ERP Vendor Selection

ERP Vendor Selection Tips to Save you Time and Money

The ERP Vendor Selection process can be challenging. It can also be frustrating or even humorous in some cases. Weeding through the morass of ERP Software Vendors is a task that hopefully only happens once every seven to ten years. Here are some tips to help make this process less painful.

Key ERP Vendor Selection tips

Remember that the vendor is there for themselves. They may try to be your buddy, flower you with gifts, take you golfing, or whatever else it takes to close the sale. They want to build a relationship with you, so you will buy based on a feeling of gratitude towards them. If you do nothing else, keep the relationships with these vendors above board and strictly professional. We have seen clients being taken down a rosy path only to end up with that software, despite the fact that it wasn’t the best fit for them. There is a psychology to providing gifts and giving the client value up front. There is an underlying obligation or a feeling that the client owes them back. It is a very successful trick used during an ERP Vendor Selection by the salespeople, so you need to be on the lookout for this.

Engage a consultant or service to help weed through the numerous potential vendors to get you to your shortlist. Too many times, managers and owners have taken a shot in the dark and found the first names they find on Google, or that those that they saw at a trade show. Do your due-diligence. Find a company who specializes in vendor matching or selection. One such ERP Vendor Selection company is SoftwareAdvice.com. They can provide a suitable fit for your company.

In the ERP vendor selection process, drive the vendors down your path, not down theirs. If you let the vendor lead the processes, you will only end up at their solution. You need to strongly assert that you are driving the process and then follow this up with action such as pre-defined scripts for them to demonstrate and defined criteria for what they will show you such as references. If you lead the demo, they will either shine or fall apart depending upon how closely they match your business. If they shine, they were both prepared and understand your business. If they fall apart, then they probably are not a good fit. We have had vendors who get very upset at a level playing field. These are the vendors who are focused on themselves, not what you are asking for. If you prepare the vendors ahead of time with the ground rules, the things that they need to show and not show, then they should have no excuse for not tailoring their presentation to your requests.

Find out what ERP Software others in your industry are using. Sometimes with specialized, niche industries such as process manufacturing, or semi-conductor manufacturing, generalized ERP systems do not handle the unique requirements of that industry. Talk to members of your industry association on what they use. Do the proper research on the ERP Vendors you might be looking at. Do not select software based on the opinion of a friend or what your relative is using at their facility. Doing so will get you in trouble, because likely the software isn’t fit for your industry. Even related industries may require different types of ERP software. Be careful here on taking well meaning advice from those you know.

When negotiating with your primary candidate during your ERP Vendor Selection, never take the first or even the second offer. In fact, if you time your negotiations to the end of a month, quarter or even more ideal, the fiscal year end for that vendor, you will be able to negotiate great discounts. Every sale counts at the end of the period and often they will make a concession to book the deal in that period. Vendors often have more flexibility in the pricing that you might expect. Large vendors often will dig deep if it means beating out their rivals in a deal. But there is a threshold that they ultimately are unwilling to cross. You will need to trust your instincts that you have pushed them as far as they will go.

When you are talking to the ERP Software Vendor, find out who will be implementing the software. Often it is a Value Added Reseller (VAR) who will be doing the implementation. This could be different than the VAR involved in your ERP Vendor Selection. If that is the case, shop the VARs and find one that you feel most comfortable with. Just because there is a VAR on the sale of the software, does not necessarily mean they are the best qualified to do the implementation. But if you are to do this, do this early. You probably want to identify the VAR to go forward with as soon as you have a short-list of Software Vendors. If you wait until you made the purchase, it is unfair to the VAR who helped to demonstrate the software and spent all the effort finding out about your business.

If you follow these simple tips during your ERP Vendor Selection, you will be a lot better off and find a solution that is better suited for your business and you will have a easier time implementing as well. Work with the ERP Vendors as a business partner, but keep the relationship professional and hold them to a level playing field. Doing so will only be to your benefit, especially when you choose the best software for your business.

