At ERP Advisors Group, we’ve helped dozens of fast-growing companies navigate the murky waters of selecting a new ERP solution. In working with clients, we have seen a pattern of mistakes that businesses make when selecting their ERP software. These are the top 5 mistakes executives and businesses make during ERP selection and the best practices to keep your selection on time and within your budget.
One of the most common mistakes organizations make is having too many employees involved during the process. Large committee decisions can cause disorganization and confusion around prioritizing requirements and establishing project responsibilities. Organizations are much more successful in deploying ERP software when the selection committee is comprised exclusively of stakeholders who are working within your ERP daily and the Subject Matter Experts (SMEs) impacted most by the software. Additionally, one person on the team should have primary ownership over the final selection. This could be a CFO, Controller, CIO, Director of IT, or Operations head, but it should be THE person responsible for gathering all the data and ultimately making the final decision. A single lead alleviates some of the stress and makes the selection process much smoother.
A large part of the ERP selection process is looking across the entire organization to identify which workflows and processes can be automated with software, what areas need improving, and what exactly it is your business needs. In many cases, we see companies start the selection process with the assumption that they only need accounting software, but as soon as they examine their organization and its processes, they realize they need a CRM or another type of solution. After performing an in-depth needs analysis of the organization, we often find that the solution to an organizational or operational issue is not what the internal team expected. Without a clear scope, things get even more confusing when potential software vendors get involved. ERP vendors are eager to sell their software, though they may not realize it’s not the right fit for your organization. That is why it is critical to know your needs before getting bids and demos from vendors.
Companies experience ERP fatigue when they spend too much time juggling too many vendors and watching too many demos. Software can be very complex; therefore, sitting through too many demos blends the content, making it difficult to differentiate the solutions. Clients also make the unfortunate “Beauty Pageant” mistake and pick the best-looking software, regardless of functionality. The best way to avoid ERP fatigue is to allow three to four people to conduct a mini-demonstration with the vendors, and narrow it down to the top candidates (about two or three solutions) to show to the rest of the team.
Selecting an ERP solution is about more than just the software; the implementation team and process are equally important. It is vital to ensure there are experienced people running the implementation, that understand your industry and the solution. These individuals must be available, interested, and invested to work on your project. Even if you choose the right software for your business, the wrong implementation team can cause budget overages, missed deadlines, and frustrated stakeholders.
The final mistake businesses make during an ERP selection is that their budget does not accurately reflect the total cost of ownership. There are other costs associated with buying ERP, such as implementation services or implementation project management that need to be considered. These costs may include:
All these costs need to be included in the project but are often neglected, leading to blown budgets. You can mitigate this issue by creating a contingency plan and keeping it under wraps. It sounds odd, but if vendors (or even your internal team) know about it, those funds will get used. However, the contingency plan is important to allow for leeway later in the project.
Avoiding these 5 mistakes will help the ERP selection process run smoothly. However, your project will STILL fail if you do not line up the proper resources for the implementation. Make sure to engage key people who know your processes, know how things operate on a day-to-day basis, and can successfully run your implementation. Of course, these may be the busiest people in the company, but they know the most about your organization and need to be working closely with the implementation partners during the process.
Contact us today if you need help with your ERP selection process, and we’d be glad to help you successfully navigate your selection and implementation.