Before starting your ERP journey, it is important to create a set of ERP selection criteria. Through our 300+ client engagements, we have realized there are five main points of focus. By studying, evaluating, and documenting these five key criteria, our clients can make the best and most educated decisions for their company.
ERP Selection Criteria Checklist: 5 Main Points to Consider
An enterprise technology project is complicated. We suggest a methodology that involves an ERP Selection Criteria Checklist. These 5 top points of consideration include:
- Company -which software vendor knows your business? What is the partner eco-system for this company? Do they know your processes and production environment? What’s their track record.
- Technology – what is the software developer’s technology landscape and road map for future innovations? Does the technology fit the business strategy?
- Function fit – It is tempting to start with a list of features and functions, but this is only part of the equation. Find those vendors that offer system features specific to your needs.
- Support – Each software developer will offer a unique set of support options. Any ERP selection criteria checklist must involve looking closely at support offerings.
- Cost of ownership – Total cost of ownership is a critical calculation to the health of your business. From licensing, user fees to support and upgrades, take a close look at all cost implications.
This phase of assessing ERP selection criteria will produce better outcomes when guided by independent resources. Once a long list of vendors has been identified in the enterprise software selection process, the team should go about a process of evaluating these ERP selection criteria. Here is a definition of each criterion:
Clearly, an ERP Selection Criteria must start with a close look at the software vendor company. Company size, including annual revenues and number of employees, is very important in your evaluation because it helps answer the following questions:
- Who will make the best partner?
- Who knows my industry the best and has the most impressive track record with companies like mine?
- Are they committed to serving my industry?
- Who will be able to keep my company abreast of important technology changes for the next 20 years?
- Who will make the best vendor partner?
We find that most companies have developed a technology strategy favored by top management and IT. You will also find that ERP software vendors have their own technology strategy. Even though most vendors profess they are open systems, in truth, each vendor has their technology “sweet spot.”
It is important to understand the vendor’s technology platform and architecture and measure it against your strategy.
Even though there are dozens of vendors that have a good function fit, you will find there are only about three or four that are the best fit for your business. The key in your evaluation is to quickly find those vendors that best address business best practices for your industry.
Assess Support Options
ERP vendors have a number of ways to support their client. The larger firms have significant support ecosystems to support their market. Buyers should evaluate all of their support systems, including the following:
- ERP consulting firm
- ERP selection methodology
- ERP education
- ERP implementation methodology
- Maintenance and phone support
- User groups
- Partner network
Cost of Ownership
ERP Selection Criteria should also take in consideration total cost of ownership. It is important to learn from previous customers about each vendors’ cost of ownership. We find at the end of the day after negotiation, most software vendors all offer the same price for their software.
There are several other factors that differentiate vendors in addition to cost of ownership. Annual support fees vary, implementation rates and fees vary, and the ongoing need for support varies from vendor to vendor. To make the most informed decision, look to understand and confirm the total cost of ownership over a five-year period.
We guide our clients in the development of an ERP selection criteria table that documents all the facts gathered in the evaluation phase organized by the above criterion.
How to Become an Expert in Assessing ERP Selection Criteria
Today’s modern ERP software provides manufacturers with the tools necessary to improve business performance. Several features of a new system can help companies work smarter, make informed decisions, and improve business processes, including:
- Robust business intelligence
- Dashboard reporting
- Mobile access
- Real-time data access
- Integrated inventory control
- Materials requirement planning (MRP) and more
When carefully selected, an ERP system can help your company succeed and prosper in changing environments, setting you apart from your competition.
Learn More About ERP Selection Criteria
It’s critical to have a firm grasp of ERP selection criteria considerations. Download a free white paper, “Best Practices in ERP Vendor Selection,” for best practices in ERP vendor selection – from developing a list of vendors for consideration, to identifying the leading vendors in the vertical industry, to conducting due diligence to make sure those solutions on the short list will deliver value to your organization.
With tactics shared in this free resource, you will quickly establish a list of vendors to be considered, and achieve an effective ERP selection project.