50 ERP selection tips to help you find the perfect system

Selecting ERP software is a daunting task.

First, there's the sheer amount of work that an ERP selection project involves. The requirements gathering. The RFIs. The RFPs. The demos, the consultants, the endless debates over deployment options...the list goes on.  

Then there's the issue of company politics - who do you want on your project team, and how do you keep them motivated? Which member of senior management should you ask to sponsor the project? And once you get them on board, will they be any good? 

These concerns are, of course, just the tip of the iceberg. To guide you through this minefield, we've compiled this extensive list of ERP selection tips from ERP industry experts, consultants and vendors, including advice on:

• Gathering ERP requirements
• Creating your ERP selection team
• Budgeting for your ERP selection project
• Shortlisting ERP vendors
• Refining your ERP project strategy
• Deciding on deployment and licensing options
• Reviewing ERP customization and integration options
• Making your ERP vendor demos count

Gathering ERP requirements 

1. Identify three to five critical business issues

Before evaluations begin, it is important to identify your top three to five critical business issues. People often get lost in lengthy RFPs and focus on features and functions rather than on what they are really trying to achieve. Do you lack lot control? Are there customer specific inventory requirements? Are manual processes slowing operations? These are the points that should drive discussions, not if a solution can handle basic tasks like order-to- cash processes or generate reports. Think about what the business needs in order to double its growth and lead the evaluation with these challenges at the forefront. (via Deacom)

2. Identify the unique aspects of your business (and find an ERP to fit)

Once you have audited an ERP solution for industry fit and functionality, ask your team the following question, “What makes our business unique and what thing(s) do we do that makes us consistently profitable?” For some, it will be changing colors on the fly, for others it will absolute cost control and for still others is might be zero defects and rejects. Every business has a 'secret sauce' that is actually an essential business strategy. Define that strategy and determine with absolute certainty that the ERP system you are evaluating can implement it perfectly. (via IQMS)

3. Pay attention to your compliance needs

If you distribute food, pharmaceuticals or chemicals, you have many specific compliance requirements. No matter what your business, your customers have compliance requirements and so does your government, from the city sales tax to the national tax authorities. You must meet them, and your ERP must ensure you do so. (via Infor)

4. Analyze and document future requirements

While potentially uncomfortable, a critical step is agreeing what your organization's requirements are. ERP software is vast and it's easy to latch onto showy features that demo well while losing sight of how elegantly core processes will be handled. (via Alta Vista Technology)

5. Discover why change is necessary

A first and critical step in an ERP project is to go through a 'discovery' stage, where you identify your key business needs and the motivations to begin such a strategically important project. In discovery, your goal is to define several areas where there are opportunities to improve your business. For example, become more competitive and profitable. This discovery sets the foundational, all-important vision for your project. Having this vision, in turn, helps you then examine the current state of your business and the desired future state, and identify the discrepancies between the two. (via Ultra Consultants)

"ERP software is vast and it's easy to latch onto showy features that demo well while losing sight of how elegantly core processes will be handled."

6. Real-time functionality is absolutely essential

The Internet of Things is changing everything, every day. Consequently today’s commercial transaction processes require constant information consolidation driven by input from customers, retailers, distributors, materials suppliers and affiliated business entities. As a result, if your enterprise systems are not able to ‘listen to the world in real-time’, it is likely that your enterprise is leaving money on the table. This capability is no longer just a desire but has become a critical business need that only the value of an all encompassing ERP system can provide.

Recommended reading: use our list of 70 ERP features to consider to make your requirements gathering more manageable 

7. Beware of brand loyalty

Many ERP selection managers immediately pick up the phone and call a previous vendor partner believing that the solution will offer a simpler way around the change challenge. Unfortunately, the chances are that if the manager didn’t like the way the previous system worked out, any updated system will offer the same advantages and limitations. Don't be lazy - if you require a change, change.

8. Simplicity is underrated, especially when it comes to UI

Believe it or not there are degrees of simplicity in the ERP world, and even though the information axiom; ‘more is less’ may appear to be universal, it’s really how clear information is delivered that usually makes for the best pick. In this case, then, true simplicity typically begins at the User Interface (UI) level. For example, are the screens clear and easily understood? Does the UI make sense even for novice operators, or do they suggest that remedial training will be absolutely necessary, all the time?

9. Keep your ERP requirements checklist simple and easy to follow

ERP selection checklists are supposed to be straightforward; with the goal being to only include elements that only relate to the job at hand. However, depending on the enterprise culture, some companies tend to throw everything possible at checklists that can become nothing more than lists of lists, which end up missing the goal of the exercise entirely. The caution here is simple; when you’re building ERP requirements checklist, ensure that you only include elements that apply directly to well-defined operational needs – no more, no less.

