We've helped a lot of organizations with ERP selection, and at the outset, organizations tend to focus on current pain points. Current pain points are important to address, but a new ERP system will not automatically solve every problem. Heavy emphasis on current pain points can narrow the focus too much and create a limited view into the challenges that need to be addressed and the true value a new ERP solution can provide. The goal of a new ERP is to support the organization well into the future—not just the here and now.
Initially, organizations looking for a new ERP are typically facing into one (or more) of three common challenges:
Often, addressing these challenges is not enough to justify the cost of a new ERP solution. Before jumping straight to a new ERP, it's important to understand the pain points in depth to know what's really going on.
To justify a new ERP, organizations have to step back and look at the bigger picture. This includes the following steps:
Put the vision of where the company is headed on paper. A comprehensive look at where the company is going will dictate what ERP solution is best. Delve into the following areas:
Company Structure:
Anticipated Future Growth:
Answering these questions dictates how the company will operate in the future. For example, building a new manufacturing plant will require added resources, including capabilities around managing construction projects. Other factors, like adding a distribution network or changing the channel strategy, will also drive you to decide what ERP capabilities are needed.
It's like getting a new vehicle. If a young couple goes to the dealership, it would be wise to pick out a car with the future in mind. A Prius might meet current needs, but if they have plans to start a family within a year, that Prius is not going to serve them well with 2 or 3 kids in tow. A minivan or SUV would be a better option overall. The decision they might initially make is driven by a few key pain points. Their decision changes significantly when the future is top of mind.
Consider how a new ERP will integrate with other systems across the organization, like a CRM, for example. It should tie in seamlessly for managing customers, contracts, and orders. Review all company systems to identify redundancies and the need for the system to move forward. Will the ERP replace anything? How will it integrate?
The same goes for systems used on the shop floor or in the field. Identify which systems must integrate with the ERP and how a new ERP can meet the needs of both corporate accounting and the field.
Before implementing a new ERP, data cleanup within other systems is crucial. Make sure data is error-free, organized, accurate, and not duplicated so the transition to a new ERP is as seamless as possible.
Additionally, identify if other systems must be implemented first before the new ERP. A new payroll system might be necessary first so employee data is correct and in the right format. There may be back-end, front-end, or internal systems to implement first to make the ERP project more successful.
The selection process is not just about picking an ERP. It includes defining the scope of the project. After defining the vision, make sure the right capabilities are clearly marked as part of the ERP project to understand the scope and set a budget. It helps to break down implementation into phases to minimize risk of trying to implement too many things at a time.
Understand what it's going to take to implement the new system. Internally, know what resources (people, knowledge, skills) are available to support an implementation and in what capacity. Have a plan for filling the gaps. Know who is going to lead the implementation process, including systems integrators, software configurators, and other technical resources. The big question companies ask is where to get these technical resources. Should they come from the software vendor or an independent consulting firm?
Whichever systems integrator an organization chooses should be involved in scoping the project. They will have strong insight into what it's going to take to implement the system, including the time and people needed.
ERP selection is not just about selecting the software. We have had people ask us, “How quickly can you select an ERP?” Technically, you can do it in a day and just decide. The better option is to complete the due diligence. Set the vision and the scope to determine where the company is headed in the future and select the software considering the broader picture.
