There are endless blogs on software evaluation best-practices and steps to take, such as documenting requirements, requesting demonstrations, negotiating, etc., and then there are the details within these steps that will crush your initiative if ignored. The phrase “The Devil’s in the details” holds very true for software evaluation.
An effective ERP selection process can help ensure that you avoid ERP failure. Following are a few land mines or “devils” to watch out for during your ERP software selection:
Lack of Overall Digital Roadmap
Before jumping into an ERP software assessment, be sure you know and have outlined exactly what you are looking for. Most companies have a spread of disparate systems, some integrated, some not, and in many cases departments have just purchased a stand-alone system because they “need” some new functionality. Before long, you find your organization has overlapping functionality and a range of systems, data issues and redundant costs.
Before evaluating ERP, CRM, HCM or any of the top ERP systems, take a holistic look at your entire platform of systems currently in place and define what the future systems infrastructure should look like. Based on current technology trends, it is likely that you will consider an ERP best of breed strategy, so it is important to consider all your options. Without this, you may find yourself back in the same mess you are now.
Relying on Software “Best Practices”
Anyone who has ever talked to a software provider has been pitched the idea of incorporating “best-practices” as part of their technology implementation. How is it that every software package on the market has your company’s best practices already programmed in their system? Essentially, any out-of-box software has some general functionality that fits common practices for a particular industry or functional area. This is why it is important to correctly answer to the question: when should business process management should occur in your ERP implementation?
The answer is that there are multiple “best-practices” for any industry or functional process, and it is up to you to determine which will best fit your business model. Functionality that a software vendor states as “best practice” may not, in fact, be best practice for your industry or sub-vertical, much less your individual company; it is simply the best practice for what that particular software offers. If your determination is to simply adopt to the “best-practices” provided by your new software, you are placing your company at risk.
This video further explores the myth of software best practices:
Lack of a business case and benefits realization plan
You may simply “need” a new ERP and know that your business will not survive on the current platform. This is great to know, but it is not a business case. With the variety of software functionality and emerging technologies, it is imperative to know 1) that you are getting what you need and 2) that you can justify the cost with benefit potential. If you try to select technology without measuring and defining how a new system will improve your business, it is similar to launching a new business without a business plan.
Another way to look at this is to consider how “cool” technology has become. It is no longer a simple business support function- technology is a business differentiator. Automation, mobility, big data, virtualization, internet of things, robotics, etc., sounds awesome when discussing with the SAP salesman (or any software), but watch out. You don’t want to go without what you need, and you certainly don’t want to end up with what your stakeholders don’t want or can’t afford. Say that 3 times fast!
Not Understanding Total Cost of Ownership (TCO)
Tying to the above point, it’s common knowledge that ERP software total cost of ownership extends far beyond than just the software itself. Implementation services, maintenance, integration costs, data management, hardware and infrastructure upgrades (servers, PCs, database, scan guns, printers, etc.), business processes reengineering, organizational change management, program and project management, consultant or project team travel and contingency, etc. really add up. Tie that to the excessive functionality a multiple EDI partners you have agreed to and you may be in for a shock.
You may assume that any additional “work” will be handled internally, but then backfilling and internal costs and capabilities will need to be evaluated. Make sure you have documented a TCO analysis before purchasing new technology.
Bottom line: ERP software selection is the first step to a successful digital transformation
An effective ERP software selection process won’t guarantee success, but it at least gives you a chance to succeed. It’s an important prerequisite to a successful implementation, so be sure to watch for these common pitfalls along the way. And don’t be afraid to reach out to independent ERP consultants such as our team at Third Stage for help along the way!
In the meantime, this video outlines some additional things to consider during your ERP software selection process: