Pick Your Next ERP System in 6 Steps


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If your company is considering an ERP implementation, and isn’t sure where to start, you’ve come to the right place.

This 11-page e-book walks you through six easy steps to help prepare you to make the right choice for your company.

From selecting your ERP assessment team to making your final ERP software choice, our easy to follow guide offer tips, checklists and suggestions for each step of the process.

Learn the best practices in choosing the best ERP system for your business so your ERP implementation is a success from start to finish.

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Pick Your Next ERP System in 6 Steps

  1. 1. Pick Your NextERP System in 6 Steps …an e-book by
  2. 2. ForewordContrary to what you may have been told, ERP is not only for largeorganizations. As SMB operations become more complex, it is essentialfor the software solutions to evolve and also become more complex,making the adoption of a comprehensive ERP system a necessity.If your Small to Medium Sized Business (SMB) is drowning in paperworkand bad information from disparate systems, it might be ready toimplement an ERP (enterprise resource planning) System. You may beoverwhelmed by not only the software choices, but the best practices inchoosing a new ERP system.There are many benefits to ERP - probably the most important is theability to get real-time information across the company from one system.No more out-of-date spreadsheets from various departments that takehours to dissect.Another great benefit, especially for high-volume organizations, is thecapability to improve on-time deliveries and greater inventory control andvisibility. And improved efficiencies across the organization help yourcompany become lean operations that can better compete in an ever-growing global marketplace.In this e-book, Pick Your Next ERP System in 6 Steps, we’ll outline thesix steps you should take to ensure a successful selection andimplementation. From assembling your cross-functional ERP team tofinally selecting your ERP system, we’ll walk you through each step of theprocess.  The Encaptis Group 200-6400 Roberts Street Burnaby, BC V5G 4C9 Phone: 1-866-277-2736 www.encaptis.com
  3. 3. 1H O W T O P I C K Y O U R N E X T E R P S Y S T E M I N 6 S T E P S ChapterAssemble Your Cross-Functional Team of ExpertsMany companies believe an ERP project shouldstart with the IT team. While you certainly needIT’s input and support, especially as it relates tonetwork and hardware issues, it’s really a cross-functional process.Key stakeholders from areas such as accounting,purchasing and inventory, operations, IT and allother instrumental areas of your business shouldbe tapped, as well as a member of the ExecutiveManagement to keep the project focused, on taskand on budget.The team will be responsible for a number of important tasks:  Researching, evaluating and selecting the ERP system  Setting specific goals and objectives  Communicating the need for ERP and its benefits throughout the company  Collaborating with the ERP vendor to create and execute the implementation planKeep the team to 5-8 members. Each team member should be responsible for gettingfeedback from others in their business units and providing it to the team. And remember, theteam members don’t have to be the managers – but they should be well-respected, effectivecommunicators with a good understanding of how the current processes feed into the overallcompany goals.Be sure not to discount less experienced or junior team members. Employees with limited oroutside background can give valuable input into a process or system based on experiencewith the systems or processes they have recently learned, or with systems they have used atother organizations.Once you establish your team, you are ready to move on to the next step, Assessing YourERP Readiness, which we will cover in the next chapter. 1
  4. 4. 2 ChapterAssessing Your Company’s ERP ReadinessSo you’ve put together your ERP Selection Teamand think your company is ready to implement ERP(enterprise resource planning), but are you sure?While an ERP implementation can be a key elementof your company’s growth, if you’re not truly ready, itcan be a costly and time consuming undertaking. Tostay on time and in budget, it is critical to do your duediligence to ensure that your entire organization isprepared before making your decision.Upfront preparation, clearly defining expectationsand goals, and doing your due diligence help toensure that your ERP implementation is a success.In this chapter, we focus on assessing your company’s ERP readiness, and provide a list ofquestions that can be used to guide you through the decision process.There are many things to consider when reviewing and implementing ERP systems.Assessing your company’s readiness is just one step, but an important one. Having a goodsurvey of the organization’s preparedness to undertake such a big project helps you topredict whether or not it will be successful.For instance, if your executives are not convinced of the need for ERP, then it is unlikely thatthey will be supportive if issues arise during the selections process or implementation.Similarly, if key user groups aren’t willing to make changes, then their use of the new systemwill be limited, deeming the implementation a failure. And if goals, expectations andanticipated ROI are not clearly defined, then it’s not possible to measure the success of theoverall project.To help you assess your organization’s readiness for ERP implementation, we’ve compiled alist of questions you should be able to answer positively and thoroughly before embarking onyour project. 1. What is your motivation for implementing ERP? Is there pressure across the organization? Without pressure throughout the company, there will be little motivation for change. 2. Are your business processes standardized across all departments and offices? 2
