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How to Select an ERP System: 5 Must-follow Best Practices

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Jalene Ippolito August 10th, 2020

With so many ERP systems to choose from, it can be overwhelming to pick the right one. But, if you follow our step-by-step process, you’ll be armed and ready to make your decision – and it will be the right one if you’ve done your homework.

1. Review your business requirements for the ERP project

How long has it been since you first assembled your ERP project team and outlined your functional requirements? If it’s been a few months, now is a great time to go back through those lists and make sure that your top choices can address your critical success factors. This is also a good opportunity to review your current processes and how they might change in the new system. Your ERP partner should have demonstrated what your processes will look like in their system during the demo. If you’re unclear on any processes, circle back with the partner to ask some follow-up questions.

2. Evaluate ERP solution technical fit

When it comes to technical fit, use the 80/20 rule. You want a system that naturally fits your requirements (this is the 80%). The other 20% is what you’ll need to tweak or customize to fit the processes that are unique to your business. Some platforms are easier to customize than others, so you’ll want to understand how much flexibility you have. At a basic level, you should be able to add custom fields. But if you need more complex customizations, ask your partner how that affects future upgrades. Will system tailoring prevent you from upgrading to a new version in the future? Will the cost of an upgrade increase significantly to accommodate your customizations? Ultimately, you want the ability to tailor the system to fit your business, but you want to make sure it’s reasonable to do so (from an effort and cost perspective).

You’ll also want to consider how well the ERP solution plays with others. You might have systems that need to stay in place for one reason or another. The whole point of an ERP solution is tying your data together, not separating it further. So, whether your current ERP or accounting system integrates with other tools or not, your new ERP absolutely should. Ask your implementation partner how integrations are done, what kind of effort is involved and what limitations (if any) it puts on system upgrades.

3. Understand your total cost of ownership (TCO)

No one wants to be caught with hidden costs, but the reality is that 54% of ERP projects go over budget. At a minimum, be sure the proposal includes costs for licenses, implementation (including training), support and maintenance, and hosting (if you choose a cloud solution). If any of these aren’t addressed in the proposal, ask your partner so you understand the true cost of your ERP system.

A word of caution – beware of scope creep. Nine times out of 10, projects run over budget because additional items are added to the wish list after the system design is signed off on. If you find yourself tempted to expand the scope of the requirements, circle back to your project objectives. If the change in scope helps you achieve your objectives, you might decide it’s worth the added cost. But if it’s just a nice to have, you might want to put it on the shelf for a future update.

4. Be realistic with your implementation plan

Before you make your final decision, ask each partner for a comprehensive implementation plan. It should include:

  • Business processes and workflows

  • System design

  • Software installation and configuration

  • Data migration (make sure your data is fully scrubbed and useable – the data out of your new system is only as good as the data you put into it)

  • Functional testing

  • User acceptance testing by key users

  • User training (including super users and the rest of your team)

  • Change management activities

Having this plan up front will help you completely understand the costs and resources required to successfully kick off your new ERP implementation.

5. Track the success of the project

Pull out your original list of objectives and measurements for success. Have you improved visibility, reduced costs, increased customer service levels, or any of the other items on your list? Don’t just evaluate with a gut feel.

Check your KPIs and compare them against your ‘before’ values – you have easy access to your data now, so your performance metrics are at your fingertips!

As you can see, there’s a lot to consider when selecting ERP software for your organization. For many companies, it can be an overwhelming process, but it doesn’t have to be. As a leading Canadian ERP partner, helping small and mid-size businesses navigate ERP is what we do. Our experts have a keen understanding of business process and deep technological expertise that uniquely positions us to understand your business almost as well as you do. We’re here for you every step of the way – through selection, implementation and beyond. Let us help you transition to ERP with the highest level of empathy, consideration and fit.

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August 10th 2020
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