 

Creating your ERP selection team

10. Include end users in the selection process

Make sure your ERP selection team is actually inclusive of end users. Every department should have a representative on your selection team. Your manufacturing facility is robust and has many moving parts that require different points of view. The software selection team should mirror this. (via Godlan)

11. Appoint an ERP project manager to improve communication

In order for your ERP project to be successful, you must create an ERP selection team that consists of upper management, department leaders and end users from across the organization. It is critical to have an ERP project manager that will keep the communication moving between the stakeholders and the team, as a successful ERP implementation needs the full support of the executives. Keep the selection committee to 6-8 members and have the ERP PM reached out to all departments to make sure feedback is gathered and all departments’ needs are being addressed. (via Barry Wehmiller International)

Recommended reading: get ERP selection team advice using our step-by-step ERP selection survival guide

12. Select the right type of person to manage the project

The most important characteristic for an ERP project manager to possess is a refusal to fail. This is not an offhand cliché – it is a literal behavioral description.

13. Show your ERP selection team that you appreciate their efforts

ERP selection and implementation can involve long days, and even later nights. Consequently, ensure that you to feed your ERP team physically, as well as intellectually. This doesn’t mean you have to spend a load of money, but sandwiches and beer go a long way toward keeping everyone happy and content with their lot during an ERP project.

"Ensure that you to feed your ERP team physically, as well as intellectually"

14. Hire your own ERP consultant

Find a person who will work for YOU. An ERP consultant that is employed by any outside consultant company certainly will care about your business, but their pay check does not have your business’s name on it. The arrangement can be as an employee or contractor. You might find the right person already working for you and only have to change their job title to get a good consultant.

15. Target an executive sponsor that can devote time to your project

Your executives are busy people. The one who agrees to sponsor the ERP project must be able to devote substantial time to it. If not, their value to the project will be severely limited. It might be to your advantage to target the ‘second-best’ executive sponsor if that person is willing and able to put in the more time than your first choice.

 

Budgeting for your ERP selection project

16. Make meaningful cost comparisons

First and foremost when it comes to comparing software options, make sure you’re comparing apples to apples. Most comparable systems will fall within a similar cost range, so it’s important to first identify which tier of software will have the functionality to meet your needs, and be appropriate in terms of business size and sophistication. When it comes to software, make sure you think about what you’re comparing the cost to and keep in mind the cost of doing nothing. Not purchasing software can also affect costs directly by resulting in a new hire or indirectly through lost productivity. (via Blue Link ERP)

Use our software pricing guide to help calculate your ERP project budget

17. Don't let the budget get to your head

The first step to ERP budget success is to warn you that you will become wildly popular overnight. Remember that this is because you are managing an enormous budget, and not because those Dale Carnegie classes are finally paying off. After a while, you will learn to just skip the unexpected invitation to lunch, and ask what the request is. It is a necessary skill to learn to say “no” to a request for money without saying “no” to your working relationship.

 

Shortlisting ERP vendors

18. Don't cast your net too wide when shortlisting vendors

Compare only a few software packages that are suited for your business level. An ERP selection cycle should not have both Tier 1 and Tier 3 ERP packages under consideration. Also, don’t try to boil the ocean, just pick a few credible systems to evaluate. Don't forget to consider implementation and post implementation process. Do you trust your vendor? Have you met their Consulting Team leadership – eye to eye? This perhaps is more important than splitting hairs over software features. A great ERP package is worthless if your implementation fails. (via Godlan)

"...also, don’t try to boil the ocean - just pick a few credible systems to evaluate. Don't forget to consider implementation and post implementation process"

19. Analyze and document future requirements

Accountants selecting software can get caught up in feature-parity, being very careful to not take a step backwards as they pick new software. Switching ERP solutions is hard, however, so you'll be on your next ERP software for years. You don't just want it to do what you're doing today; ideally you want to take the next step as well.. I'd recommend listing the requirements you anticipate needing in the future, not just replicating what you do today. For example, what mobile requirements will you have? What integrations might be needed? (via Alta Vista Technology)

20. Don't neglect user experience

When it comes to choosing ERP anyone will tell you to make a list of requirements and compare these specifications against what vendors offer. What few will mention is the (almost always) hidden bullet in this list and its significance: good usability can make all the difference when choosing enough to ensure it's user-friendly, easy to learn and your employees will use fully. It's only that way that your business will gain the most from all its features and that you'll actually see a productivity boost. (via Megaventory)

