We receive a lot of queries on how to select an ERP. Being ERP Consultants, it is our bread and butter. However, the six-step process can help anyone select an ERP suited for him. The five steps are
2. Define requirements
3. Evaluate ERPs: needs plus future plans of ERP Developer
4. Prepare a budget
5. Negotiate and contracting
We, as ERP consultants, compare the selection and implementation of ERP with buying/ construction of houses. Buying a flat or constructing a house requires research. Research what is available in the market, be it the type of material or technologies of construction. The user has to define his current and future requirements, understand how the area will develop or evolve in the future, and check his budget and ability to finance the deal. The ultimate step is negotiating the deal, that is financials and commercial terms. Buying and implementing ERP is something similar and involves
1. Research – Research what are products available in the market. An organization should check if there are Industry-specific solutions available in the market or if there are ERP implementers who have implemented the solution(s) in the industry. The ERP implementer will have a lot of industry knowledge and hence it would reduce both the time in the requirements gathering stage and in the configuration of the ERP. The flip side of this is that both the ERP Seller and the implementer may come with fixed notions or mindsets about the industry and may resist new ideas.
Research what has been experienced by the people who have used the software. There is a lot to learn from people who walked the path. Talking with ERP consultants and ERP implementers who work with diverse software also helps. Sometimes the insights may not affect our choice of ERP but may help in improving the experience of implementation. So, if you are really in the research stage for your ERP implementation, you must hire an ERP consultant who can provide you with the right guidance & advice.
2. Define needs – Different ERPs offer different functionalities and features in their product. While it is good to research what is available in the market, it is also important to define our own needs. Going back to the house analogy, a newly married couple when purchasing a flat or house will take a decision based on their plans for having children, and make provision for scenarios like their parents visiting them; similarly while defining needs, the company should look at its expansion plans and how that would affect its ask from its ERP (https://mentorsunlocked.com/how-to-select-an-erp/).
3. Evaluate ERPs: needs plus future plans of ERP Developer – Normally most people tabulate the needs and prepare a comparative chart. However, we at Mentors Unlocked recommend that it is also important to understand what new technologies the ERP Developer is planning to incorporate into the ERP. Today, ERP is part of technological tools and products used by a company. New products and tools are coming that may have to be integrated to sit on top or beside ERP (https://mentorsunlocked.com/newer-technologies-will-come-but-erps-will-remain-heart-of-enterprise-management/ )
4. Budget: Most people would put budget right at the top of the first step that they need to undertake before they even start a conversation with an ERP supplier. But just like while building a house, we would not like to be rigid with the budget, we may like to build for a planned 10-15% overrun. It is important though that before we finally choose the ERP and the implementer, we assess all the costs so that we do not get any unpleasant surprises later on (https://mentorsunlocked.com/cost-benefit-analysis-for-erp-implementation/ ). You can also consult an ERP consultant to discuss your budget.
5. Negotiate and Contract: The last and final stage of choosing ERP is negotiations on the contract. It is essential that both the ERP implementer/consultant and the company have clarity on the scope of work, exclusions (what the ERP implementer will not do), and responsibilities of both parties. One of the contentious issues is the preparation of data for migration from legacy or erstwhile ERP to the new ERP.
Even if it is an upgrade of ERP from one version to another, say from ECC (SAP) to S4, there could be changes in database structure, the underlying technology of the database, etc. All this may require time and effort to reconcile the data and map the databases to each other for migration. This could also turn out to be a significant cost. Like one of my supervisors used to say, nothing is done till it is done. Negotiations have to be closed with the signing of contracts.
Building a house is a journey and so is implementing an ERP, be it moving from legacy software to ERP or upgrading ERP. Best of luck, and enjoy the journey.