Are You Ready to Select a New ERP System?

One of Lumenia’s core services is ERP system selection, so we are regularly approached by prospective clients who want to understand how we can help them to select a new ERP system for their organisation. However it often turns out that they’re not quite ready to embark on a selection process.

In order to be ready for an ERP selection project we would typically expect clients to have a good level of clarity on a number of items, including:

• An understanding of the high-level business strategy and its implications for business systems
• An understanding of the organisations IT strategy and how it affects this project
• Which systems are definitely to be replaced
• Which systems definitely are to be retained
• Which systems could be either replaced or retained depending on what ERP solutions can provide
• Which business processes are in scope
• Which business processes are out of scope
• What the target (to be) business processes look like
• An initial view in relation to budgets and timelines.
• The reasons why they need to select a new ERP system, and the associated business benefits.

Some of these questions might be answered relatively easily, and a small amount of scoping work and a benefits assessment prior to starting the selection process may be enough to get the ball rolling.

On the other hand, we often find glaring omissions in thought processes and logic, and a proposed new system initiative that’s built on very shaky foundations. It’s all very well to start a selection process based on wishful thinking, but you’re highly unlikely to secure funding without a sound business case. Making decisions throughout the selection project will also be difficult if you don’t know what you’re aiming to achieve and why.

Among the most common mistakes we see is a failure to assess the various strategic options relating to retaining the current system. For many organisations the option of upgrading and possibly extending the current ERP system is worthy of serious consideration and may well prove to be the most cost effective and beneficial path to take. However it’s an option that is often given little or no consideration, whether due to a poor relationship with the current ERP provider, negative sentiment from the user community, or a lack of awareness of upgrade options.

Another common error is to expect the ERP selection process to help solve significant strategic or scoping decisions. This type of analysis and decision-making is best done upfront before starting the selection process, although in certain circumstances it may require a level of initial vendor engagement to assess likely costs and functional capabilities.

Successful ERP initiatives start with a coherent, realistic and agreed strategy. Improve your chances of success by considering your options and ensuring your plans and objectives are clear and agreed before jumping into the selection process.

This blog was written by Consulting Manager John Donagher of Lumenia. If you would like further information on ERP Costs please send an e-mail to John Donagher.