ERP Package Selection


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ERP Package Selection

  1. 1. Book Excerpt ERP Package Selection ERP packages, if chosen correctly, implemented judiciously and used efficiently have the ability to raise productivity and profits dramatically. The book, ERP Demystified (Second Edition) by Alexis Leon helps ERP Demystified (Second Edition) decision-makers in choosing the ERP package that is Tata McGraw-Hill Publishing Company best suited for their organisation. Limited ERP Demystified is primarily a comprehensive resource for managers and T he market for ERP systems is So, you think that all ERP packages executives who are entrusted with the job very competitive. Industry are the same? Think again, because they of implementing ERP systems in their analysts are forecasting steady are not. Of the more than 50 ERP organisations. The revised and updated edition includes the latest developments in growth rates for the ERP market. Why packages available, the features they the field of ERP, IT and new technologies are companies replacing their manual offer vary, as do the technologies they that are changing the ERP landscape. or semi-automated systems with ERP support, the technologies they use, the Divided into eight sections, the book systems? Some of the reasons for the architecture on which they are built and covers: ERP basics, ERP and technology, increasing popularity of ERP systems the available platforms. Each package ERP implementation, ERP in action, are information integration, improved has its own strengths and weaknesses. business modules, ERP market, present productivity, improved business agility, But the marketing literature from ERP and future of ERP, ERP resources, case studies, career guidance, manufacturing reduction in errors, automation, etc. As vendors will give the impression that perspective, etc. more and more companies join the ERP their product is just as good as any bandwagon, the competition is getting other. Such literature is valuable for keener and ERP vendors are gearing up giving the reader an overview of The objective of the selection process to meet this challenge by offering more functionality and a glimpse at the is to find a package that is flexible features and better capabilities for their differentiator for that vendors offering. enough to meet the company’s needs. products. So, the future will see a fierce But, if you compare the literature or Or in other words, to find a package battle for market share and mergers and listen to a vendors presentation, it that can be customised to obtain a acquisitions aimed at gaining strategic would be very difficult to evaluate which “good fit.” and competitive advantage. The package is the best or which would be If one studies the history of ERP ultimate winner in this race will be the most suitable for your organisation. packages and finds out how each customer, who will get better products Deciding which package is suited package evolved, then it soon becomes and better services at affordable prices. to your organisation is a difficult task. If evident that every ERP package grew you go by what is written in the product out of the experience of a group of ERP package evaluation and brochure or what the salespeople say, people working in a specific business, selection you will find it very difficult to make a who created systems that could deal ERP systems are now available in all sizes decision and might end up with the with certain business segments. The and shapes for all platforms and wrong choice. So package selection is ERP packages evolved over time as the development environments. Evaluating something that should be done in a companies grew. The experience the ERP systems available in the systematic and scientific manner. gained from implementation, the marketplace and then selecting one The most important factor to keep feedback by the users, the need to enter for your organisation is a very critical in mind when analysing the different into new markets and the pressure from task. This decision can make or break packages is that none of them are competitors, forced most ERP vendors an organisation. If the choice is not perfect. The idea that there is no perfect to redefine and expand the scope of the right, then the organisation will pay package needs to be understood by activities and functionality of their dearly for it. everyone in the decision-making team. products. The concepts were expanded48 / November 2007 / BenefIT CMYK
  2. 2. Book Excerpt “upon, new functions were introduced, evaluation committee that will do thegood ideas were copied from others, The most important factor evaluation process. This committeeand so on. But still each package has an should comprise of people from the to keep in mind whenorigin that determines the type of various departments (the functionalbusiness it is best suited for. So while analysing the different experts), top management (preferablymaking the analysis, it is a good idea to packages is that none of the CIO or COO), consultants (packageinvestigate the origins of the different them are perfect. The idea experts) and end-users. This team canpackages. provide the different perspectives and So, after the decision to go in for an that there is no perfect can ensure that the needs of allERP package is taken, the company package needs to be stakeholders are addressed.needs to develop the selection criteria understood by everyone in The selection committee should bethat will permit evaluation of all the entrusted with the task of choosing aavailable packages on the same scale. the decision-making team. package for the company. Since allTo choose the best system, the The objective of the business functions are represented andcompany should identify the system selection process is to find the management is involved, thethat meets the business needs, matches package that is selected will have a package that is flexiblethe business profile, and identifies with company-wide acceptance. Thethe business practices of the company. enough to meet the package experts or the consultants canIt is impossible to get a system that will company’s needs. Or in act as mediators or play the role ofperform, exactly as the company does other words, to find a explaining the pros and cons of eachbusiness, but the aim should be to get package.the system that has the least number of package that can bedifferences. customised to obtain a Handling the vendors “good fit.” To choose the Once you make a decision to go in forThe selection process an ERP package, the marketingOnce you have decided to implement best system, the company executives of the different vendors willthe ERP system, you have to find a should identify the system