Does it Pay to Issue an ERP Request for Proposal?

For decades, manufacturing and distribution companies typically issue an ERP request for proposal to software vendors when they head into an active enterprise technology project.

The results of this effort are mixed at best.  Working through an ERP request for proposal is time-consuming for the organization and the project team. The contents of a typical ERP RFP are often so generic the information is not useful.  Plus,  the responses from the vendor don’t reflect the specific business requirements of the project team.

So, what’s a better approach?

ERP Request for Proposal – A Better Approach

As an ERP consulting firm serving manufacturing and distribution teams, we’ve found that it is best to avoid the typical ERP request for proposal process.

We suggest  a “Request for Presentation”or even a “Request for Information” which is far more revealing than a written response a vendor would issue as an ERP request for proposal

Setting up interviews and presentations gives you the chance to meet the ERP software vendor face-to-face to test the relationship between your team and their team. It helps teams whittle down from the long list to the short list of vendors a lot faster than putting out an ERP request for proposal to multiple vendors.

Strategic Decision Drivers

This approach involves setting strategic decision drivers even before looping in the vendors, which differs from the traditional ERP Request for Proposal or RFP process.

A speedier and more effective selection process follows when there is an understanding of how the software performs necessary activities that meet well-analyzed future state requirements – a critical understanding not addressed by a traditional RFP.

A decision driver is a qualifier that ensures a solution is aligned with the buying organization.

Decision drivers become qualifiers that help the business narrow the playing field of possible solutions.  Of course, functionality is most often a top qualifier, but there is more to consider.

Ultra encourages clients to consider other factors like technology, experience, support, and approach to implementation.  If a client values a forward-thinking partner, that is a non-functional decision driver.  In that case, we may review the publisher’s investment in R&D and the product roadmap.  If the client prefers a more hands-on approach to implementation, a decision driver may focus on the partner community and proximity to their locations.

To illustrate the difference between an RFP and the value of setting strategic decision drivers, in a recent example a manufacturer sought automatic generation of on-time shipping reports.

Most vendors will indicate in an RFP that their systems generate shipping reports. However, the manufacturer’s key decision driver required report integration with a standalone warehouse management solution.

By defining this decision driver, the project team could then analyze any required customizations or integrations needed to meet this specific requirement. The team was better able to evaluate the software against future state business process models – enabling the team to make the best decision to support long-term needs.

Decision drivers can also help vendors develop vendor scripts during their qualification presentations.  The decision drivers become qualifiers which effectively move vendors into the short list– not a typical outcome of a traditional RFP.

ERP Request for Proposal – A Better Outcome

When executed well, aligning decision drivers with the needs of the business improves the effectiveness and timing of an ERP project.

Functional requirements should inform the preliminary set of solutions.  For example, a mandated requirement for shelf-life management in the case of a food and beverage manufacturer, the drivers act as criteria to narrow the vendor playing field down to an effective long list.

This process should provide enough data and shared understanding for both the manufacturer and the vendor to create a relevant and effective technology presentation that focuses on precisely what the manufacturer is searching for in a new ERP system and partner.

The approach yields a dramatic payback for the manufacturing or distribution company.

We often encounter examples where this approach shortened the ERP selection project duration since the information helps teams quickly find those vendors that best address their requirements and priorities.

With this approach, the vendor has the needed insight to showcase the strength of its solutions as best serves the ERP project team. And, most importantly, the manufacturer has the required detail to understand which systems deserve a review, and to clearly see how each solution will address its needs.

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Software selection and implementation processes often present challenges of their own. To steer you around trouble and help you drive success, Ultra’s experts compiled a list of pain points and solutions to be aware of as you embark on this journey.

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Jeff is the founder of Ultra Consultants, a well-known voice in the ERP consulting industry and an expert on ERP solutions for discrete and process manufacturers. Over the last 40-plus years, his companies have helped more than 2,000 organizations improve their business processes, select ERP software and implement advanced solutions.

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