Find ERP software that works for your company with our monthly-updated ERP vendor directory

21. Consider the strategic direction of vendor products and services

Generally speaking, it’s worth noting that ERP is a major commitment. In other words, once you're in, you will likely not rip it out. Therefore, the promise of the roadmap, the support and services organization, and the strategic direction of the software provider - which don't relate to what the ERP platform can do today - all need to be factors that align to your business trajectory. (via Tipalti)

22. Select an ERP vendor that invests in new technology

Programming and network tools evolve. Select an ERP vendor who keeps up-to-date with the latest technology and is able to use it on your behalf. At the same time, they shou;d maintain expertise in older tools that you might still use for systems other than ERP. These are people skills. If they recently hired a person who should be up-to-date on modern ERP technology but that person works with fossils that still use FORTRAN, you might want to keep looking.

23. Check support options before selecting a specialist ERP

Niche-focused ERPs sometimes use older technology. Many niche ERPs are very competitive. Others could have been developed by someone who was in your business a while back and still sells software they developed a long time ago. While it can work well, consider the support available - is it easy to get the support you need if the database is one from the 1980s? A broad sector manufacturing ERP is more likely to use modern technology and they are more likely to keep their technology up-to-date over time.

24. Look at vendor company culture when selecting ERP

The phrase 'company culture' is typically seen as an arcane concept, driven by philosophy or goal-setting. However, at an operational level, “why” businesses make decisions in a particular way is equally as important as any other management consideration. This is because companies tend to respond to their leadership and, therefore represent subjective desires driven by the views of founders, owners or senior managers.

25. Ask for potential ERP vendors' customer completion ratios

Over the years, while there have been a number of highly-publicized ERP successes, unfortunately, there have been an equal number of disasters in the market. Consequently, when searching for the right vendor partner, is it most instructive to review the customer completion ratios associated with various vendors, and if those metrics are not readily available, one should be ready to ask a candidate company to describe those values in detail before you pull the trigger. To do otherwise, will put an enterprise on its back foot at the outset, and run the risk of making a mistake that could otherwise be avoided.

"When searching for the right vendor partner, is it most instructive to review the customer completion ratios associated with various vendors"

26. Ask potential ERP vendors about their implementation process

Keep it simple, stupid. If at all possible, you want a simple, easy implementation without a lot of fancy touches that are mainly for show. You want an ERP; you don’t want a vendor who tries to baffle you with with sales speak. A needlessly complicated implementation can hit your budget hard and could cause you to overspend. Establishing what is involved upfront will allow you to plan your finances accordingly.

27. Only consider forward-thinking vendors

To thrive, businesses must grow beyond processes that exceed simply surviving quarter-over-quarter. The ability to scale an operation quickly and seamlessly must therefore be a key consideration when selecting ERP software. To do this, you'll need to select an ERP vendor with their finger on the pulse of the industry who issue the updates and support you need to keep growing.

 

Refining your ERP project strategy

28. Map out your existing processes

Make sure that existing processes are mapped out before looking at new systems, get users involved and let them know that a new system is being considered. Once mapped, make a list of requirements that are 'nonnegotiable' and 'new features'. To get user buy-in it’s important to integrate some of the “new features” as well as keep them informed. Make sure it’s well understood how the business operates and what the needs are before considering an ERP or new ERP system. This is even more important when merging several locations, business units or companies. Use this information right from the beginning when evaluating new systems. Start your “data cleanup” before looking at new systems. Migrating bad data into a new ERP is terrible practice and bound to cause problems. The more preparation you do before ever speaking to an ERP vendor the better off you are. Expect to spend at least 50%-70% of your project time with these activities. You will need to get some of your “best” people involved and so prepare for the impact this will have on the day to day operations! (via QuakeTek)

29. Use selection and implementation as a chance to improve processes

People looking for ERP software should dig deeply into all the software they are considering to make sure that they fill current problems, but also work well where your current software works well. Better yet, get comfortable with the people implementing the software. If they can give you better ways to run your business as part of the implementation, you have an opportunity to significantly improve your business. (via Apprise ERP)

30. Digital transformation should influence your selection decision

The emergence of the digital transformation market should shape your ERP selection. Analysts have predicted the digital marketplace to be valued at $2.2 trillion by 2020. Evaluate your potential ERP software company: does it offer easy-to-integrate product services related to the IoT, mobility, cloud, Big Data, AI and cognitive computing? In the new era of postmodern ERP, it is essential for your core ERP functionality to be able to interface with third party best of breed bolt on app. Your ERP package will need to support your business for years to come. Make sure it's designed to do just that. (via Surety Systems)

"In the new era of postmodern ERP, it is essential for your core ERP functionality to be able to interface with third party best of breed bolt on app"

31. Establish a concrete failure and recovery plan

Unfortunately, things go wrong, and failing to plan properly can put a company in a ditch in the blink of an eye. Consequently, when selecting an ERP system, ERP, failure/recovery planning is a critical helpmate that can either save a company. Without one, all your best laid plans and hard work look up could go up in digital smoke.

