For any organisation currently exploring options to implement an ERP (Enterprise Resource Planning) solution, you will most likely be facing difficult questions and decisions.
There are many to choose from, ranging from ERPs designed for smaller organisations, right up to multi-million dollar Enterprise solutions. It IS indeed a difficult landscape to understand.
Recently, our client engaged James Fordham to research and help procure a suitable ERP solution to replace our clients antiquated and outdated in-house equivalent. We started by doing the usual research (asking around/referrals, Google search, white papers & reviews). After a few weeks of research, we connected with four providers and invited them in to meet with our clients to understand their requirements.
Note 1: Dont look for a demo in first instance. Assume most ERPs will cover off 70% of what you need. The Key is for the provider to understand YOUR requirements.
We spent a couple of hours with each vendor and quickly you get a level of comfort (or not) around the vendors experience, expertise and knowledge. It is important they have some experience in your industry, or at least a very similar client case study, as your needs and they way you do things (unique workflows) are most likely different to most of the vendors other examples.
Following the first meeting, we ask the vendors to revert back with an indicative proposal. Indicative in that they only had the two hours of Q&A in addition to one or two briefings I had provided. However, we can at least work out what the cost range will be.
Note 2: When forecasting your budget for an ERP, it is important to note that the Year 1 cost will be significantly higher than subsequent years. This is due to the implementation cost which is where they function map your workflows to their solution. It is not uncommon for this cost to range between $ 150K – $500K.
In my clients regard, we needed to provide the board with a 5 year cost schedule.
Next challenge was OnPrem (where all the software is installed onto your existing IT Infrastructure) or Cloud based. And then some offered Hybrid (combination of both). Dont think Cloud is cheaper – its not. And if you are considering OnPrem, you need to factor in your hardware life-cycle (replacements, upgrades, internal IT resource etc). Again its never a one size fits all scenario. It needs to be right for you.
Some ERP solutions price their solution based on Users, whilst some base it on transactions and some purely flat license fee based. For the Users Model, it is important to understand the types of users – as some of the more reputable providers offer multiple user types and offer free types as well (e.g. users who may only VIEW reports & dashboards – not specifically interact and enter data etc).
Once you’ve navigated the landscape around license models, onPrem or Cloud, you then realise that almost ALL the solutions you’ve spoken about will most likely get the job done. So how do you go about differentiating between them? Its a difficult question to be honest. In my case, I was carefully listening to the vendors’ experts. Some vendors may turn up with one or two representatives, whilst other may arrive with a small army. The number of people doesn’t matter – its the questions they ask. Do they understand my requirements? It becomes apparent, and quickly, which ones know their stuff, which ones are just essentially executive sales people.
On that note, it is important to understand WHO will be working with your team during implementation. In many cases, experts will be on teleconference or flown in for the meeting – so its reasonable for you to ask the question… Person X on the phone sure knows their stuff… will they be actually working with us during pre-implementation and implementation? Find out what resources are accessible (local) and which ones are not.
Once you tick off the items above and feel like you have a couple of good options to recommend to your superiors, it is time to get other opinions and perspectives. Invite your short list back in to meet with you, but this time ask for a Demo of their solution. Also invite key stakeholders from your organisation in to meet them and see the potential solution. Being an ERP, most likely you will want a senior Finance stakeholder in the room. Additionally, manufacturer, logistics, warehouse managers etc…
Note 3: Keep in mind, that whilst its incredibly important to get wider buy-in from your senior stakeholders, they may not need to be present throughout the entire meeting. Perhaps setup the agenda, so the Demo and Q&A components can be handled up front and fairly quickly. Then let them back into their day to day routine, whilst you ask more technical questions.
After the vendor presents, and leaves, you can go back and chat with the other stakeholders who were present earlier and ask them what they thought… There is little point recommending a vendor if your stakeholders didnt like them – you’ll end up with a massive change-management nightmare in addition to you own personal reputation on the line.
Once you have got to this point – its time reference check. 100% make sure you speak with at least two clients of the vendor of choice. Ask how the product/solution is going. What was the implementation like? Did it take longer, where they easy to contact? Did they resolve issues in a timely manner? and so forth..
I hope this helps get your thinking cap on. Investing in an ERP is a significant task. Both literally and metaphorically. Make the wrong choice, or rush through the process, the mistake can cost your organisation hundreds of thousands of dollars. Take your time. Get it right.
All sounding overwhelming? Dont stress. ZIS can manage this process for you (like we recently did for a valued client). Give us a call today and let’s first understand the WHY before we dive into the HOW… Thanks for reading.