How to avoid the 5 common pitfalls of ERP selection
An enterprise resource planning (ERP) system is one of the most critical IT solutions an organisation must deploy – but too many fall into the same common pitfalls
Short of time?
Many organisations set about the task of selecting a new ERP system and implementation partner for their organisation but run aground when trying to compare the various available options or end up making the wrong choice.
When selecting a new ERP system, here’s how to avoid five common pitfalls.
1. Lack of a systems strategy
The first priority when setting out to select a new ERP system is to have a clear vision as to what you’re looking for. You need to know what’s definitely in scope, what’s definitely out of scope and what might be in scope should the right solution be available.
This should be driven by a systems strategy that assesses the benefits of implementing ERP – strategic, financial and intangible – and the likely costs of the various options.
Unfortunately, many organisations jump straight into systems selection projects without taking the time to consider what the business needs and what it’s going to cost.
Clarity on the benefits of ERP is vital, both because it will drive your strategy and because it will inform your decisions during the system selection project and beyond.
2. Inadequate specification of requirements
Failure to spend time defining and documenting your requirements may mean that you select a system that works perfectly well in certain industries but lacks functionality that is a differentiator in your industry or sector.
The important thing to remember is that most systems on your shortlist will probably do 80% to 90% of what you need as standard. Clearly there’s no value in documenting those requirements – your time and the vendors’ time is much better spent on the differentiator requirements.
Focus on requirements that give you a competitive advantage, drive business benefits, are peculiar to your industry, or that your current systems struggle to manage.
3. Using the vendor’s sales demo to evaluate the system
Every ERP system vendor will be delighted to demonstrate their system to you based on their interpretation of what you’re looking for. Unfortunately each vendor will have their own interpretation and it will prove extremely difficult to compare what you’ve seen.
You can avoid this pitfall by having a structured demonstration that gives you the “apples to apples” comparison you need. The critical component in achieving this is a test script that each vendor is asked to deliver.
The script should outline the scenarios you need to see demonstrated, focussing on how well the vendor’s solution meets your differentiator requirements, as well as giving you the chance to evaluate how the various usability features provided can benefit your business.
4. Lack of focus on the vendor’s ability to deliver
Regardless of the functional capability of any ERP system, a successful ERP project is hugely reliant on the vendor’s ability to help you deliver a solution that delivers the expected benefits.
A common pitfall is to focus almost entirely on system functionality and cost. However, a comprehensive selection process will also involve reference site visits and calls, an assessment of the calibre and experience of the consultants being proposed for your project, and an assessment of the implementation methodology being proposed.
5. Focussing on costs rather than benefits
Everyone wants their ERP implementation to be delivered on time and on budget. In general that’s considered a success. As a consequence it’s natural during the ERP selection project to ensure that software and implementation costs are kept within initial expectations.
However, this approach takes no account of the ability of the solutions being assessed to deliver the expected business benefits. Everything else being equal, a solution that costs 15% more but helps you achieve multiples of that in financial benefits over a period of time is clearly a better option.