Selecting the right ERP software provides manufacturers and distributors the tools necessary to improve business performance. Robust business intelligence, dashboard reporting, integrated inventory control, quality management and other features can help companies work smarter, make informed decisions, and improve business processes.
But when it comes to ERP selection challenges, manufacturing and distribution organizations often find that navigating through the many available ERP solutions can be an obstacle with so many ERP vendors in the marketplace. Enterprises saddled with outdated legacy ERP systems often don’t know where to begin when it comes to an ERP selection project. Worries over what could go wrong abound—and rightly so. Selecting the wrong ERP system can result in inefficient operations disrupting workflows, poor user adoption decreasing productivity, or inaccurate data effecting reporting and decision-making, putting your company at a competitive disadvantage.
This post will examine these common ERP selection challenges and pitfalls to avoid:
- Evaluating ERP vendors
- Resource and time challenges
- Understanding business needs
- Anticipating future growth
- ROI concerns
Best Practices in ERP Vendor Selection
Download the best practices for small to medium sized manufacturers to consider when starting an ERP selection project.
Common ERP Selection Challenges
Every year, we talk with hundreds of companies about their ERP selection or upgrade. We find that many of these companies experience common issues, including poor access to information, core systems that are difficult to use, and an over-reliance on standalone systems that are islands of information. In addition, we see systems that have not been updated or which are held together with manual work-arounds or odd assortments of bolt-ons.
As these companies enter into an ERP selection process, we see the following groups of ERP selection challenges:
Evaluating ERP Vendors: The company doesn’t have a comprehensive understanding of what’s available with modern ERP in terms of reporting, features, integration, mobile access, security and more. ERP demos with different systems are difficult to compare, especially if ERP vendors aren’t held to a script addressing a clear and comprehensive list of requirements.
Resource, time challenges: The company doesn’t have the necessary internal IT expertise, resources or time to effectively take on an ERP project. Nor can the company spare other internal staff across different departments for this effort. Plus, ERP implementations require a significant cost investment, both with the initial purchase and with other expenses effecting total cost of ownership including additional maintenance costs, training and customizations.
Understanding business needs: The company needs help to understand existing processes, including where the opportunities are to improve with new technology, and set criteria for evaluating which ERP system best fits its requirements. Without defining needs and requirements—where you are now and where you want to be in the future—you may select an ERP platform that doesn’t correspond to your business goals.
Anticipating future growth: Companies must also factor scalability when it comes to ERP software selection. Many organizations are not exactly sure of their ERP technology needs in the face of growth from expanded markets or facilities. This requires considerable forethought beyond the foreseeable future.
ROI concerns: Many teams are wary of making a significant investment in ERP technology when they don’t have a clear evaluation of the return on investment (ROI). Often, companies find it difficult to clearly establish metrics for success, based on improvements in efficiency, increased productivity, enhanced decision-making, or cost reduction from new software.
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Pitfalls to Avoid in Your ERP Selection Process
On top of these concerns, there are additional pitfalls that add uncertainty to the already murky waters of ERP selection.
Ignoring training and change management: ERP implementation brings significant change to an organization, including current business processes and workflows. Users may feel resistant to fully embrace the changes, impacting user ERP adoption and your ROI. Prepare for change rather than responding to it later. As part of good project management, users should be included in the ERP vendor selection process using a comprehensive communication plan outlining the reasons for change as well as regular opportunities for input by key stakeholders on required features and functionality.
Missing the step to make sure all legacy applications are integrated. In addition to outdated ERP, many manufacturers or distributors use a variety of legacy systems for specific functions including financial software, inventory management or production planning systems. As part of the ERP software selection process, it’s important to avoid duplication and inefficiencies by ensuring that the new ERP can integrate or replace these existing systems. Any integration challenges can result in data silos or disruptions to daily operations.
Not reviewing enough vendors/reviewing all a vendor has to offer: One size definitely does not fit all in the ERP space. Be sure to compare multiple vendors and dive deep into features using an ERP selection checklist to weigh all options against your business requirements.
Choosing on cost alone: Selecting a new ERP system based on initial cost alone may result in software that doesn’t meet the company’s needs or deliver long-term value. It’s important to consider the total cost of ownership including implementation, customizations, training, and ongoing support. Also, laying the groundwork for your future state is key, with your business requirements guiding the selection of an ERP solution based on business strategy as well as costs.
Meeting ERP Selection Challenges
ERP selection challenges are a reality for most manufacturers and distributors we talk with, as this set of common concerns illustrates. Ultra’s industry-leading selection methodology is specifically designed to address these issues.
When carefully selected, an ERP system helps companies succeed and prosper in changing environments, setting them apart from competitors. However, a poorly considered or rushed choice can lead to an expensive and unused system that doesn’t deliver on its promises.
By tapping into a proven methodology for ERP projects, teams take the time to analyze current systems, educate process owners on best practices, and build a long-term business process improvement plan. From an ERP readiness assessment to defining ERP selection criteria and navigating vendor negotiations, Ultra can help your company navigate ERP selection challenges to find the just-right ERP system for your unique needs. Get started today by requesting your free discovery call.
