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ERP & Enterprise Resource Planning Software Selection Guidelines

Long before need is inevitable, ERP implementation begins with software evaluation. Hundreds of questions will arise as installation progresses, but eight pivotal questions can launch the thought process:

  1. Is the ERP software user friendly?

  2. The answer to this question should not require a user’s manual. Instinct and judgment guide evaluations. First imagine the work for time-strapped business unit counterparts who furnish the data. If the front end requires more than modest coaching, finance departments may divert time to help desk activities instead of data analysis. Frustration is an enemy of accuracy. ERP that comports with users’ intuition tends to lower error ratios at the get go. Once data makes its way to central finance departments, high performance systems ease tasks from routine numbers crunching to urgent shifts in strategic direction. The user-friendly payoff: more productivity start to finish.

  3. Is new ERP software compatible with legacy software during transition?

  4. All the virtues of updated ERP systems may not seem worth their weight without seamless evolution from legacy systems. Don’t leave it to chance. Transitions that should take weeks take months instead, or even years depending on their complexity. Rocky transitions consume time, money and patience, often at the cost of ceding a competitive advantage to rivals with data at hand to make faster decisions. Done right, ERP installations import legacy data with nothing lost in translation between old and new.

    ERP & Enterprise Resource Planning Software Selection Guidelines
  5. How many vendors should a company evaluate?

  6. Hundreds of firms advertise ability to install ERP software. Lists of candidates can be any length, but skipping basic steps usually invites trouble. First identify your company’s priorities, and then start matching them to suitably equipped vendor(s). Preliminary lists look unwieldy – a dozen or more names is not unusual. Website reviews and comparison resources should winnow the list down to a half dozen firms that can handle the scope of priorities, are situated near enough to provide prompt service, emphasize quality control, possess sufficient resources to grow along side their customers, furnish support 24/7 and have solid industry-specific track records. To ensure a real choice, give extra points to venders that are fluent in on-premise, Saas, Cloud and hybrid solutions. Make sure vendors really want your business. If the signs say no, they may not belong on a short list. Inviting half a dozen firms to make a presentation is reasonable. Whittle a final list down to two or three firms for second and third presentations to all stakeholders.

  7. Is software flexible and scalable as business conditions and goals change?

  8. Dynamic markets and strategic objectives often shift in the course of ERP installations that consume time, cost and – more crucially – attention of management. Without predicting the future, new ERP systems should anticipate change to avoid repeating the exercise in five years. On-premise solutions should not rule out open source or cloud applications and vice versa. For once, rosy assumptions are wise. Software that can’t scale up to accommodate growth or keep up with advances in technology invite results that no one wants.

  9. Can you afford ERP tools that help companies grow faster?

  10. Total cost of ownership contemplates more than the ERP price tag. It adds training and maintenance. All considered, there’s no doubt that installing state-of-the-art ERP can tax a current budget. But lack of information, like cash shortfalls, imperils the future. Information feeds growth. In many respects, access to information is practically cash in the bank. If ERP software can’t deliver accurate, timely information at all times, that alone builds the case for an upgrade. Early signs often amount to inconvenience. Inconvenience becomes distraction. As growth accelerates, distractions become crucial lapses when stakes are greatest. That’s when rebuilding an ERP engine imposes unexpected costs that companies can seldom afford. Take note, though, to resist hot ERP deals for ERP that pose an array of pitfalls, from outdated or insufficient software to hasty installations that plug calendar gaps for vendors who prefer larger installations.

  11. By what date must the system operate fully and smoothly?

  12. The answer varies at every company subject to one axiom: Selecting an ERP system shouldn’t wait until a crisis exposes necessity. As growth meets targets, information will expand at a geometric pace. The humor writer Dave Barry once said that the right price for a personal computer is $300 less than you paid. Borrowing that wisdom, the correct time to finish installing new ERP is six months before you need it, leaving time to work out bugs that find their way into every implementation. Challenge the current system with what-if scenarios that feature new competitors, new products and market shifts. Extra capacity in 24 months won’t hurt — but ERP software that can’t keep pace with growth exposes companies to crippling information lapses.

  13. What should a new system accomplish?

  14. Provided business strategies are sound, state-of-the-art ERP should deliver a robust return on investment. That is, it will lower overall IT costs, streamline data processing, maximize user friendliness, ease analysis and furnish results on demand. Cloud based and open source software get a lot of press nowadays, but on-premise systems still have a lot to offer. Goals across the board fall generally into three baskets: availability, security and cost. The right system for any company usually involves some tradeoffs. Hosting on sight adds control over system availability, subject to power outages, denial of service attacks and network glitches. Security is only a secure as the hosting company that is not always as safe as advertised. Bigger companies that tout the most advanced security tend also to lure the most sophisticated attacks because of their size. Cost, the third leg on this stool, needs tight management. Lower costs for cloud hosting, for example, can exceed the cost of on premise hosting as data multiplies.

  15. Are you informed enough to evaluate hands-on testing?

  16. ERP technology suited to finance departments should not leave anyone perplexed. To put it another way, if ERP doesn’t make sense with minimal explanation, or touts technology over application, it’s probably the wrong approach. Vital questions concern accounting and budgeting, not details about the operating system ERP requires. Because CFOs don’t have all the answers — or even all the questions, for that matter — other stakeholders can help fill in blanks. But overriding questions go with familiar turf in finance where speed, accuracy and security of data and data analysis are paramount.

Now that you have a solid foundation for making your technology decisions, feel free to explore our Enterprise Resource Planning product listing, where you will find filtering capabilities and product reviews from financial professionals.