Expert ERP Software Selection

Guide with Expert ERP Software Selection

Introduction

Are you ready to make a strategic leap in your business operations by selecting the perfect Enterprise Resource Planning (ERP) software? In this comprehensive guide, we will delve into the essence of an expert guide in ERP Software selection.

The Guide with Expert ERP Software Selection InfoGraphicComprehensive Scope of ERP Selection

Selecting the right ERP is akin to choosing a partner for your business. It’s a decision that can significantly impact your company’s efficiency, growth, and bottom line. However, a complete ERP evaluation goes beyond just the software itself; it encompasses four crucial areas:

Software Suitability

How well does the selected ERP software align with your company’s current and future needs? We’ll explore this in detail in this article.

Implementation Capability

Assess the capability of the ERP vendor in successfully executing ERP projects.

Long-Term Sustainability

Consider factors such as the vendor’s sustainability, ease of upgrading, internal support resources, and the flexibility to switch software or vendors.

Total Cost of Ownership

Calculate the total cost, including software, services, maintenance, support, and upgrades for the next 5 to 7 years.

Completeness of Expert ERP Software Selection

Beyond the usual focus on functionalities and features, we believe that a holistic ERP software evaluation should include the following critical aspects:

Localization

Ensure the ERP software supports your language preferences and complies with local regulations, such as VAT/GST.

Modules

Explore the availability of core, advanced, optional modules, and third-party add-ons/extensions.

Software Architecture

Examine the development language, database, server and client OS support, mobility features, deployment options (on-site/cloud), and customization architecture.

Finance/Accounting Details

The finance module is the centered module in ERP software.  Specifications such as Year-End Closing Procedures and perpetual accounting should be investigated.

Reporting and Analytics

Assess standard reports and the availability of Report/Business Intelligence (BI)/Analytic Tools.

Extendibility

Consider add-ons/extensions, integration capabilities, and the availability and costs of APIs.

Understanding these aspects is crucial not only for your current needs but also for anticipating future requirements and costs. It’s essential to have a clear picture upfront, as negotiating for additional functionalities post-implementation can lead to ERP project cost overruns.

Traditional ERP Software Evaluation Process

Most consultants and users evaluate the ERP software by using the following process:

  1. Software Functionalities Checklist for vendors to indicate if the functionalities required are: Standard, not available, require an add-on, or customization. Sometimes, higher weights were added to more important functionalities to score the various ERPs and a total score was produced to indicate how well the ERPs fit the requirement.
  2. Software Demo by the vendor who will showcase the bells and whistles of their ERP software.

Shortcomings of Traditional ERP Software Selection Process

The traditional method of evaluating ERP software may have its limitations:

Pre-Packaged Checklists

These checklists are usually obtained by purchasing from some website or provided by the shortlisted ERP vendors. Often, these checklists are biased toward specific ERP solutions and may not suit your unique needs.

Terminology Confusion

Terminology varies across ERPs, leading to potential misunderstandings. For example, production orders may be called manufacturing orders or jobs in some other ERPs. Whereas, job in some ERPs may be referring to project manufacturing in others. Often, from the terms used in the checklist,  experienced ERP consultants can guess which ERP they are based on to produce this checklist.

Time-Consuming

In-depth checklist evaluations can be time-consuming to answer and may lead to errors. It takes time for a diligent ERP presales consultant to make clarifications and test the software to ensure that it can execute the requirements. It is thus difficult to provide an accurate answer within a limited time.

Function Prioritization

Not all features are equally important, making it challenging to judge responses solely based on “yes” or “no” answers. And yet it is arbitrary to give weightage. To determine whether some features are “nice to have” or “must have” can also be subjective, especially for someone who does not have knowledge about ERP.

Vendor Demos

The demos provided by the vendors are designed to highlight the “bells and whistles” of the software and may not uncover the usability issues. Experienced ERP presales consultants are skillful enough to hide the shortfall of their ERP software during a “Canned” demo that is designed by the ERP vendors.

Integration Oversight

Unlike most software such as MS Office where each function and feature can operate independently or even in isolation, ERP software’s core strength is its ability to integrate various business processes. So, evaluating an ERP software without a thorough evaluation of its integrated processes matching the real-life business processes will miss a large part of a critical ERP software evaluation.

Introducing the Demo Flow ERP Software Evaluation Methodology

To overcome these challenges, the Demo Flow ERP Software Evaluation Methodology will help the users to better appreciate the ERP Software that better meets. Here’s how it works:

Preliminary Screening

The evaluator will first design a high-level functionalities requirement to screen out those ERPs that do not have the modules required for the requirement. This preliminary screening if conducted correctly, will be able to uncover the depth of each ERP and its general strengths and weaknesses by an experienced ERP evaluation consultant.

Detailed Questionnaires

The way to design the questionnaires is important. For example, a question that asks the ERP vendor whether they have manufacturing/production modules is meaningless unless it is followed by asking the vendor to submit the screen capture of the manufacturing configuration screen and the item/product master file settings. An experienced evaluator can read a lot more about the ERP software from this information.

Real-Life Scenarios

The evaluator will select a few critical business flows, and prepare the data based on real-life operations for the ERP vendors to input into the ERP software. This is to allow the ERP vendor to demo near-to-real operations. Then compare it to the expected results and reports. It is also good to include the business processes of handling common changes and corrections to test out the flexibility of the ERP software in handling these situations.

Benefits of the Demo Flow ERP Software Evaluation

Standardized Comparison: Achieve an apples-to-apples comparison of shortlisted ERP software through real-life scenarios.

Integrated Testing: Uncover usability issues and visualize the ERP’s real-life performance.

Data-Driven Evaluation: Use real data to check results and identify potential customizations, allowing for accurate budgeting.

Usability Testing: Uncover usability issues, ensuring a true evaluation of the ERP’s performance in real-life usage.

Uncover Hidden Costs: Identify potential customizations that may incur additional costs so as to lock in the price and better budget for the project.

Consultant Capability:  This methodology forces the consultant to configure their ERP according to real-life usage, which helps to demonstrate the ability of the ERP pre-sales and implementation consultants.

Limitations of ERP Software Evaluation using Demo Flow

However, the Demo Flow methodology has its limitations:

  1. The designer of the demo flow needs to be knowledgeable not only about the business processes but also a wide knowledge of various ERP software. That’s the reason why inexperienced ERP evaluation consultants prefer the conventional evaluation checklist that they can purchase or obtain from ERP vendors and let the ERP vendor design their demo.
  2. People are more familiar with the weighted checklist methodology despite its multiple shortcomings.

Conclusion

No ERP evaluation methodology is perfect, but informed decisions lead to success. ERP software is a long-term investment with a significant impact on businesses and organizations.  It’s crucial to consider not only the software itself but also the implementation partner.

ERP solutions are not just about features and functions; they’re about transforming your business. Make the right choice today for a brighter tomorrow.

Our expertise in the Demo Flow ERP Software Evaluation Methodology can make your ERP evaluation process efficient, transparent, and insightful. As consultants with vast knowledge of business processes and ERP solutions, we are your trusted partners in finding the ERP software that truly meets your needs.  Let us guide you through the ERP evaluation journey, ensuring an unbiased decision with the best ROI and lowest TCO.

Learn More about the author, Raymond Yap, and how we can help you.

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