ERP Selection Process – 9 steps to success

ERP Selection Process – 9 steps to success

Selecting the right ERP system for your business, or any piece of technology for that matter is not easy. Over the years I have helped several business in widely different categories with their ERP selection process, or a another piece of technology to help them improve their daily operations and the value they add. More often than not this is about an ERP system that will affect how the finance department operates, the operations team, the warehouse, the sales team,… it affects the whole business.

How to choose an ERP System: the selection process

Step 1 – Gathering ERP Requirements

I usually start the ERP selection process with a requirements gathering. What does your current tool do and what do you want to be able to do in the future?

This is an initially broad collection of a teams’ wish list which might have some of the following examples on there:

  • Primary ERP System Selection Criteria
    1. Finance integration or module
    2. Billing management
    3. Supplier Management
    4. Warehouse / Stock management
    5. Open API integration options for 3rd party tools
  • Secondary ERP System Selection Criteria
    1. Marketing module
    2. Also has Mobile / App Version
    3. Annual software updates rolled out to entire client-base
    4. Australian based
    5. Public support forums

In my experience this list can get very long indeed and primary vs secondary criteria split will need to be made.

In this example, lets suggest that the first 5 criteria are vital. You won’t be selecting the ERP system, if it cannot answer yes to the first 5. The second 5 are nice to haves.

This is a long process. Many stakeholders will need to be interviewed and all existing processes and systems will need to be evaluated before a list of requirements can be comprehensively finalised.

Step 2 – Category analysis of ERP systems

Every ERP selection process should include solutions from both inside and outside the category. Most of us start with the platforms that are leading in their category. The recruitment industry tends to use JobAdder. Campaigning tends to be led by Nation Builder, membership management by IMIS, and the Strata Industry is led by StrataMax.

These platforms and vendors often lead the way in their category for good reason, but I always recommend to keep an open mind. Providing a solution for a certain industry can also mean that there is not enough innovation going on. Do your due diligence and always investigate if a seemingly different platform could meet several of your primary selection criteria.

Step 3 – ERP Platform solution research

It’s time for desk and phone research and to see which platforms exist inside and outside your category that can meet your requirements.

You’ll find that larger platforms like zoho, netsuite, and salesforce not only have many different modules you can select to construct the tool your business needs, but that a long string of 3rd party providers build solutions that can be integrated with these systems very easily.

Your research may require for you to identify some of these 3rd party providers as well in order to create a comprehensive picture of the suitability of each tool. This will also start to build towards a better understanding of overall cost.

Step 4 – Shortlisting the ERP Systems

Once all possible platforms have been identified and scored against your criteria of step 1, it’s time to tally up the scores and shortlist 3 to 5 ERP platforms.

As mentioned above, the fact or the matter is that you may find that not a single platform can help you close the gap on your entire wish list. Several integrations may be required and this is a vital part of selecting your shortlist.

Step 5 – Prepare for an ERP demo

ERP Selection Process - Online Demonstration
ERP Selection Process – Prepare the scenarios you’d like to see covered during an initial demonstration

Its time for a demo session, but a generic demo is not going to help you. At this stage you need to create a super clear brief to each vendor with scenarios drawn up about what typically occurs in your business. How would their system handle your scenarios?

This is also important to allow you to compare each platform later. If you leave it up to a generic demo, they may have omitted a feature that could easily be handled by a 3rd party provider or a module they did not know to bring to your attention.

Step 6 – ERP system & vendor references

The value of references becomes important, not just for validating you have shortlisted or chosen the right platform, but also that you will be working with the right implementation partner.

If you chose netsuite you can choose several very experienced implementation partners for example, which one is right for you and has the right style and process to ensure successful ERP implementation?

Talking to some other people who have implemented the platforms you are considering and who have worked with various implementation partners, will give you the confidence to proceed.

Step 7 – Writing the RFP and invite to pitch

You have gathered more than enough information now to write a Request for Proposal (RFP) for your ERP system platform solution and corresponding implementation partners.

Make sure you hire a consultant to manage this process for you (and yes you could ask me :)) to ensure all requirements are formulated, the selection criteria are weighted and the vendors are all informed of the evaluation approach prior to their response.

This is also a good time to ask vendors to submit their template contracts and T&Cs so you can make that part of your evaluation criteria, if required.

I have run many a pitch during my career and they require an enormous amount of input from the team that is asked to respond. I cannot stress enough how important it is to respect their time and efforts and to not invite teams who you don’t intend to take seriously.

Step 8 – Final ERP System shortlisting

When all responses are returned you might select those you want to come in and present to you.

If you have not yet chosen your ERP System, you might have invited two different implementation partners who are capable of implementating the same ERP System. It’s as much about the final ERP as it is about the right vendor. They are most certainly not always the same.

You’ll want to understand how they work, who is on their team and if their ideas calibrate with yours.

During each of the pitches your panel will be asked to score each presentation of a selection of weighted criteria you agreed upon in advance, in fact they were disclosed to your vendors in your request for proposal, right?

This allows for the most objective method I can think of to avoid boys-club decisions and favouritism towards mates.

In fact, if you have reason to assume your panel might lean towards subjective decision making, the weighting of each criteria might be held back.

Step 9 – ERP Vendor Selection and negotiation

You have collected all the scores and have a numeric outcome for a decision. Now it’s time to call the panel in for a final decision making meeting and select the winner. You can be guided by your objective data, but its is still a people choice.

A decision to buy and ERP system is very costly. You want to get it right.

At one of more recently completed projects I had the luxury of having access to a legal team at the early stages of vendor selection. It was immensely helpful to have legal support in negotiating contracts and terms. It helped everyone get the difficult conversations out of the way whilst the relationship was still new, fresh and thus full of excited anticipation.

(might I add this is a great idea for your private affairs as well, but I have no official status to be making suggestions about your marriage, so you can skip this advice, or give it a low weighting in your decision making chart) 

About Traffic Act

We are not aligned with any specific agencies. Instead, we work with a vast array of agencies in order to find the right partners for your business.

Contact us for independent advise or to run your ERP selection process.

About Jen

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