This is the first in a three-part series regarding ERP System Selection.
Digital transformations often focus on, or include elements of an Enterprise Resource Planning (ERP) system, it is vital to have a clear understanding of what requirements your organization needs when selecting a new ERP.
Choosing an ERP system is an overwhelming task for those who have never gone through the ERP system selection process. While most organizations can usually find a few staff members who have used an ERP system in a previous life or have even been involved with an ERP system selection, there are several reasons you should employ a third party to manage this process. Before we get to these reasons, I will start by answering some basic questions and talking through some factors to consider when choosing a new ERP system.
What is an ERP System?
An Enterprise Resource Planning system is an integrated suite of software applications designed to automate processes and manage business functions. These business functions often include finance, human resources, sales, procurement, and manufacturing.
What are some examples of popular ERP Systems on the market?
The Gartner Magic Quadrant below, from May 2021, shows some of the more popular solutions. Most organizations will focus on those in the Leaders quadrant; however, you should consider all offerings to find the product which most closely matches the needs of your organization.
How long should you plan for an ERP system selection?
Your organization can expect to invest at least 60-90 days in the ERP system selection process. This includes developing requirements, issuing an RFP, shortlisting vendors, planning logistics to schedule demos, negotiating contracts, and conducting legal activities. Some variables that may impact this timeline include (any of the factors below could increase your timeline significantly, resulting in a year or more of effort):
The size and complexity of your business, along with the number of your locations
The number of vendors you are evaluating
The availability of key business resources and subject matter experts
The selection of your third-party ERP consultant
Your organizational decision-making culture
Why should you employ a third-party ERP system selection consultant?
At MSSBTA, we strongly advise you to seek assistance, instead of attempting to manage the ERP system selection process yourself. Here are the top five reasons to employ a third-party system selection consultant:
Acquire expertise you do not have. Hiring a third-party system selection consultant can bridge the internal gaps in knowledge, skill, and capacity.
Leverage selection accelerators. A third-party system selection consultant has a structured methodology/process, tools, and templates so you will not need to re-invent the wheel.
Eliminate internal bias. A third-party system selection consultant is not aligned with any specific solution or vendor. They are apolitical and have your best interest at heart.
It is a huge decision. You want to get it right. The total cost of ownership of an ERP system can easily reach seven figures. Due to this cost, it is a decision you will be living with for the next ten years or more. The ERP system selection process is not something most organizations can afford to skimp. Hiring a third-party to be your guide is like buying an insurance policy.
Avoid the never-ending sales calls. This might sound funny, but are you prepared for the onslaught of sales representatives knocking down the door? I didn’t think so.
You now have a better understanding of what an ERP system is, popular systems available, the time it takes to select an ERP, and the importance of working with a third-party consultant. It is time to start the process of selecting an ERP, not just any ERP solution, but the right solution for your organization.
The next article in this series, ERP System Selection Factors to Consider, covers what to consider when choosing an ERP solution.
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