  5. 5. 3. Have key stakeholders documented specific needs and wishes? Are all business requirements documented in one place? Are they prioritized? 4. Has an ERP strategy and change management been fully identified and documented? 5. Has your company had significant turmoil in the past few years? Examples include management change, layoffs, other IT projects, etc. Are you still recovering from it? 6. Does the ERP implementation have executive sponsorship? 7. Have you assembled your selection and implementation team? Have you appointed a Project Leader? 8. Have you identified early system adoption users (initial key users)? Early adoption is critical to the success of your implementation. 9. Do you have documented the business case, assumptions and anticipated ROI? 10. Have you outlined your key performance indicators (measurements of success)? 11. Is the company culture open to the project or will key stakeholders have to be convinced of its usefulness and ROI? 12. Is your ERP Implementation project fully funded - including miscellaneous and unexpected expenses (plan for about 10% for additional programming and miscellaneous expenses)? 13. Is your data ERP-ready? The data going in is only as good as the data coming out.Implementing ERP can be a great way to help yourcompany compete on a national or global scale, ifimplemented properly – start to finish. Don’t underestimatethe importance of assessing your company’s readiness,and if you’re not ready, start preparing for the future now! 3
  6. 6. 3 ChapterDefining the Business RequirementsOftentimes, an executive will walk into the IT person’soffice and say, “We need ERP.” The IT person goesabout lining up several ERP providers, interviews themon their software functionality (not necessarilyconsidering user requirements), and if it seems to fitand is reasonably priced, they select their vendor andschedule implementation. As we explained inAssessing Your Company’s ERP Readiness, thissets up the company up for failure by not fully exploringseveral areas and processes related to the ERPimplementation.Considering the high failure rate of ERP implementations, you want to make sure you havecarefully considered all aspects of the organization and the impact the ERP implementationwill have. With proper foresight and planning, ERP does not have to be a failure and in fact,is key to many companies successfully expanding their business on a national or globalscale.In chapter 3, we walk you through Defining the Business Requirements when selecting anERP system. We will help you define the areas where you expect to receive benefits, as wellas identify budgetary constraints. Correctly outlining these areas upfront will assist you whenyou are ready to review and qualify solutions.The most important question to ask yourself and others is, “What do you want to achievewith ERP?” Getting a clearly defined answer will help you have a good understanding ofwhat your organization hopes to accomplish with an ERP implementation. Without this keyanswer, you won’t be able to accurately define its success later.Here are two questions you should ask your team:What is the business objective for implementing ERP?Have we defined the strategy?If you cannot clearly and succinctly answer these questions,it is unlikely that you will achieve ERP success. The point ofthe strategy is to define the objectives of the ERPimplementation and define the measurements of success. 4
  7. 7. There can be a number of objectives, each with its own measurement of success:  Is your organization trying to standardize operations across the company (and perhaps many offices and geographic locations)?  Do you want to improve customer service by improved fill rates and service levels?  Does your company need improved visibility throughout the organization?  Are you already using ERP but need to upgrade to a more robust system?  Do you want to reduce overhead by streamlining operations?How will the ERP implementation contribute to the individual objectives?Without understanding how the ERP implementationcontributes to the individual objectives, it will be difficult tomeasure success at some point in the future. Don’t forgetthat some objectives may not have a measurablecontribution. Things like improved visibility or reducedbusiness risk may not be quantifiable in dollars but theydo contribute to the overall success of the company andthe ERP implementation. Here are a few questions to consider:  Have you identified the objectives you are trying to achieve?  Can you put a value on the objective, if successful?  Is it possible to achieve the objective without ERP?  Is there a deadline that your organization is trying to meet with the ERP implementation?Once you clearly document the answers to the questions above, you will be able to betteridentify if an ERP system is going to benefit your company. If you decide ERP is indeed rightfor your company, you will be able to move on to the next step, Review & Qualify SoftwareSolutions, which we will discuss in the next chapter. 5
  8. 8. 4 ChapterReview and Qualify ERP SolutionsIn this chapter, we will guide you through the steps to help you narrow down your choices.Before reviewing solutions, it’s important that you identify key areas about your company tohelp you determine which solutions are right for your business.Define Your SuccessThe most important step is to thoroughly understandyour measurements of success, specifically, CriticalSuccess Factors. Critical Success Factors are thenecessary elements for an organization or project toachieve its goals. While you no doubt have anextensive list of needs and wants developed by yourERP Selection Team, not all of the items listed arecritical to the success of your project.During your research, you should have identified key savings from your ERPimplementation. The savings don’t necessarily have to translate into cash savings, butshould impact the bottom line. Streamlining operations, visibility to inventory and data andincreased customer satisfaction may not be immediately translatable to cash, but will affectoperations at some point. Easily identifiable things like increased revenues have animmediate impact on the company’s cash flow.Develop a numbering system to prioritize your requirements. A “5” could be essential with “1”being non-essential. If you have mostly 5’s, you should take another look at yourrequirements. Not all requirements are must-haves.Identify Your Existing Business ProcessesIf you aren’t sure of what it is exactly that you wish to accomplish with your ERPimplementation, then you’re not ready to move on to evaluating systems. Be sure to clearlyand fully understand what it is that the employees are doing on a daily basis, and what eachbusiness requirement is. Then, you will be able to recognize a good ERP fit when you see it,and be able to clearly communicate your need to the vendors.  Do you fully understand your existing business processes?  Have you talked with employees about their daily activities?  Can you identify areas where you need improvement? 6
