Guide with Expert ERP Vendor Selection

Introduction

ERP selection is a complex and high-stakes endeavor. A failed ERP project can be expensive and even potentially fatal to a business. Building upon our last article, “Guide to Expert ERP Software Selection “Guide with Expert ERP Software Selection,” this piece delves into the intricate process of selecting the right ERP vendor for your project.

Comprehensive Scope of ERP Selection

As explained in our previous article, our comprehensive approach to ERP selection encompasses four crucial areas:

Software Suitability

How well does the selected ERP software align with your company’s current and future needs? We have covered this in our earlier article.

Implementation Capability

Assess the capability of the ERP vendor in successfully executing ERP projects. Which will be covered in this article.

Long-Term Sustainability

Consider factors such as the vendor’s sustainability, ease of upgrading, internal support resources, and the flexibility to switch software or vendors.

Total Cost of Ownership

Calculate the total cost, including software, services, maintenance, support, and upgrades for the next 5 to 7 years.

While our previous article focused on software selection, it is crucial to recognize that, in ERP selection, the implementation of the ERP project often holds more significance than the capabilities of the ERP software.

Complexities of ERP Vendor Selection

Selecting an ERP vendor is more challenging due to the lack of transparency in information. Unlike software, it’s difficult to demo the implementation capability of an ERP implementation team. Three critical factors shape the evaluation of ERP vendors:

• Ability to Identify Critical Information
• Proficiency in Interpreting Information Correctly
• Methods in Validating Information Directly or Indirectly

Yes, these are challenging due to the following constraints:

Difficulty in Obtaining True Information

ERP vendors are adept at handling evaluations, employing tricks to convince prospects they are the right fit. Tricks may include presenting non-GAAP compliance or unaudited financial information, incentivized customer references, and staged office/site visits.

Difficulty in Identifying and Interpreting Relevant Information

Evaluators who are concerned about the support quality of the ERP vendors often questions about the number of support consultants that the ERP vendors employ.

However, this can be a misleading indicator. More support consultants may not mean better support services.  Rather, it may be an indication that:

• The ERP vendor created many customizations in their ERP projects that usually lead to more support effort.
• The projects could not stabilize even years after the project went live.
• The support consultants did not solve the root of the support issues which led to the same support issues keep recurring.

To obtain the true picture, it’s crucial to consider it alongside other information, such as support backlog and the number of customers under support.  Which usually leads to other questions.

Some Tips

While it is not convenient to share the detailed questions and methods that I use in helping my client conduct a more comprehensive evaluation of ERP vendors in this article, I will share some tips on how you can begin to build those evaluation questions.

Reconcile Information

To verify the information, reconcile indicators with other data in your validation process. Deep experience with ERP vendors’ operations is valuable for assessing the reasonableness of gathered information.

Qualitative and Quantitative Information

For example, understanding the ERP vendor support management process will give you some hints of how much focus the ERP vendor puts into their support operations. The qualitative information needs to be combined with the quantitative information to obtain a more complete assessment.

Interview Consultants

Interviewing the potential consultants who will be assigned to your ERP project will give you some assurance of the quality of implementation. However, how do you ensure that the consultants whom you interviewed will be assigned to your ERP project once you sign the contract, and how to obtain the true answers from the interview?

The track record of the project managers and consultants who will be assigned to your project is more important than the ERP vendor’s track record. Sometimes, an established ERP vendor may suffer a severe brain drain due to high turnover and the consultants who help the vendor to achieve their track record may no longer be with the ERP vendor.

What, How, Who +

So, evaluating the implementation capability of ERP vendors is not a science, but also an art. My advice is not just to understand the “What” but also understand the “How” and “Who“.

Broad Questions to Ask

When selecting an ERP vendor, your final decision will depend on your perception of the answers to the following broad questions:

• Implementation Capability: How proficient are they in projects similar to yours?
• Support: How effective are the ERP vendors in providing support services?
• Sustainability: Can they sustain their business to support you in the long term
• Costs: What is the total cost over the next 5 to 7 years?

Steps in ERP Vendor Evaluation

The general steps in ERP vendor evaluation can be concluded as follows although the devil is in the details:

• Identify Information: Quantitative and qualitative.
• Ask Questions: Formulate questions for accurate information.
• Validation: Determine how to validate collected information.
• Compilation: Discuss compiled information with the evaluation team for second opinions.

Conclusion: Elevate Your ERP Journey with Our Expert Guidance

In the intricate landscape of ERP selection, the path to success is paved with informed decisions. As you navigate the complexities of choosing the right ERP vendor, remember that it’s not just about understanding the “What” but also delving into the “How” and “Who.”  We go one more step of asking the “Why” during our evaluation as part of our validation process.

At 1st ERP Consulting, we specialize in guiding businesses through every phase of the ERP selection process. We bring a wealth of experience, offering you not just answers but strategic insights that go beyond the surface.

Consider the critical elements of software and implementation suitability, long-term sustainability, and total costs of ownership. Our consulting services are designed to empower you with the knowledge needed to make sound decisions, ensuring your ERP project not only meets but exceeds expectations.

Ready to elevate your ERP journey? We invite you to explore how 1st ERP Consulting can be your trusted partner in achieving ERP success. We are here to collaborate with you, bringing clarity to the complexities and ensuring your ERP investment becomes a catalyst for transformative growth.

Contact us today and let’s embark on this journey together. Your success is our mission.

Learn More about the author, Raymond Yap, and how we can help you.

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