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ERP VARs How to Choose Enterprise Resource Planning Software

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By Alison Diana

Thorough Selection Process Critical to Implementation's Success

Since enterprise resource planning (ERP) software pumps the heart of a company's data life-blood, it is vital that businesses expend the necessary time and resources to ensure they select the best-suited product and technology partner to implement and support their investment.

ERP solutions incorporate a centralized database for information from all a company's departments, branches or offices. This data is accessible to authorized users within the organization, giving employees single, up-to-date business information. ERP solutions typically encompass financials; distribution; human resources; product life cycle management; customer resource management (CRM); purchasing; manufacturing; warehouse management, and decision-support.

Since nearly all aspects of a company are affected by and interact with the ERP software, it is critical that IT executives and business managers pool their acumen to design an information system that best meets the company's current — and future — needs.

Start with a Plan

Like any large undertaking, an ERP implementation requires buy-in from senior management and a top executive to champion and drive the cause. All of a company's department heads must support ERP adoption since everyone will use the solution, and a breakdown in any one department will deteriorate the system's cross-departmental process automation and information sharing.

Executives and IT also should encourage non-managers to create a wish-list of an ERP solution's capabilities. After all, these individuals will use the system most. In addition to improving employee buy-in, these discussions likely will generate ideas and requirements that ERP champions should consider in the ERP software selection decision-making process. And, by addressing potential stumbling blocks in advance, businesses can tailor customization or training to avoid prospective pitfalls.

Wise companies get early and broad participation and listen to many voices, especially in the formative planning stages. But ERP implementations also require a designated leader and team to make the tough decisions and spend the company's investment wisely, otherwise chaos - and failure - easily could ensue.

Current Processes

To get the most out of an ERP implementation, businesses must avoid merely automating or centralizing existing business processes. Instead, they should critically evaluate current procedures, deciding what works and what doesn't, before moving further into the ERP planning and design.

Speaking to employees and managers helps dig up bottlenecks, redundant tasks and other time-wasters. This is the opportunity to dramatically improve the ways in which a company does business, cut costs, eliminate non-value-added activities and improve productivity.

Looking Ahead

Businesses not only must consider current needs but must look ahead. Extensibility and scalability are critical. After all, no one wants - or can afford - to frequently revisit ERP implementations. Mapping required ERP capabilities against a company's business plan reduces the risk of short-sightedness, ensuring today's investment pays off well into the future.

Companies also must consider the viability of potential partners. How stable and profitable are ERP software vendors? How do they continually adapt and advance their technologies? Who are their technology and consulting partners? How do they compare with their main competitors? How have they weathered the most recent economic downturn? What percentage of a vendor's revenue goes into research and development?

Asking these questions may eliminate some contenders or open the door to new prospective vendors.

Cloud vs. Hosted vs. On-Site

Today, businesses have more ERP software delivery options, including subscribing to an ERP cloud service, having a third party host the software or choosing to purchase the software to run and maintain on-site. There is no cookie-cutter approach to this decision; rather, it depends on the company's culture, business objectives and budget.

Purchasing ERP software for an on-premise installation is more expensive up-front, and may force a business to invest in more servers, network capabilities and IT staff. But a company then has complete control over the technology, data, security and availability. With cloud or hosted services, businesses may pay a pre-set monthly subscription fee and rely on the managed service provider's (MSP) hardware, network and support staff to keep the system up-and-running. However, some firms are leery of ceding data to an external company, regardless of an MSP's reputation and strict adherence to its service level agreement (SLA).

Reference Check

Use the ERP product demos to hone down the list of candidates and then investigate each leading contender by speaking to like customers.

When possible, locating clients in similar verticals or lines of business is a great way to determine the viability of each vendor's solution. The more similarities, the more likely these customers are to have encountered the types of challenges - and benefits - your company can expect. In a competitive environment, this option may not be available, in which case it may be wise to speak to several more current customers to find areas of similarity. In addition to getting feedback on the product itself, it's also important to review the vendor's accessibility and flexibility; the quality of the training and support; the ease of customization and integration with other products, and conflict resolution.

If a business plans to use a third-party MSP to host its ERP solution, it's important to pose similar questions to prospective service providers. Results from these reference discussions can be particularly helpful in crafting a vendor purchase agreement that reduces risk for your organization.

It's a Multi-Phase Process

Of course, an ERP implementation cannot be done overnight - or even within a few weeks. The planning phase includes employee feedback, the creation of an ERP leadership team and a schedule. The design phase incorporates the review of current practices and corporate organization, selection of the ERP software, modules and capabilities, and a decision on the hosted vs. in-house debate.

During the implementation phase, the team creates a firm project plan and the accompanying documentation, and integrates applications into the ERP software. This period also includes thorough testing and user-training. Finally, the production phase involves a full-scale ERP roll-out - often department by department - throughout the organization.

Investing up-front time to select the best-suited vendor and software will deliver a much higher return on ERP investment by delivering employee and management buy-in, improved productivity and customer service, and an overall boost to the organization's operations. End

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Results from customer reference discussions can be particularly helpful in crafting an ERP vendor purchase agreement that reduces risk for your organization.






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