32. Know when you need to replace, not modify

Mobility is today’s commercial Holy Grail, so if your ERP doesn’t offer an efficient way to integrate with mobile devices, or transaction-based components like NFC or plug-in terminals you’re probably losing money on the bottom line. Unfortunately, just because you can connect, it doesn’t necessarily mean that you’re doing it well; and hanging a cluster of third-party utilities on your ERP system, just to prove that mobile compatibility is available to your customer base, will cost you money sooner rather than later. The only way to futureproof your ERP strategy is is to replace your legacy ERP with a system that offers native mobile functionality.

33. Keep tabs on what your competitors are up to

Your competitor might provide the stimulus for an ERP selection project. If, for example, they can track customers and analyze their shopping habits then they have a significant advantage over your business. Did they begin using a new system? If so, it's probably time for you to get one and to minimize their competitive advantage.

 

34. Demonstrate potential ERP value across all parts of your business

Articulate, then establish an overall problem scenario, then break it down into specific areas which are applicable to the department in question. In this event, try to utilize real world examples, such as those discussed with the CEO at the start of the project. If you’re talking about reporting problems discuss specific reports, and if you are talking about inventory problems explain the processes affected. The goal here is to get everyone thinking about the same problems at the same time.

35. Define and document the lifecycle of your ERP

Your ERP system should - hopefully - last for years. Your vendor will have an ERP maintenance plan to keep you up to date with the latest improvements and bug fixes in their software. Understand how the plan works and what it will cost for the lifespan of your ERP. Hardware and networks have a lifespan too. Some parts will wear out and others will become technologically obsolete and in either case this will bump up the outgoings in your ERP budget.

36. Research ERP market developments (even when not selecting software)

Crystal gazing is a lot of fun. From time to time, you can actually find a feature or function that exists on the near-horizon and might end up being a useful element in your ERP decision-making a couple of years down the line. If you make a note of potentially useful features as you encounter them, there will be less catching up to do when you have an active selection project going on.

 

Deciding on deployment and licensing options

37. Align ERP deployment and license models with business goals

In the ERP evaluation process, a company must decide the deployment option and licensing model which best aligns with their business goals. Note that deployment and licensing are two different topics and are not always presented in strict combination (i.e. cloud solution always priced as a monthly subscription). A company may likely encounter:

1. A vendor that offers a legacy solution only available deployed on premise with either a perpetual license or a monthly subscription
2. A vendor that offers a true cloud solution likely priced as a subscription
3. A vendor that offers parts of the application deployed on premise (priced as a perpetual license), while other modules may be deployed in the cloud (and priced as a subscription).

Ultimately, a company must determine which option aligns with their current deployment mindset and cash flow position. In the past, it was often the vendor who had the most detailed features that often won the business. Today, a company might actually choose a vendor and ERP solution that has fewer features but a more flexible deployment or licensing model that aligns with their requirements. (via Epicor)

If you're thinking of migrating to a cloud ERP, here are five mistakes you really need to avoid

38. Calculate the number of licenses and users you require carefully

Whether you use an on-premise ERP or choose to work in the cloud, you will agree to use a certain number of licenses. Don’t add up the number of users. The licenses are concurrent so think about the highest number of people who might need to log on at the same time. You could have 100 users but only 25 licenses and your ERP will work to everyone’s satisfaction. Look for limited licenses too. An ‘MES only’ license might allow a user to enter transactions such as PO receiving or time and quantity completed on a production job but not updates such as a new sales order.

"Licenses are concurrent so think about the highest number of people who might need to log on at the same time"

39. Don't forget about open source ERP

if you want an ERP where you control the software and know you will need customization to meet your needs, take a good look at open source ERP. It might be exactly the set of tools you need, if you have the development talent to make it a feasible option.

40. Prepare for infrastructure changes when moving to the cloud

From a management perspective, on-premise means that everything is typically driven by an enterprise-centric hardware and networking focus. However, when considering a cloud ERP system that focus disappears, and is instead replaced by an end-to-end management challenge. In the event of a migration from on-premise to cloud ERP, the only thing an enterprise cadre can do is plan for major restructuring of infrastructure management.

