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Picking the Right ERP Vendor
In the last post, Review & Qualify Software Solutions, we walked you through the process of identifying key areas to help you review and qualify ERP solutions. In the5th post, Qualify ERP Vendors, in our series, “Selecting ERP for Your Small to Medium Sized Business,” we’ll explain why it’s important to choose the right ERP partner and how to tell if a vendor is the right one for you.
Choose the Right Partner
Choosing the right partner is as important as selecting the right ERP system. Establishing a long-term working relationship will help with internal adoption and increase the likelihood of a successful ERP implementation.
Narrow the Field
Once you’ve narrowed your selections down to1-2 providers, allow them to conduct interviews with ERP Selection Team. The ERP team should clearly communicate the business requirements outlined when they defined the business requirements. Once the vendors are brought up to speed on your needs, they will be able to build a meaningful presentation that sets your business in the context of their product offering. Their demonstration should illustrate how the gaps in your current processes will be filled, how existing processes can be improved or how new processes will impact your business (such as e-commerce).
Prove It
It’s very easy for a vendor to walk you through how their system completes specific tasks. But what does it look like for your business? Preparing a script with a few business processes that the vendor will work through the system not only ensures they understand your requirements but helps you to see if the system will work for you (and possibly improve your processes). As mentioned in the previous post, never allow a vendor to “demonstrate” the software to you via Power Point slides. It’s a huge red flag – run!
Know the Costs (all of them!)
You’ve probably heard stories of how ERP implementation costs spiraled out of control, costing thousands more than the original estimate. Unfortunately, this happens, but it doesn’t have to happen to you. Ask the vendor to provide you with the Total Cost of Ownership (TCO) which should include:
•license fees (including3rd party)
•implementation fees (training and consulting)
•support
•hardware
•software
•networks/communication
•software customization
•maintenance fees (including maintenance on custom development &3rd party products)
•any other fees not included in the proposal
If you’re convinced you need an ERP system but are not sure you can afford it, ask the vendor for a phased-approach. You can break up the costs over a longer period of time, and it may be less stressful on your staff.
Avoid Customization
ERP gets a bad rap when it comes to costs, and a lot of that is due to software customization. During the demonstrations, be open to new processes that are standard in the software but may be different than how you currently do something. You might be surprised to see that there’s a better and easier way to do something, and it’s already included in the software. This also helps to avoid future maintenance and support costs.
Time is Money
Your ERP vendor should have experience in fast, streamlined implementation of ERP systems. The faster its running, the greater your user buy-in, and the sooner you will start seeing a return on investment. Ask your vendor about their methodology for smooth implementation, and their long-term support to ensure the system works and your goals have been met.
Show Your Expertise
The ERP vendor you choose should have a broad view of the organization, one that goes beyond functionality in the software. Understanding the entire business cycle is critical to a successful ERP implementation. Ask your top vendors to demonstrate their knowledge of your industry or business and have them demonstrate how that will translate into results for your company. Look for a vendor who has deep experience in the industry, with a stellar reputation for implementing solutions on time and in budget (be sure to check references). And one with extensive experience is more likely to be as committed to your success in the future, as they are during the initial sale.
You’ve Made It (almost)
Choosing the right ERP vendor and system for your company doesn’t have to be a complicated process. Following these tips will direct you through the process and help you to choose the best ERP vendor for your project.
I beleive tht the following are the criteria for selecting an ERP vendor:
- Look for ERP vendors which have a proven track record in your specific industry. Ensure that the vedor addresses your critial requirements including regulatory, customer requirements and other key considerations.
- Look for ERP vendors who offer solutions for a total cost of ownership that is within your ERP budget.
- Ensure that the vendor's technology strategy (software, hardware, network, delivery, & expertise) aligns with your comany's IT strategy.
- Ensure the vendor's positive historical fainancial performance and forecasted fainancial stability.
- Request recent customer refrences. Ask for customer refrences with similar size and requirements and have been using the ERP in production for more than two years.
- Ensure availability of adequate local support or24x7 remote support.
- Ensure availability of cost effective expertiese for using the system
Selecting the best ERP vendor for your ERP project can be made easier if you ask the right questions and keep top of mind the most important characteristics to you. The best choice will be more evident the more you engage with the vendors during the pre-sales process.
This is probably obvious but One important characteristic is definitely chemistry. An ERP project typically lasts3-6 months for a small to medium project and typically6-9 months for a medium sized project (i.e.200K –800K in cost). So of course the more comfortable your team is engaging with the selected vendor’s team the smoother the communications will be.
For example, are they easy to talk to? Do they seem to genuinely care about your company success and project success? Have you met all of the members of their proposed project team? What would it be like to be around them when you’re completely stressed out right before the project go-live?
Aside from chemistry, let’s remind ourselves of the most common objectives when undertaking a new ERP project, (1) minimizing risk & (2) maximizing project success.
A. ERP Experience – how many of the proposed ERP systems have they successfully implemented?
B. Industry Background – how many ERP clients do they have in your industry?
C. Project Methodologies – project methodologies used? Do you feel they’re good to reduce risk?
D. Their understanding of your requirements – how well have they shown that they understand your requirements? How well does their proposed solution meet your requirements?
A. How will their processes maximize the chances of achieving your project success factors?
B. Do they have a methodology for handling expectation (change) management? So that during stressful portions of the implementation project they can help keep your team positive and motivated to do their part to make the project implementation successful.
C. How do they control project costs and minimize project budget overruns?
D. Does their proposal include gathering input from your executive team to capture management objectives? Does their solution meet your management objectives for the ERP project?
E. Does their proposal include gathering input from your team to capture organizational objectives for the project? Does their solution meet your organizational objectives for the ERP project?
Before selecting an erp vendor, one should understand that what kind of erp is required for organisation, identify gaps in the system and then make a request for proposal with criteria as what kind of critical function is required for the system to perform that is core function and standard functions. Then select the vendor who has got industry experience in implementing such projects.
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