  9. 9. Identify Preferred SolutionFirst, determine if you want an off-the-shelf product with many basic and advanced featuresalready built in. This is a great way to save money, get a stable product and get greatsupport. Be aware that you may be required to change some of your processes to fit theproduct (which may not necessarily be a bad thing).You may also consider a vertical solution, developed for and used solely by companies inyour industry. The advantage of a vertical solution can include additional functionalityspecific to your industry and deeper level of knowledge of the specific best practices.Finally, you can also have a totally custom solution built for your company. The vendor willstart with a base product and will build a solution that exactly fits your needs and wants.Beware that custom solutions will most likely be the most expensive and time consuming toimplement (which may also not be a bad thing).Develop a Vendor ListThere are many ways to identify potential vendors – startingwith your computer! Do a thorough internet search to develop alist of vendors that seem to meet your needs. You can alsolearn of solutions through a number of more traditionalmethods – trade shows, trade journals, colleagues, andconsultants/accountants.Be sure to find a reputable VAR for your identified solutions.Your VAR can make or break your implementation. Onceyou’ve narrowed down your top two or three vendors, be sureto do a thorough reference check. Create a checklist of questions so you ask each referencethe same questions.Issue a Request for ProposalUse your RFP to get a good picture of each vendor’s capabilities. Your questions shouldinclude those related to technology, user experience, implementation and cost. Grade eachsolution to identify the fit of the vendor solution to your requirements. Once you’ve identifiedthe solutions that could be a fit, it’s time to schedule the demonstrations. Create anevaluation scale such as:  5-included in current release and cost estimate  4-available in current year  3-minor workaround  2-third party solution  1-major workaround/custom development  0-not available 7
  10. 10. Schedule the DemonstrationsEach person on your ERP Selection Team should clear their calendar to attend the solutiondemonstrations. They should each have a copy of the business requirements and gradingcriteria.Be sure the vendor demonstrates all critical features in a live version of the software. Do notsettle for a Power Point slide show or demo version of the software. Each attendee shouldprovide feedback and their score for the vendor solution.In the next chapter, Qualify ERP Vendors, we’ll cover how to dig deeper into the vendoroffering to make sure you select the best ERP solution for you. 8
  11. 11. 5 ChapterPicking the Right ERP Implementation PartnerIn this chapter, we’ll explain why it’s important to choose the right ERP partner and how totell if a vendor is the right one for you.Choose the Right PartnerChoosing the right partner is as important as selecting theright ERP system. Establishing a long-term workingrelationship will help with internal adoption and increasethe likelihood of a successful ERP implementation.Narrow the FieldOnce you’ve narrowed your selections down to 1-2providers, allow them to conduct interviews with ERPSelection Team. The ERP team should clearly communicate the business requirementsoutlined when they defined the business requirements. Once the vendors are brought up tospeed on your needs, they will be able to build a meaningful presentation that sets yourbusiness in the context of their product offering. Their demonstration should illustrate howthe gaps in your current processes will be filled, how existing processes can be improved orhow new processes will impact your business (such as e-commerce).Prove ItIt’s very easy for a vendor to walk you through how their system completes specific tasks.But what does it look like for your business? Preparing a script with a few businessprocesses that the vendor will work through the system not only ensures they understandyour requirements but helps you to see if the system will work for you (and possibly improveyour processes). As mentioned previously, never allow a vendor to “demonstrate” thesoftware via Power Point slides. It’s a huge red flag – run!Know the Costs (all of them!)You’ve probably heard stories of how ERP implementation costs spiraled out of control,costing thousands more than the original estimate. Unfortunately, this happens, but it doesn’thave to happen to you. Ask the vendor to provide you with the Total Cost of Ownership(TCO) which should include:  license fees (including 3rd party)  implementation fees (training and consulting)  support & maintenance fees (including maintenance on custom development & 3 rd party products) 9