swamp you. Each will have colourfulpackage that is best suited for you. The that meets the business and excellently produced brochuresselection process is one of the most and presentations claiming that their needs, matches theimportant phases of the ERPimplementation because the packagethat you select will decide the successor failure of the project. Since ERP business profile, and identifies with the business “ product is the best one for you. They will use all the tricks to get you hooked. So it is better that you have a strategy for dealing with these vendors. practices of the involve huge investment, once Since you have done a detaileda package is purchased, it is not an easy evaluation of the few packages thattask to switch to another one. So it is a not equal, the pre-evaluation process meet your pre-selection criteria, you‘do it right the first time’ proposition. should eliminate those packages that are can be prepared for the vendorThe consequences of choosing a wrong not at all suitable for the company’s presentations. This point is beingpackage are catastrophic, often forcing business processes. One can select the stressed again and again because mostthe company to close shop. few best packages by looking at the vendors can make presentations that There are many ERP packages product literature of the vendors, getting leave potential users dazzled. Theavailable in the market. Analysing all help from the external consultants and, selection may thus end up being basedthe packages before reaching a decision most importantly, finding out what on a set of factors that are insufficientis not a viable solution. So, it is better to package is used by similar companies. It for arriving at a well-informed andlimit the number of packages that are is always better to look around to find judicious decision.evaluated to less than five. It is always out how the different packages are So, instead of just listening tobetter to do a thorough and detailed performing in environments similar to presentations, you should be preparedevaluation of a small number of yours. Once you select a few packages with your questions. The questionspackages, than to do a superficial after the screening, you can call the should be prepared beforehand andanalysis of dozens of packages. respective vendors for presentations/ should address all your concerns. The The company should do a pre- demos. responses that you get for yourevaluation screening to limit the number questions will help you in eitherof packages that are to be evaluated by The selection committee eliminating a vendor or strengtheningthe committee. Since all packages are It is always better to form a selection or its case. The questions, if properly BenefIT / November 2007 / 49 CMYK
  3. 3. Book Excerpt “ prepared and asked will expose the pre-evaluation screening. The criteria weak/problem areas that exists in the All vendors will have can be in the form of a questionnaire vendors’ products. Also, when you are customers for whom their and a point system can be asking questions, it means that you are implemented. This will help in making products have failed. not taking anything for granted. It is a the selection process more objective. good idea to prepare the minutes of the Getting those names and The questions should address the meeting and make the vendors sign it. the reasons for the failure company’s business needs and This will prevent them from making is more important concerns and each issue or question false claims and you can make them should be given a weight according to accountable if they fail to deliver what than the success stories. how critical that function is for the they have promised. Also, while vendor company. For example, if the company The vendors should be asked to representatives are well has offices in different countries, then show testimonials and practical dem- the capability of handling multiple onstrations of the system. The vendor prepared for the success languages and currencies becomes an should provide references of stories, the questions important criterion. Likewise the organisations where the system has about failed selection criteria should be divided into been implemented successfully. But all categories—vital, essential and implementations usually vendors will have customers for whom desirable—and points should be given their products have failed. In my opin- reveal points and issues to each criterion. The point rating ion, getting those names and the rea- sons for the failure is more important than the success stories. Also, in my experience, while vendor representa- that the vendor is trying to downplay. So it is important to ask about “ system will simplify the evaluation process. But the importance of human intuition, gut feeling, and judgment should never be underestimated. tives are well prepared for the success failed implementations. The best method for preparing the stories, the questions about failed selection criteria is to conduct a implementations usually reveal points requirements analysis—find out what and issues that the vendor is trying to infrastructure then it can think of buying the company needs. The requirements downplay. So it is important to ask the required components from the must reflect those factors that the about failed implementations. vendors and integrating them with the company considers indispensable for The vendor will usually send two existing system. For example, if an the successful running of the business representatives to visit you—a marketing organisation is using an HR according to the company’s work agent and a technical expert. Most of management system and is quite culture and practices. Given below are your questions should be directed to the satisfied with it, then it can go in for the some examples of the selection criteria. technical expert. The marketing expert other modules and not for the complete The package should have multi- should be asked about warranties, offering from the vendor. language and multi-currency support. licenses, cost, support, training, etc, It is not imperative that all the The package should be international whereas, the technical expert should be components offered by the vendor be and should have installations in asked about the functionality and bought. The evaluation committee in specified countries (basically in capabilities of the system they are association with the vendor can select countries where the company have offering. the required components and then offices). The vendor should also have integrate them with the existing a local presence in those countries. The role of technology infrastructure. But here, do not forget The package should have at least ‘x’ The existing technology will play a very to get