Why Finding the Best Functional Fit is Not Enough in Selecting Your New ERP

Written By: Brian Potts
Date: September 11, 2020

It is a daily conversation, companies wanting to know which ERP system best meets their functional requirements. This is not an easy question to answer and requires evaluation, but it is also not the only question that should be answered. Even when you find an ERP software that matches your functional requirements, you may still not be looking at the right solution. Here’s why:

Functional fit does not accurately summarize cost or risk: When you confirm with a vendor that their software can handle a specific requirement, you need to specify the “how” along with the “if”. Software is so flexible today, and so many vendors have relationships with third-party providers that most software will be able to handle most requirements. While software modifications and bolt-on solutions are commonplace, both scenarios can skyrocket costs and risks if not properly evaluated and managed. Customizations, specifically, should not be taken for granted and can completely derail an implementation. For these reasons, you will need to complete vendor due diligence, Request for Proposal (RFP), and demonstrations to validate that “functional fit” is truly a fit.

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Consider who will be implementing and supporting your software: You may find the best software for your business, but if there are limited or unqualified integration resources the software alone won’t do you any good. Many software implementation firms are currently backed up for months on implementation timelines. If you are in hurry to implement this may be a valid concern. In addition to timelines, if you are getting the “B” team from your vendor or reseller, this may in turn increase both cost and risk to your digital transformation. What we are finding in many cases currently are resellers positioning resources lacking full certification or experience implementing the new cloud solutions.

Does the software match your future vision: When evaluating functional fit to requirements, it is easy to lean towards current state processes when the future is cloudy. It is not always possible to project where a company will go, and thus future state requirements often get overlooked. When looking at software functional requirements, companies will usually think ahead from a transactional perspective, such as the volume of orders or purchases, numbers of future employees, or increasing SKUs. In addition to future growth and transactions, we also stress the importance of considering future strategic decisions such as acquisitions, splitting entities, extending business lines, or expanding internationally. These factors can steer a software selection in any number of directions.

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Do you need a flexible or rigid software: This question often gets blank stares when we first talk with organizations looking to move to a new ERP. What this question is getting at is, do you want a software that will stay flexible to changing business needs and environment, or do you need a software to drive processes and standardization across the company. To put this in better perspective, consider Microsoft Dynamics and SAP. Generally speaking, Microsoft Dynamics is a very moldable software, meaning that you need to tell it what to do. If you implement Dynamics 365 in a company with poorly defined processes, you will still end up with poorly defined processes. If you bring in a more “rigid” ERP such as SAP into the same environment, you may have better luck defining processes that didn’t necessarily exist earlier. Likewise, bringing SAP into an organization that is constantly changing or has varied processes across multiple locations may not work too well. They may both meet the exact same functional requirements, but they do so in very different ways.

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These are just a few scenarios that would extend your software evaluation outside the traditional functional matchup. Like online dating, checking the boxes is a great first step, but there is always some additional underlying chemistry that makes someone (or a new ERP) a perfect match!

Questions about digital transformation needs or general ERP software implementation? Please feel free to contact us to discuss your change management or transformation initiatives. We are happy to help!

Brian Potts

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