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One of the most important aspect of ERP implementation is the selection of right software.
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ERP Selection Process One of the most important aspect of ERP implementation is the selection of right software. Wrong ERP selection is one of the top 3 causes of ERP failure. In order to be fair to the subject in hand, we must discuss what is ERP failure.
What is ERP Failure? In its most disastrous form, an ERP failure will result in the application being not used at all in the organization. But such instances are quite few. In most other failures, when an ERP does not deliver business benefits, it it termed a failure. In most cases, company looking to implement an ERP has some idea about the areas that can benefit upon ERP implementation. When a company is not able to reduce inventory by 6%, or increase inventory turns, or reduce the amount of receivables or reduce business risks it has to be termed as a failed implementation. Just writing an Indent or a PO in the ERP, can not be consider success. That is setting the bar too low for yourself as well as for ERP. I have another perspective to add. When an organization, despite having need, is unable to use all the features available in the ERP fails to use them to increase business benefits, I term that as a failure.
ERP Selection ERP Selection starts and ends with understanding customer needs. Once business needs are identified, process should be followed to identify ERPs that meet customer's current and foreseeable future needs. There are sites like TEC that will allow you to buy software selection criteria. The advantage of using an existing criteria is to use what has been proven to work. It also ensures that you get access to an exhaustive list. Then it is for you to decide the item to keep for your purposes.
ERP selection criteria must show weightage to be given to each feature/functionality requested. This weighted criteria must take into account not just the perceived needs but the ability of the organization to effectively use such features. Over years, I have seen many criteria that ask for "Ad Hoc Reporting" not realizing that the number of reports along with the filters provided in ERPs now a days eliminate the need for Ad Hoc reporting. Even if it is provided, I have not seen too many organization use adhoc reporting effectively.
ERP selection criteria must include technical items as well. ERP implementations are expensive. Your evaluation criteria must ensure that as much of existing infrastructure as possible is used. One must also factor in the availability of support staff to ensure that proper support is in place. While evaluating any tool one must also record the effort it will take to meet business needs. This can be done by assigning High, Medium, Low type of category. High would mean that significant amount of customization would be needed to meet customer needs. Value in terms of hours effort should be dependent on the size of the implementation. High for a large implementation may mean 400 hours where as for a small implementation it may be only 100 hours.
One must include non-functional criteria as well while evaluating a solution like ERP. Financial viability and current installed base of the tool maker and availability of the implementation partner in close vicinity are examples of such criteria. It is very necessary to understand that outcome of a software evaluation and selection phase is not one software but
1. Reasons for selection. Team must understand whether selection of a tool was based on which factors. If cost was one of the factors, then it is important to record that for post implementation discussion. Many times, a seemingly cost effective tool may turn out to be not to so cost effective when you look at total cost of ownership. 2. Cost of implementation in terms of effort (people's time) and money. Many times organizations forget to plan and hence consider their employee's time in the implementation. Lack of planning results in creating bottlenecks during implementation. 3. Reasons why other tools were rejected. There is great amount of learning from the rejection to give us a feel for what should not be done during your implementation.
erp consulting: https://www.pemeco.com/
