ERP Software Evaluation Checklist - A 5-Step Guide for SMEs

Jalene Ippolito July 27, 2020

Selecting a new ERP solution can be a long process and there’s a lot of prep work that happens before you even get to evaluate your top choices. At this point, your internal ERP project team has confirmed that your company is ready to proceed with an ERP project. Their job is to approach this like you would any other major project – by setting objectives so you can evaluate the success of the implementation and outlining the functional requirements for your new ERP.

Now, you’re in the home stretch. It’s time to select your top ERP solutions, connect with implementation partners and schedule the demos. Given the number of ERP solutions on the market, it’s important that you have a structured process for reviewing the options. This will make it easier to narrow down your choices and focus your attention on the ERP solutions that have the most potential for your business.

Get the Complete ERP Selection Guide for SMEs →

1. Define your critical success factors

While your ERP project team has no doubt compiled an extensive list of needs and wants, not all items are critical to the success of the project. So, in this step, you’ll define critical success factors – the elements that are necessary to achieve your goals.

During your research, you identified key savings from your ERP implementation. It’s easy to identify things that have an immediate impact on your cash flow, like increasing revenue. Keep in mind that savings don’t necessarily have to translate into a cash value but should impact the bottom line in some way. Streamlining operations, visibility into inventory and data, and increased customer satisfaction may not immediately translate to cash, but they will impact profitability at some point.

With your selection team, take a second pass at the master list of objectives and functional requirements you identified in the previous phase. Use a numbering system like the one below to prioritize the requirements and help you zero in on the true must haves. This will help you identify the deal breakers as you’re reviewing solutions.

1 = Non-essential
3 = Nice to have
5 = Must have

Remember that not all requirements are must haves. If you have mostly 5’s, take another look and be more critical of what’s truly essential.

2. Identify your preferred ERP solution

At this stage, it’s important to decide which type of ERP solution makes the most sense for your business. Typically, people think of three distinct types of ERP software.

  1. Off-the-shelf ERP solutions come with a built-in feature set that includes your basic ERP functionality, and often some more advanced capability. This is a great option for many companies, as they tend to be stable products with established support channels. And they tend to be the most cost-effective. Keep in mind that you may have to change some of your processes to fit the product (which may not necessarily be a bad thing).

  2. Vertical ERP solutions are developed for and used solely by companies in your industry. You may get additional functionality specific to your industry and a deeper knowledge of the industry best practices with a vertical solution. However, they typically won’t have as much flexibility to adapt to unique requirements or changing needs as your business models change over time.

  3. Custom-built ERP solutions come on a sliding scale. They can be fully custom from the ground up, or an off-the-shelf ERP product that your implementation partner will customize to fit your business needs, workflows and processes. These will typically be the most expensive and time-consuming to implement, but this isn’t necessarily a bad thing. In the end, you have an ERP solution that is truly best fit for you.

What people don’t realize is that ERP solutions have evolved. There are options that give you the best of all three worlds. What if you could have a vertical solution purpose-built for your industry, plus the flexibility to adapt the system to your needs and make minor or major customizations as required? It's possible.


3. Create your preferred vendor list

Once you’ve determined the type of ERP solution you’re looking for, head to Google! Do a thorough internet search to develop a list of software vendors that appear to meet your needs. More traditional methods are also a great way to learn about solutions – attend trade shows, read trade journals, or talk to people you know – your suppliers, customers and accountants are all good sources of information. You can also reach out to ERP consultants for guidance in the process.

As you’re searching, it can be easy to focus solely on the system itself. Functionality is important. But be sure to research the software vendor as well. How long have they been around? How many customers do they have? What are people saying about their products? Given the investment you’re making, you want to select an established software vendor, with a good track record.

Choosing a strong ERP solution, from a reputable vendor, is important. But there’s another piece to the puzzle – the Value Added Reseller or ERP implementation partner. Your partner can make or break your implementation. And they’ll be with you for the long-term, providing ongoing services and support. So, it’s important to select one with a good reputation that understands your business.

If the vendor and partner are one in the same, think about what you might do if the partner relationship doesn’t work out after you’ve implemented the software. You can change partners, but you can’t change vendors without changing software.

4. Prepare for ERP evaluations

At this point, you’ve narrowed the field to one or two (three max) providers and you’re ready to dive into the selection phase. Allow each provider to conduct interviews with your ERP project team. Be sure to clearly communicate your business requirements and give them an idea of what your existing processes look like. Once the partners are brought up to speed on your needs, they’ll be able to build a meaningful presentation that sets their product offering in the context of your business.

Before you move into the demo stage with your selected partners, you should develop a structured approach to evaluating the solutions. This will help you get a good picture of each partner’s capabilities and ensure each member of your ERP selection team is using the same evaluation method.

Here are just a few questions you should consider asking each partner, based on your specific requirements:

  • How will the solution help us achieve our identified objectives?

  • What does the user experience look like? How will our team access the system (e.g. via a web browser, VPN, mobile, etc.)?

  • What’s the cost of the implementation project? Ongoing subscription or maintenance fees? Services?

Keep in mind that partners should have questions for you too so they can better understand your business, your requirements and the potential fit. Grade each solution to identify the fit with your requirements. Once you’ve identified the solutions that could be a fit, it’s time to see them in action.

How to Prepare for ERP Evaluations – Get the Guide

5. Setup ERP software demos

Each person on your ERP project team should clear their calendar to attend the demos. You may also want to include executive sponsors in all or even part of the demos, so they have an opportunity to see the system and ask any questions. Provide each member with a copy of your business requirements and grading criteria so you can have an informed discussion following the demo.

It’s very easy for a partner to walk you through how their system completes specific tasks. But what does it look like for your business? A good partner will come prepared with a script to show you how the system will handle a few of your key business processes. This will demonstrate their understanding of your requirements, but also helps you determine if the system will work for you (and possibly improve your processes).

The partner should demonstrate all critical features in a live version of the software. Never settle for a “demo” done using PowerPoint slides or a demo version of the software. It’s a huge red flag – run!

A good demo will be tailored to your business, based on the requirements and objectives you identified earlier in the process. The demo should illustrate how the gaps in your current processes will be filled, how existing processes can be improved, and how new processes or capabilities will impact your business.

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As one of the top Canadian ERP partners, we've helped many other Canadian companies streamline operations and fuel growth. We're here to guide you through the process – right from evaluation, through implementation and beyond.

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