7 Things You Must Do to Avoid a Bad ERP Software Choice

Published by Adam Bluemner on May 16th, 2014

There’s no one single way to evaluate ERP software–every organization and set of requirements is different. But there are a handful of best practices that always must be observed to avoid making a bad choice.

In this list we’ve shared 7 best practices to avoid making a bad software decision with concrete, actionable tips you can put to work for you immediately.

Having assisted with thousands of software searches, we’ve seen the good, the bad, and the ugly. Over the years, certain risky decision making patterns have clearly revealed themselves. But we’ve also noticed that it’s much easier to spot these patterns from a distance. Up close, it’s easy to get caught up in deadline demands and cost pressures and fall into an approach that hurts your ability to invest wisely for the long-term.

For a quick self-check on where you stand with optimizing your review process, consider the 7 following ERP review best practices:

1. Include Real Users.

The best generals never take advice from their lieutenants. Wait, hold on… that’s not the saying. Of course you need to enlist users to share their input! Your process owners understand what’s working and what isn’t–and gathering that info is the foundation of making a good software decision. Consulting with users takes time (and sometimes patience), but it’s time well-spent.

Tip: Identify top users for each function you want the software to address. Ask for a list of their top tasks and brief observations on what’s working and what isn’t. Not only have you improved your needs visibility, you’ve just made the burden of requirements documentation that much easier on yourself. Also, let your key process owners participate in demos of your top 2-3 choices later in the review.

2. Question Your Assumptions.

Bringing in a new ERP system doesn’t have to be a complete tear-down, but you do need to expect some sawdust will fly as you rennovate.

Having a hard time finding an ERP solution that integrates with a particular credit card processing or payroll service? Trying to find a product that supports an unconventional account code structure? Have some other funky requirement that seems to be disqualifying a lion share of the solutions?

Your cart’s probably in front of your horse. Taking advantage of existing technology or catering to current processes can offer efficiencies. But it can also arbitrarily limit you to choices that won’t truly meet your needs.

Tip: Target solutions that are most capable of meeting your central goals, rather than working from the basis of which options don’t run up against more peripheral limitations.

3. Consider Scalability.

Switching ERP software is a big deal. You don’t want to do it again prematurely after bringing in a new system. In order to make a good purchase, you must plan for tomorrow as well as today.

Tip: Monitor scalability in two directions. First, you need a product that can keep up as your demands intensify. Automation features that seem like luxuries can fast become necessities with growth–so don’t just review the modules you do need, but the ones you might need. Second, understand that your requirements will also diversify. Check for the presence of version upgrades that offer additional features and consider the quality of the software API and the marketplace for add-on functionality.

4. Talk to Experts.

I don’t know about you, but I’m not an expert on anything I only do once every 4 or 5 years. And, for most ERP buyers that’s about how often a serious purchase evaluation will come around. You know your skill set better than anyone else. But if there are areas you could use help to make sure you nail your ERP decision, the good news is that that help is readily available.

Tip: Depending on your company’s strengths, you might require assistance in one, all, or none of the following areas–but it’s good to be aware of your choices. Needs analysis consultants can help with requirements discovery and documentation. Software match services like this one can provide a set of options matched to your specific needs. Solution providers offer full service project planning, implementation, training, and support services.

5. Open Up the Black-Box on Customer Support.

The majority of business purchases don’t require much in the way of support. Then there’s software.

Integrations, configurations, data errors… You’re going to run into support issues with whatever program you choose. Most buyers take a we’ll-cross-that-bridge-when-we-come-to-it approach to ongoing technical support. There’s a better way.

Tip: In order to figure the quality of support you’re likely to receive, there’s a few things you can do, including considering the quality of the technical documentation, exploring user groups, checking support hours and which channels are available, and asking providers who will provide the support when issues arise.

6. Investigate the Differences.

Software isn’t a commodity. At all. It’s both an investment and sophisticated tool. The range of quality available in software systems is quite wide.

The problem is the terminology doesn’t change with these differences in quality. Both a glorified Word document template tied to a simplistic database and the enterprise-ready, fully-featured billing system can bear the title of “invoicing software.” And, the natural confirmation bias of most buyers is usually going to slant toward wanting to believe the lower cost solution will suffice. But–software is an investment–and investments are only as good as their returns. It’s imperative to dig past the “what” of what a software provides and investigate the “how”–in order to understand how the differences in quality will impact your organization.

Tip: The days of buy the box software have been gone a long time. Product reviews, videos, user testimonials, references, and demos leave no excuse for making an uneducated purchase–and shine a bright light on the difference between systems.

7. Do the Math to Price Like a Pro.

If you can’t answer the question of how much a software program is going to save you, you’re probably not ready to purchase it. An ROI study should be part of any software decision that’s as involved as purchasing ERP. Commodities can be bought on cost considerations alone, but investments require a careful study of value; and that means taking on the somewhat daunting exercise of tallying up costs and returns for each solution under consideration.

Tip: To calculate the investment, make sure to consider all licensing, support, implementation, set-up, hardware, support, and training costs. Estimating the return can be trickier, but it’s worth pursuing. For each individual process the software addresses, create an estimate for savings generated from reduced labor costs, impact on customer acquisition and retention, and opportunities for lowered overhead costs. Here’s a simplified example: improved inventory control with stronger automation features might save a couple hundred hours in labor, reasonably be expected to prevent the loss of a key account or two via improved turn times, and require less warehouse space based on better optimization. Applying the dollar figures to each of these improvement provides a basis to compare a more robuts to one with a more attractive pricepoint, but weaker features. The bottomline is you won’t know which makes sense for you if you don’t do the math.

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