41. Understand your risk profile when switching to a cloud ERP

This has almost nothing to do with your ERP solution, and everything to do with your company’s size, your company’s culture, and your company’s tolerance for risk. These intangibles play such a critical role because from a financial perspective this is not a make-or-break decision (you may save money with a cloud ERP solution, but not enough to drastically impact the income statement). But strategically, if things go badly, (your cloud ERP vendor goes under, your cloud ERP vendor shuts you down because of a dispute, you cannot get at your business data) the results are catastrophic.

 

Reviewing ERP customization and integration options

42. Look at what software your company is using already

When a company is selecting an enterprise level ERP, it's common for the business to initially overlook what third party solutions and legacy applications are already being used. In every ERP implementation, the challenge of integrating with multiple 3rd party solutions inevitably arises; to ensure a seamless process, the company should focus on selecting a vendor whose software will allow integration across all of the current systems used within the organization. (via Information Builders)

43. Treat integrations the same as any other software requirement

No ERP system is perfect and you will likely need to plug in other applications to meet every need your business has in the future. Does the ERP system have an integration platform that plugs seamlessly in with other applications? How many applications are in their app ecosystem today? How customizable is the system to your unique business needs? For example, what if you want to automate supplier payments operations tomorrow? Does the ERP system have a partner in place to handle this already or could you easily integrate such an application in to your ERP environment. (via Tipalti)

"No ERP system is perfect and you will likely need to plug in other applications to meet every need your business has in the future"

44. Look for flexibility to accommodate future growth

When selecting an ERP system, having a solution that will adapt to your business needs is key. Traditional ERP systems are notoriously hard to change and with today’s technology, it is possible to have an ERP that is both robust and flexible. Make sure to ask about how hard it is to make changes to the system, and whether these changes require a consulting firm or extra charges to implement. Additionally, understand the timeline associated with making changes in the ERP to your business processes. If you are planning for growth and product innovation, it’s critical to have a flexible enterprise resource planning solution that enables team members to quickly make changes to supply chain and manufacturing processes that allows companies to be nimble without large IT costs or long timelines. (via Kenandy)

45. Only use customization as a last resort

When it comes to customization, less is more. If a small tweak to an internal process would sidestep the need to have custom code written, then consider that change. If a third-party add-on will fill a gap, that's often a more full-featured and simpler alternative. Customizations may be necessary, of course, but heavy customizations usually mean higher costs now and in future upgrades, more instability, and longer time to implement. (via Alta Vista Technology)

 

Making your ERP vendor demos count

46. Voice your concerns during the demo

During the ERP demo if you have any concerns, make sure you communicate them – and don’t be afraid to ask questions. The best demos tend to be informal with both sides having an honest and open discussion. Understandably, many teams can get ERP-fatigue after they have seen their third demo –it’s important you have a wash up meeting post-demo to collect your thoughts and gather feedback. You’ll want to come to some form of consensus among your group before you move forward with a decision.

47. Ensure the right people attend your ERP vendor demos

Look back to why you are looking at a new ERP. If your primary motive is to be able to accept orders faster and to deliver them in a shorter time, then sales and production people must attend. If your customers demand improvements in production quality systems, the necessary audience changes.

Ensure your needs are addressed during vendor demos with our five-step guide to mastering ERP demos

48. Define the structure and content you wish to view in a demo clearly

You want to stay in control of your ERP demos. The vendor will lead, but staying in control allows a chance to ensure your questions are addressed. Some ERP vendors will have vanilla demos that aim to showcase the strengths of their systems, but you have your own list of important criteria. Make certain that your important points are part of the demo. Further, there might be points in the demo that only pertain to a part of your selection team. Having the script in advance allows sales to skip the financial portion if they choose.

49. Reduce 'vendor blur' post demonstration

Post demonstration is the time to conduct follow-up activities, get clarification, review touch points, and identify those characteristics among ERP vendors that differentiate one from the other. Also use this time to clarify and/or reconfirm with each short-listed vendor what should be included in the proposal, number of users, and features.

50. Use a scoresheet to evaluate ERP vendor demos

Collect a score sheet from every person who saw the demo whether live or perhaps a recorded version if they were unable to attend the live presentation. Check against your attendance logs to be sure everyone turned in a reply. Enter each reply score in a spreadsheet and total up the scores. You probably can eliminate some of the ERPs from consideration at this point.