  12. 12.  hardware  software  networks/communication  software customization  any other fees not included in the proposalIf you’re convinced you need an ERP system but are not sure you can afford it, ask thevendor for a phased-approach. You can break up the costs over a longer period of time, andit may be less stressful on your staff.Avoid Customization if PossibleERP gets a bad rap when it comes to costs, and a lot of that is due to softwarecustomization. During the demonstrations, be open to new processes that are standard inthe software but may be different than how you currently do something. You might besurprised to see that there’s a better and easier way to do something, and it’s alreadyincluded in the software. This also helps to avoid future maintenance and support costs.Time is MoneyYour ERP vendor should have experience in fast,streamlined implementation of ERP systems. The faster it’srunning, the greater your user buy-in, the sooner you willstart seeing a return on investment. Ask your vendor abouttheir methodology for smooth implementation, and theirlong-term support to ensure the system works and yourgoals have been met.Show Your ExpertiseThe ERP vendor you choose should have a broad view of the organization, one that goesbeyond functionality in the software. Understanding the entire business cycle is critical to asuccessful ERP implementation. Ask your top vendors to demonstrate their knowledge ofyour industry or business and have them demonstrate how that will translate into results foryour company.Look for a vendor who has deep experience in the industry, with a stellar reputation forimplementing solutions on time and in budget (be sure to check references). And one withextensive experience is more likely to be as committed to your success in the future, as theyare during the initial sale.You’ve Made It (almost)Choosing the right ERP vendor and system for your company doesn’t have to be acomplicated process. Following these tips will direct you through the process and help you tochoose the best ERP vendor for your project. 10
  13. 13. 6 ChapterSelecting Your ERP SystemYou’re almost there – you’re almost ready to choose your ERP system and startimplementation. In the previous post, Picking the Right ERP Vendor, we explained how tochoose the best partner for your business, which is as important as selecting the rightproduct. In this final chapter, Selecting Your ERP System, we will give you tips forchoosing the right solution for your company.You already know that you need timely and accurateinformation to make smart business decisions and thesoftware you’re currently using is no longer suitable foryour growing business. You need an ERP system thatwill not only provide visibility to the information yourmanagers need to make better decisions, you need anERP system that will provide you with key competitiveadvantages.With so many ERP systems to choose from, it can beoverwhelming to pick the right one. But, if you’ve been following along in this series, you arearmed and ready to make your decision – and it will be the right one if you’ve done yourhomework.Consider All the OptionsThere are many ERP choices in the market today so be sure to fully explore your choicesand choose the best one for your business. Don’t pick solely on name or reputation.Consider what your organization’s needs are, and select the best one to give you thatcompetitive advantage.Review Your Business RequirementsIt may be many months since you first developed yourERP team and drafted your wish lists, so it’s a great timeto go back through those lists and make sure that yourRFP addressed the most important items, and mostimportantly, that your top ERP vendor choices can meetthose needs. Also, review your current processes andwhat those processes will look like in a new ERP system.The potential vendors should have clearly demonstratedhow your processes will look in their system. 11
  14. 14. Evaluate Technical FitIt’s important to understand how the new ERP solution will dovetail with your currentinfrastructure. Implementing software built on a completely different platform can causeissues (and increase costs) later on.Know the Total Cost of OwnershipAs mentioned in Picking the Right ERP Vendor, it’s critical that you fully understand the totalcost of ownership (preferably before you become invested in a particular system). Despitethe sales reps being completely committed to your success, they are still trying to sellsoftware, so they may downplay some costs associated with their software. Be sure to askabout hidden costs that aren’t apparent in the quote. Things to consider:  license fees (including 3rd party)  implementation fees (training and consulting)  support & maintenance fees (including maintenance on custom development & 3rd party products)  hardware  software  networks/communication  software customization  any other fees not included in the proposalBe Realistic with Your Implementation PlanPrior to making your final ERP system decision, ask for a comprehensive implementationplan that includes installing the software, ensuring it is functional, tested and accepted bykey users (including those on the original ERP Selection Team). Having this plan up front willhelp you completely understand the costs and resources required to successfully kick offyour new ERP implementation. In your plan, include things like business processes,workflow design, data migration, testing and any change management activities. Prior toinstallation, make sure your data is fully scrubbed and useable. The data out of your newsystem is only as good as the data you put into it.Track the Success of the ProjectGoing back to Defining Business Requirements, you should pullout your original list to track the success of your ERPimplementation. Have you improved visibility, reduced costs,increased customer service levels, or any of the other items onyour list? Go back over it to measure your success and makeany necessary adjustments.Selecting the right technology for your company will give youthe edge over your competition. But you must go through all thesteps for success. Once you know what you need, you will be able to make a smart choiceto keep moving forward. 12
  15. 15. Want to learn more about picking ERP systems? Ready to learn how SAP Business One orMicrosoft Dynamics AX can transform your business?Contact Derin Hildebrandt at 1.866.460.7765 ext. 100 to talk about your business goals foryour move to ERP and to schedule your initial complimentary consultation. And be sure tovisit our website to learn more about The Encaptis Group, our offerings and to view productinformation and videos. 13