Premise software:
- Additional Hardware: Will you need to purchase additional servers, networking equipment?
- Additional Space: Do you have space or will you need to relocate? Any expenses associated with that.
- Additional Staff: Will you need additional staff to implement & maintain ERP software & hardware? You will have to budget for their salaries as well.
- AMC Contract: Will you need to outsource the maintenance & upkeep of your hardware & software. If yes, provision for the AMC contracts
For Cloud-based Software: You will need to budget for Internet connection, sufficient bandwidth, to accommodate all users working in the cloud.
5. Shortlist and Evaluate ERP Vendors
When you have outlined your ERP selection criteria clearly, research which ERP is functioning well in your niche. Ask for recommendations from your industry and shortlist the vendors who seem to meet the criteria. You may like to do gather the following information before inviting them for a DEMO.
- How many years of experience in your industry?
- How many successful implementations in your niche?
- Have they developed the software themselves? How often do they update it?
- Is the solution robust & scalable?
- Do they have a standard implementation methodology?
- What deployment options do they provide?
- Do they provide post-implementation support?
- What are the pricing options & payment terms?
6. Request a Demo of ERP
Invite shortlisted vendors to give you a proposal and Request a Demo of the ERP Software. Some even offer a free trial of the software. Gather as much information and see the ERP in action.
Be sure to run a background check & ask for references & reviews from their existing customers. Check how satisfied the clients are with implementation, did they get adequate training & post-implementation support and so on before arriving at a conclusion as to which ERP most suits your requirements.
ERP Selection is very crucial, as ERP will impact every function and process of the organization. Hence first, clearly define the objectives & key results for ERP implementation to be able to define the ERP selection criteria precisely. Then carry thorough research to compare and evaluate various ERP and ERP vendors to ensure a successful and fruitful implementation that will eventually help your business to scale & grow.