Implementing the new enterprise resource planning (ERP) solution is a major undertaking for businesses. It gets even more complex given the various factors that are required to be considered for successful implementation and leveraging the full potential of the software. That’s one reason why many companies invest heavily in the ERP evaluation process, which helps them to weigh the strengths, and limitations of various ERP solutions available in the market, as well as, identify the company requirements for the right ERP software. It’s only rational to say that companies need to put in extreme due diligence during the ERP evaluation process to ensure they choose a system that offers features/functions they need.
A lack of due diligence during the evaluation stage may lead to an inadequate ERP solution. This won’t just translate into a loss of precious resources, time, and costs, but also cause frustrations, and restrictions in the company’s growth and operational capabilities for years to come. Other potential downsides for implementing inadequate ERP systems include increasing cost of ownership, and service failures.
Contrarily, a strong and successful ERP evaluation process that leads to the implementation of an adequate ERP system gives businesses a strong foundation to:
- Streamline workflow processes
- Improve operational efficiencies
- Develop robust integrated systems
- Improve work collaboration
- Enhance customer experience
- Gain insightful analytical updates for innovation and growth
ERP Evaluation Process
As mentioned above, ERP implementation is a major step for businesses that can influence growth or failure. The key to successful ERP implementation lies with robust due diligence during the ERP evaluation process. Below, we will be looking at some important steps that can help you identify your business needs and implement the best ERP system as per your unique business needs.
- Determine system requirements.
As with any other business transformation process, the first and foremost step is to understand your business needs. The key here is to not limit your understanding to the existing needs of the business, but also anticipate future needs. The process should involve reviewing the entire business operations and financials while estimating the growth potential. It’s worth determining where’s your business headed at the moment and what are the future growth plans. That’s because your choice of ERP system shouldn’t only be able to deliver to current requirements, but should also have the scalability and flexibility to evolve and adopts to future needs. So, it’s worth it to consider the processes, resources, and systems that ERP software will need to support today and in the future.
The right approach to determine the system requirement is to adopt a collaborative approach. Bring in all the relevant stakeholders in the company and devise detailed business system requirement scenarios, so as to cover all important scenarios of the future.
- Should you go for a new ERP system or upgrade the existing one?
Now, once you are done with the consultative meeting to determine the system requirement for the ERP platform, the next important step is to consider if you really need a new ERP system or a major upgrade to the existing system will suffice.
As mentioned above, ERP implementation is a major business transformation process that requires significant time and resources. Thereby, if you already have an ERP solution, it’s worth it to determine the laggings in the current system and if those can be fixed with a major upgrade. Evaluating the need for a new system or upgradation of the existing system is an important consideration during the ERP evaluation process. Because, if an upgrade can solve your business requirements, you will save time, money, and hassle involved in new ERP implementation.
However, this may not be easy to determine. That’s because you will have to consider not just the current gaps, but also anticipate the future gaps that may arise. Most of the time, replacing an older system with a completely new one is recommended. That’s because technology evolves at a rapid pace. And while you may be able to fix the operational gaps in the existing ERP system, for the time being, it will eventually become obsolete and unworthy in the future. Also, most of the older ERP systems doesn’t include the latest functionalities and features like agility, specialized add-ons, SaaS deployment option, and Cloud ERP, etc. Thereby, while choosing to upgrade the existing system may be cheaper and faster in the short-term, in the long run, it may not be the most suitable option for meeting the business requirements.
Nonetheless, the scenario may differ from company to company and thus it’s important to consider the pros and cons of both options during the ERP evaluation process.
- Engage senior management
As a general rule, most business transformation plans don’t fail due to external factors, but because of internal resistance. As a major business transformation process, it’s important to engage all senior and relevant management of the company to avoid any bottlenecks or skepticism in the future. By engaging the senior management during the ERP evaluation process, you won’t just ensure that all key stakeholders are on-board for the transformation, but also ensure ongoing commitment towards the chosen system. While the system will primarily be utilized by the lower management, it’s the upper management that will eventually have to convince and motivate respective staff to operate and leverage the full potential of the new system.
- Establish a project roadmap.
A clear and transparent roadmap is important not just to ensure a smooth and streamlined implementation of the ERP system, but also to calm the anxieties of stakeholders. With a detailed implementation roadmap, stakeholders can be kept informed about the expenses involved in the process, potential benefits of the implementation, expected ROIs, along the implementation timeline. Thus, by creating a clear project roadmap during the ERP evaluation process, businesses can keep up with their commitments towards the stakeholders, as well as, stay prepared for potential bottlenecks, which may be experienced during the implementation stage.
- Estimate the total cost of ownership.
There will always be additional expenses that will be left unaccounted for during the initial outlay of the project. However, it’s important to consider and account for these additional expenses to have a complete sense of the project cost. Some of the important aspects to consider including, hardware requirements, the cost of training, consultation fees, future upgrade costs, and others. Also, you may need some outside help from professional ERP implementation partners post-implementation, so, make sure you add those expenses as well.
- Consider peer references.
Since the ERP evaluation is all about comparing and choosing the best model for your business needs, it’s a great idea to get some recommendations or suggestions from friends, or peers with prior experience. Peers who have recently undertaken the ERP implementation in their companies can give you first-hand experience of the challenges, and best practices to ensure the right choice for the system, as well as, a seamless implementation process.
- Evaluate deployment flexibility.
Last but not least, assessing the deployment options offered by ERP implementation partners is an important aspect to consider during the ERP evaluation process. Remember, there are multiple ERP deployment models available in the market, including the standalone (on-Premise) deployment model, and Cloud-based deployment model. Both of these models come with their strengths and limitations. And while the cloud-based models offered as SaaS solutions are highly preferred for the flexibility and scalability options, the final choice would depend on business requirements, and preferences. There are in fact some hybrid deployment models offered by some vendors, which can help businesses to enjoy the benefits of both the world. Thereby, make sure you weigh in the strengths, and limitations of all deployment models and choose the one that suits business bottom lines.
Putting It All Together
Well, just to recap all that’ involved in the ERP evaluation ;
- Identify your business requirement. There is no one-size/technology fit all solution in the ERP industry. Thereby, make sure you know your business needs and choose a system that delivers you capabilities you need today and in future
- Conduct a quick review of the existing ERP system (if you have) to see if you can still utilize the system with major/minor upgrades
- Gain the confidence of senior management by engaging them during the ERP evaluation
- Define a clear and transparent roadmap for the project, which should cater to the anxieties and ambiguities of stakeholders, as well as, serve as the base map for the implementation stage
- Don’t forget to account for the additional costs which are often left unaccounted for during the budgeting process. Costs like post-implementation support, training, and upgrades might seem trivial, can add up significantly, and may post a challenge during the implementation/post-implementation stage
- Evaluate the deployment model. While cloud-based ERP models are the most preferred option for most businesses for its flexibility and scalability options, the final choice of the model will depend on unique business needs and preference. So, make sure you are done weighing the pros and cons of different models during the evaluation stage.