ERP Vendor Selection: Cutting the Big List

You’ve done your research, and you now have a list of eight to twelve viable ERP software providers. Your next step is to cut that list again, to create a vendor short list of four to six candidates with whom you are going to engage in serious discussions. Begin this process with no preconceptions. Each competitor starts with an equal opportunity.

If you fit a statistical norm, your semi-finals list breaks down kind of like this:

1. You have one to three ERP vendors who are small- to mid-size vendors with an industry-friendly solution, and they seem to understand your business and its problems. They don’t have huge development staffs – nor do they have huge price tags and huge maintenance fees. These vendors are widely used by your competitors.

2. You have one to three large vendors, who have limited experience with your business, or a similar business model. While you wouldn’t describe the fit as “perfect”, you have confidence that these ERP vendors will be around for the long term, and that development will keep pace with changing business requirements. These systems are more expensive to buy and maintain.

3. You have one vendor who doesn’t have experience with your industry, but promises rapid and specific customization to make a generic ERP blueprint specific to your business.

4. You have one large ERP vendor who has no experience with your industry, but has let it be known that they are desperate to partner with you so that they can break into your industry. As such, they will be more than normally accommodating, in terms of price, maintenance, and service.

You may have other characterizations, but at this point, the competition is less about the ERP software per se than it is about the relative trade-offs between purchase economics, the viability and experience of the ERP vendor, and how important you perceive you might be as a customer. These are fundamental strategic choices, and you do not need to understand anything about ERP software to assess these risks. You need general confidence that the software will work – but the specifics can come later.

There is no mathematical formulation to tell you how to weigh and assess each vendor’s pros and cons. When you have a proposed short list in hand, discuss it with your IT director, and maybe your requirements gathering ERP implementation consultant if you engaged one – not for approval, but for a reasonableness check. You basically are looking for any logical flaw by which your vetting process may have resulted in eliminating a vendor with an ideal ERP solution for you.

When you are comfortable that you have the strongest group of ERP provider candidates, it is time to send out the RFPs.

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Richard Barker

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Richard Barker