How to Select an ERP System – Part 1 – The Selection Process

The number one rule is Identify What Makes Your Business Different. There are so many high quality ERP systems out there that do pretty much the same thing. You buy something, you add a margin, and you sell it. You want to record the purchase, manage the stock, record the sale and show the profit in your accounts. Your choice is not what software, just where to find the best combination of price and reputable supplier.

However, it will all go horribly wrong if you haven’t pointed out the differences about your operation. Perhaps you need to sell the item but record serial numbers, or monitor expiry dates, or immediately create a service record and remind the customer that maintenance work is essential within 12 months, or…or…or. If you haven’t listed what you think are your uniques, you can end up in trouble. That’s why it’s often the second time user who gets it most right, having found the glaring functionality holes in their first software selection. So write down your ‘uniques’.

Second, never assume. It’s so common for businesses to upgrade their system and find that things they relied on in the first system, and assumed would be there in the ‘upgraded’ system, are not! This even occurs when upgrading with the same supplier to a new release of that supplier’s software. So write down what you like about your current system and would be reluctant to give up (and anything you hate and are happy to lose).

Third, there are presumably a number of reasons for upgrading. You have a list of things you feel are missing and will be an essential part of your shiny new system. So write down the new functions you’re seeking.

Fourth, prioritise. Some of your requirements may be available bit at extra cost. If potential suppliers know what’s most important, they can point out the additional cost of some of your less important requirements. That way, you can apply some simple cost-benefit analysis and decide whether the extra cost is justified.

Finally, analyse your users. You should split your users into those who need full and unfettered access to all parts of the software – the accountants, the order processing team, the production manager etc. – and those who have a simple functional requirement – entering PO’s for approval, updating project costs, booking stock in and out. It is increasingly common for software suppliers to offer two flavours of user – full and ‘light’ or ‘limited’. The latter can be bought at a fraction of the cost of the former and offer serious cost savings.

 

Next time – Ballpark costs.

Are some ERP suppliers crooks?

I recently read a very interesting post entitled “Are Some ERP Consulting Firms Crooks?” (see article here). It was aimed at those consultants who are employed, ostensibly, to provide arm’s length, independent advice to businesses but who shamelessly take advantage of their client’s limited knowledge. People who are looking for help to choose and install a new ERP system find themselves conned as projects take longer and cost much more than originally stated.

 

But many of the points ring true for the scenario where the client is looking to do their own system selection and invites a few ERP suppliers to tender. In such a situation, the customer is relying on the potential provider to be upfront and honest, and offer useful advice. Clearly, they will also attempt to sell their system, but acting in a professional, consultative manner is a great way to win business.

 

Sadly, I often see the opposite happen. There are the resellers who field their best consultant to charm the customer and present the product brilliantly; and post-order, for those consultants never to be seen again. Or those who offer a terrific annual support rate which locks the customer in for 3 years – and only then does the customer discover that the support isn’t that great; and seems to come with lots of options for you to be charged extra!

 

However, the customers themselves are often their own worst enemy. Not so long ago, I was asked to tender for a system. The proposed final solution was going to be such a compromise that I felt compelled to write a summary of the likely failings and suggest that they reconsider their approach. But no, the Director was adamant that this was how he wanted it to be. Result – a very expensive system that delivered only a fraction of its capabilities. We, by the way, politely withdrew from the bid.

 

What’s the lesson to be drawn? In my view, references are everything. Whether it’s a consultant assisting the business to implement or a supplier offering up advice on how they would satisfy your requirements, speak to their past clients. And, one other thing.. another reason that the article branded some ERP consultants crooks was their ability to put forward ‘tame’ clients who would confirm how great they performed. So, don’t just accept the first reference given, check out a few.