the vendor’s assurance (in number of installations out of which important role in the ERP selection writing) that the existing system will at least ‘y’ should be in your business process. Each organisation will have its integrate smoothly and seamlessly with sector. own technological environment. The the purchased components. The cost of the package with all the management must decide whether the necessary modules should be less ERP systems will be selected keeping in The selection criteria than ‘x’ Rupees. mind the existing infrastructure or not. ERP packages come in all sizes and The package should have the facility to It is always a better idea to find a package shapes, with all the frills, bells and do an incremental module addition. that is compatible with the hardware, whistles, gizmos and gadgets that you For example, the company should have software and technology that the can imagine. Hence, it is a good practice the facility to buy the core modules company already has in place. If the to specify selection criteria for initially and then go in for the additional organisation has the necessary evaluating the packages that survive the modules as and when desired.50 / November 2007 / BenefIT CMYK
  4. 4. Book Excerpt The vendor should provide systems, are not totally unbiased, 4 or 5 installations should give a good implementation and post completely accurate and totally idea about the package. If the implementation support. objective and therefore, should not be committee members feel that their The vendor should give a taken as gospel truth. But these reports decision is right and what they have commitment on training the can provide valuable information thought is what they have seen, then company employees on the package. about the tools. So, at least a few the company can proceed with the The package should have the capability reports by these research groups purchasing and implementation. of interfacing with other systems that should be studied along with the If anybody is uneasy about some the company is dealing with—banks, vendor’s literature so that you get a aspect or feels that the product is not suppliers, customers, etc. complete picture of the ERP system up to the expected standard, then the The package must be customisable marketplace. These reports analyse committee members should sit and the customisation process should and compare the tools and their and discuss this again and perhaps be easy (something that could be done features, predict market trends, do the analysis once again. The package in-house) forecast the position of the different that has got the maximum score in the The vendor’s policy and practices players in the coming years, and so on. point rating system need not necessarily regarding updates, versions, etc, A number of companies and be the one that is best suited for should be acceptable. consultants do this kind of analysis. the company. The extra time spent In this way, the issues, concerns and Prominent among them are AMR on analysis and evaluation is not aexpectations that the company has, Research (www.amrresearch .com), waste; it might save the company fromregarding the package, can be Forrester Research (www. a potential disaster.consolidated and made into a list. Then, Gartner Group (www.the items in the list should be placed into International Data Finally…the ‘vital-essential-desirable’ categories. Corporation (, The One final word, the most critical factorThen, using this list each package should Butler Group (, that determines the success of any ERPbe evaluated. Many items in the list will Ovum (, VNU implementation is the support of thehave descriptive answers. The committee (www.vnu .com), etc. Sometimes trade people who use the system. Even theshould sit together and analyse these magazines like CIO, HBR, Forbes, best ERP systems will fail if there is noissues and assign points to these items. Fortune, etc, publish articles about ERP user support. So the decision of the One important thing that should be and its current state. This information committee should be a consensuskept in mind is that whenever a decision is also worth looking into because it is decision. If there are some peopleis made, the committee should discuss independent and not biased. whose views are overridden byit and a consensus must be reached to Once the committee has evaluated majority vote, then the managementensure commitment and avoid all the packages that have cleared the should take every effort to make themconflicts. The functional experts (who pre-evaluation criteria, listened to the understand the reasons for theknow the business process well) and vendor presentations and demos, and decisions and should spare no effortvendor representatives (who know the have cleared pending issues, a decision to win them over. Disagreements areERP package well) can tell areas and is reached on which package to buy. common in any group discussion, butissues that should be given more Once the committee has reached a the success of the group lies in the factimportance, the aspects that should be decision on a package, it is a good idea that all the people in the group ownscrutinised more thoroughly and how to visit a few companies that have the decisions that are made. Thus,the company’s current business installed the particular package and since the group as a whole makes thepractices could be replaced with new see it in action. But many people will choice, everybody emerges as a winner.ones or modified to suit the package. not admit that they have made a This feeling is very important, as the Another source from which the mistake, so whatever the existing company will need everyone’s goodwillevaluation committee can get owners say about a package should be and support to achieve success duringinformation about the tools is taken with a pinch of salt. But visiting and after implementation.independent research agencies andcompanies. These sources supply Alexis Leon is the managing director of L and L Consultancy Services Pvt. Ltd. He has more than 18 years of consulting experience in the areas ofinformation, comprehensive analyses software engineering, workflow automation, groupware, product design,and comparison reports about the process improvement, project management, configuration management,leading tools. But these reports, quality assurance, productivity improvement, etc. He has written more than 40 books on computing, IT and management topics. He has worked withalthough excellent sources of companies like Pond’s India Ltd. and Tata Consultancy Services. He holds ainformation and a single-point master’s degree (M.Tech.) in Industrial Engineering. He can be reached through his Web site at about the leading ERP BenefIT / November 2007 / 51 CMYK