5 Critical Enterprise Software Selection Factors
Experiencing buyer’s remorse for a candy bar only affects one person. But choosing the wrong enterprise software can ripple through the entire organization – and result in huge extra costs.
Take the case of Lidl, a 10,000-store international supermarket chain. Lidl chose ERP software that needed heavy customization to meet its needs and, after spending €500 million on that effort, was forced to abandon the implementation.
That is an extreme example, but buyer’s remorse for enterprise software is a very real phenomenon. Up to 40% of companies regret their software purchase because they don’t use it, it doesn’t align with their business processes, or it can’t scale to meet their needs.
To avoid that terrible sinking feeling, here are five critical selection factors:
1. Alignment of Functions and Needs
Most companies will choose enterprise software that solves a business problem, such as reducing manual errors or automating month-end financial closings. When looking at new software, it’s critical to note whether the vendor’s offerings align with the company’s needs. For example, if the organization needs an automated expense reporting feature, and the software doesn’t offer that, keep looking.
2. Vendor Investment in Product
Before making the commitment to a new solution, researching the vendor’s roadmap for the product can prove very illuminating. If the vendor doesn’t have a clear vision or path for updates, that may indicate that the product will be sunset in the all-too-near future. Additionally, the technology roadmap needs to fit with the business strategy – or the organization risks choosing software that will not fit its needs.
3. Interface and User Experience
One way to ensure that nobody in the organization uses the new software properly – or at all – is to choose a solution that is difficult to use. If the majority of employees who need to log in don’t understand the interface or have difficulty navigating to the functions they need, they’ll find workarounds that may not align with the original reasons for purchasing the software. For example, if the company chooses a mobile expense report solution that does a poor job scanning receipts, users may set up their own software and import data into the financial system, possibly introducing errors into the reporting process.
4. Total Cost of Ownership
While cost isn’t the most important factor in choosing software, it is significant. There can be a lot of hidden expenses, particularly when selecting subscription-based enterprise software. Companies need to consider:
• Licensing fees
• User fees
• Annual maintenance
• Implementation services
• Upgrade costs
• Third-party integration costs and fees
All of this can add up quickly, and in some cases, might not be apparent until after the implementation is completed. For example, one large ERP vendor charges when third-party programs access data inside the ERP system. This is not a common pricing model, but it’s worth investigating whether this will apply to any chosen vendor.
Chances are that the internal IT team can’t answer every question or address every issue that arises. When evaluating any kind of enterprise software, the support offered should play a critical role in the selection process. Ideally, the vendor has a strong ecosystem of support partners, including but not limited to their own phone support, as well as consulting firms and implementation partners.
The 7 Deadly Sins of ERP Implementation
Some mistakes are just bad strategic or financial decisions. Some are the inevitable consequence of situational or organizational factors. Some, however, are the result of process-oriented or people-centric choices – and are easily avoided. These are The Seven Deadly Sins of ERP Implementation.
David has more than 25 years of experience helping mid-size and large manufacturing organizations and wholesale distribution companies leverage modern ERP technologies, optimize their operations and accelerate their business processes.