Purchasing new ERP software can be an overwhelming endeavor. However, it doesn't have to be. What is essential to understand about acquiring ERP software? This article will address that topic.
One of the primary services we offer our clients is assisting them in purchasing new ERP software. We aid them in evaluating potential choices, defining both a long list and a short list, navigating the RFP process, and ultimately selecting and acquiring the ERP software that best facilitates their digital transformation. However, many organizations are unsure of where to begin. They often find themselves stuck in analysis paralysis, selecting inappropriate software or spending excessive time only to choose unsuitable software. This article aims to provide a structured roadmap for evaluating and selecting the most appropriate software for your organization.
In the ERP software market, a plethora of options exists. Our database, which we utilize to aid clients in software selection, reveals that there are several hundred ERP software options available in the marketplace. Naturally, not all of these options will be pertinent to every organization, and for most organizations, only a fraction will be relevant. The challenge lies in sifting through these myriad choices.
Even if an organization manages to reduce the options to a more manageable number, it is easy to become mired in analysis paralysis, spending time evaluating systems that may never have been suitable. Thus, it is crucial to refine the selection to an appropriate shortlist to ensure that time is not wasted on systems that don't align with the organization's needs.
Arriving at this refined selection involves a blend of art and science. The artful component involves a comprehensive understanding of the industry and the market and possessing an objective perspective on the strengths and weaknesses of the various options available. The scientific aspect requires a quantitative and objective examination of how the functionalities and features of the software options being considered stack up against one another. It's less about whether a software can perform a specific function and more about the proficiency with which it can do so. In defining business requirements, these criteria should be evaluated objectively and quantitatively. Companies like Third Stage employ proprietary quantitative toolsets to assist organizations in this regard.
Furthermore, it's essential to recognize that the market offers more than just the ERP software category. There are CRM systems, platforms, business intelligence tools, interoperability tools, and numerous other systems that intersect with the domain of ERP software. These, although distinct in their own right, add to the vast pool of options that organizations must sift through. Consequently, swiftly narrowing down these choices to the most suitable ones is a pivotal step in the evaluation process.
Once the selection has been refined to a shortlist of potential ERP options, the subsequent step is to conduct a product demonstration. This will offer insight into the software's capabilities, its usability, and how well it aligns with your business needs and requirements.
A crucial aspect of this process is to ensure that the demonstration does not devolve into merely a sales pitch. While software vendors, system integrators, or implementation partners will invariably present their sales pitches, the primary objective should be to gain a comprehensive understanding of the software's operation in a typical business setting, often referred to as "A Day in the Life." The software may introduce methods to enhance and modify your business processes. However, there are foundational operations intrinsic to your organization that you may wish to retain. As such, the demonstration should be tailored to showcase how the software aligns with your specific business needs and requirements.
One of the most challenging yet essential aspects of this process is effectively managing the demonstration. The focus should be on an evaluative overview of a typical operational day, rather than a generic sales demonstration. Sales pitches are often inevitable, even when not explicitly requested. Therefore, it's imperative to maintain control over the demonstration process and to set clear expectations with software vendors regarding what you anticipate seeing from the software.
Given the vast array of options in the marketplace, it is quite easy to fall into analysis paralysis. Even when the choices have been whittled down to three or four seemingly suitable options for your organization, it's still possible to be overwhelmed by the extensive functionalities of these ERP systems. Delving into every detail can lead to excessive scrutiny and second-guessing, especially when encountering features that might raise questions or concerns.
To streamline this evaluation, it's pivotal to prioritize business requirements based on two key criteria. The first is to emphasize those requirements that are of high priority to your business. These could be elements that serve as competitive differentiators, industry-specific functions, or unique processes that give your business its unique edge.
The second criteria is to de-emphasize or set aside those requirements that are standard across most ERP systems. This isn't to diminish their importance, but rather to acknowledge that such functionalities, being ubiquitous, won't aid in making a distinction between systems. For instance, most ERP systems can process purchase orders and facilitate payments against these orders. Evaluating this common capability doesn't provide valuable differentiation.
Instead, the focus should be on business processes of higher value to the organization, those that set you apart from competitors. If your team has identified, hypothetically, a thousand business requirements, not all need equal attention. Perhaps only one or two hundred of these are truly high-priority differentiators. This evaluation can be visualized as a pyramid: the top contains these pivotal requirements, while the broader base encompasses the more standard ones. These base requirements aren't discarded; they'll be revisited during the implementation phase. However, it's the peak of this pyramid that truly guides the decision-making process.
By adopting this approach, organizations can sidestep the pitfalls of analysis paralysis, ensuring a more efficient and focused evaluation process.
With the myriad of options available in the marketplace, it's challenging to discern and concentrate on the most fitting choices. While the features and functions of software naturally capture attention, it's equally important to consider some less tangible aspects of the software.
By "intangible aspects", reference is made to elements like the user interface. Although the user interface might not be explicitly outlined as a business requirement, its ease of use is an essential criterion for evaluation. Other significant intangibles include the software's flexibility and adaptability. Considerations such as the ease with which the software can be modified or integrated with third-party systems, the presence of configuration tools for future maintenance, its architectural openness for third-party integrations, and the potential to develop custom functionalities not readily available from the software, are all crucial.
Additionally, intangibles related to the software vendor itself warrant attention. Assess the ease of conducting business with the software vendor, the ecosystem they've established in support of their product and clientele, their overall customer treatment, and their stance on transitioning customers from legacy products. Such aspects may not typically feature in standard business requirements or formal Request For Proposals (RFPs), but they play a significant role in the comprehensive evaluation process.
One of the most pivotal methods to enhance and expedite a software selection process is by ensuring unbiased and objective support. It is essential to move beyond mere marketing messages and not be solely influenced by what the software vendor presents. Seeking guidance from an external party that doesn't have a vested interest can assist in making an informed choice based on concrete facts, real-world insights, and an objective understanding of various systems.
This is where firms like Third Stage play a vital role. Being unaffiliated with software vendors, we do not receive commissions or financial incentives for endorsing specific systems. This independence grants us the latitude to maintain objectivity, recommending solutions that genuinely align with a client's best interests rather than the interests of any particular software vendor. Having such impartial third-party support is indispensable. It not only streamlines the selection process but also instills confidence in the eventual decision.
While this provides an overview of initiating the evaluation process for purchasing new ERP software, it is worth noting that several nuances haven't been addressed here. These include intricacies related to Request For Proposals (RFPs), the contracting procedure, ensuring requirements traceability, confirming that the software version you purchase matches the one demoed, among other essential considerations.
I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at firstname.lastname@example.org. I am happy to be a sounding board as you continue your digital transformation journey.