Finding the ideal ERP solution needle in the haystack

Finding the ideal ERP solution needle in the haystack

Published: 7/1/2015 5:52:11 PM

It is hard to overstate the importance of correctly implementing your enterprise resource planning system. If we imagine all of the daily transactions of business as trains moving along their own tracks, then your ERP solution is sort of like the switchyard - i.e., it ultimately ensures their proper functionality and direction as part of a continual, uninterrupted flow of operations. Whereas a rail yard delivers this support through its parallel tracks and automated switchers, ERP does its job via versatile software that powers everything from sales to billing. Just as no railway or other organization dependent on freight could tolerate an inefficient switchyard, small and midsize businesses cannot afford a subpar ERP implementation.

What can go wrong when setting up your ERP system?
Nevertheless, the history of ERP is riddled with high-stakes failures, unjustified product hype and prickly relationships between clients and vendors. To pick just one example among many, The Hershey Company experienced a huge setback in 1999 with its various ERP supply chain applications, which resulted in the failed shipment of 100 million pieces of candy and an 8 percent drop in the company's stock price.

How do these mistakes happen during ERP implementation? Although there are certainly many possible causes of such mishaps, the usual ones often stem from the original vetting process for the client's ERP vendor, or the lack thereof. No organization is immune to ERP troubles, especially considering ERP success does not happen in a vacuum and is instead contingent upon a productive working relationship with vendors that have deep knowledge of specific project requirements.

"No organization is immune to potential ERP troubles."

Ensuring that you have the right vendor for the job is not an easy task. Moreover, this process of screening potential candidates - aligning what they bring to the table with what you need from your ERP system - is one more layer on top of the already time-consuming and potentially expensive process of getting a new ERP solution off the ground. It is no exaggeration to say that the entire project's fate can and often does hinge on the client-vendor partnership.

What not to do when looking for an ERP vendor
Let's take a deeper dive and examine how you can get into trouble with untrustworthy ERP vendors. For starters, it is common for there to be a disconnect between a vendor's sales department and its technical teams. This divide can lead to salespeople writing checks - i.e., making promises - that the actual ERP solutions cannot cash.

"Many of my best clients are 'sold' by the [vendor's] marketing team; however once the implementation is complete they are surprised by system functionality restrictions, lack of capabilities, and the impact on existing internal best practices," observed Shawn Casemore, president of Casemore & Co., according to CIO.com.

Casemore recommended getting any vendor to provide at least three references with which a prospective customer could discuss issues such as software features and potential implementation difficulties. If the vendor cannot provide them, then the would-be buyer should look elsewhere. So don't forget to ask, even though many purchasers often do - Adam Bluemner of Find Accounting Software has estimated that fewer than 20 percent of them make the necessary calls, which is surprising given the stakes for any ERP project.

A few other things to keep an eye on during the vetting stage include:

  • Certifications and trainings: What kind of partnership does the vendor have with the software developer? The latter may have a tier system - e.g., platinum, gold and silver - to indicate the vendor's sales volume and level of expertise, which can be important indicators of vendor quality.
  • Number of support personnel: This gets back to the sales-technical gulf that we mentioned earlier. Don't be fooled by a well-staffed sales department - be sure that the vendor has plenty of boots on the ground for actually helping you set up your ERP solution.
  • Specific features: It is shockingly common for buyers to go into the ERP process without knowing what they are looking for - sometimes less than half have a clear idea of what an ERP solution should deliver. Not having a firm grasp of the most important features can lead to poor decisions and overly expensive upgrades.

What to do when looking for an ERP vendor
Now let's turn from don'ts to do's during the ERP system selection and implementation process. As we can see from some of the advice above, you are always going to want to get a clear sense of what the vendor is actually offering. In other words, you need to hear its case and move past any distractions that could muddy your decision-making process.

Start with demos. Words are good, but they're not enough to prove the value of something as substantial as an ERP solution. Do request demos for custom workflows that you have fully sketched out to any prospective vendors, and see how their offerings do or do not align with your requirements. Plus, do not settle for a basic out-of-the-box demo - it won't tell you much, if anything, about how a particular ERP system would function within your actual operations.

Make sure to perform due diligence on any potential ERP vendor.
Make sure to perform due diligence on any potential ERP vendor.

On a similar note, avoid going into the procurement process thinking that there is a one-size-fits-all solution that you simply need to uncover. ERP systems are complex and heavily customized. They often reveal more about the specific processes of the client than the practices of the vendor, meaning that client-vendor collaboration on a targeted solution is paramount. Do look for a potential partner that is willing to listen and to go in-depth in demoing specific features and providing detailed return on investment justification.

Finally, be sure to take a comprehensive view of what the ERP implementation will cost you. Its price tag is just the tip of the iceberg - what will support cost? How much time and effort will you expend in making the transition from one system to another? Asking these questions make draw out the process, but the extra time can be worth it if it means finding the right vendor and toolset.

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