ERP Vendor Selection Tools

There are several tools on the internet that are available to assist you in doing your ERP Vendor Selection. The tool we have found best is the ERP Vendor Selection wizard at SoftwareAdvice.com. It allows you to drill down based on your industry, software preferences, and revenue size to find the right fit for your business. Further, you can get pricing and schedule interviews right there on the same page. Very useful.

To help you in your ERP Vendor Selection, we have a free guide for you “How to Assess Accounting Software Vendors’ Viability” available for instant download. Download it now.

ERP Vendor Selection

7 Ways to Fail in an ERP Selection

by Chris Shaul

The best way to fail at an Enterprise Resource Planning (ERP) implementation is to choose the wrong software up front. Choosing software without following some basic guidelines is a sure-fire method for disaster. Probably the worst thing that someone has done (that we know of), was to buy their ERP software at a tradeshow, thinking it would be the cheap and easy way to solve their problems. They ended up spending more than they expected in finding ways to force the software into their business all because of a failed ERP selection.

Below are some ways that will set you on the path to fail at your choice. In other words, they are ways that you can insure that you will choose the wrong system for your company.

ERP Selection Failures

1. Choose ERP software without understanding your requirements. First, you should ensure that you are getting the best fit for your company by documenting your requirements. The requirements should cover the strategic, reporting, functional, and technical aspects of what your company requires to run the business. Choosing software without these documented and without using them as a benchmark to compare the software against is a strategy for problems. Do not run an ERP Selection without well defined requirements.

2. Select ERP software without paying attention to business processes. There are certain ways that you run your business. Not all of them are rocket science, but there are certain things that make your company unique and successful. Choosing software without understanding how things flow in your company will create big problems in the implementation when the software processes information contrary to how you run your business.

3. Choose ERP software because your Friend/Neighbor/Relative is using it successfully at their firm. Another nightmare scenario that has actually occurred is that decision makers have purchased software because their ____ (fill in the blank) has used it and it worked great at that company. That company is not your company. On the surface they may seem similar, but just because one company is running well on the ERP system does not mean that yours will. You may have a special process for getting your goods out the door. The software may not support that method. Perhaps there is some information that you must have because of financial, regulatory, or supply chain requirements. The other company may not have that issue. Perhaps you need to track lot numbers and the _____ ‘s company does not. There are too many business issues that can create havoc in an information system, if the system is not carefully matched to the requirements (see #1).

4. Not having the ERP vendor prove that it will support your business processes. ERP vendors have one goal. Sell you software. Do they care if it fits, can successfully operate your business, or even if it will be a huge burden on your staff? Not really. In fact, if you buy software that requires a lot of care and feeding because it is not a good fit, then the vendor is the one who supports it and makes a handsome flow of income off your company. You can find a software that best fits your business with a free ERP Selection consultation from SoftwareAdvice.com. Get the vendor to demonstrate that it meets your requirements and can transact information in a method that is aligned with your business processes.

5. Choosing ERP software because it looks cool. You may laugh at this one, but the user interface is a sexy selling point of many systems. Is a plain old green-screen as nice to work in as a really colorful Windows screen? Probably not, but does the Windows-based system really address your issues? Your goal should be aligning a perspective system with your business needs. If it comes with a cool interface great, if not, can you live with it?

6. Let the ERP vendor tell you what you need to be doing. Related to number 4 above, having the ERP vendor guide you in your selection is a roadmap to hell. You need to guide them. Tell them what you want and expect. Too many times has a single vendor gained the trust and confidence of a decision maker and guided them to a particular system, without any concern for how close a match is it to the business requirements and processes.

7. Take the ERP vendor’s first offer without negotiating. You can generally negotiate with a vendor several times and get a more than fair price. But the key is to follow good negotiation tactics. Don’t forget that most everything is negotiable. The software, the services, the maintenance, the timing, etc. In the ERP industry, the best time to do an ERP selection is at the quarter or year end according to the vendor’s financial calendar.

The key thing to understand is that there is a path that can lead you to success and many routes to failure. Know thyself first. Understand your business and document it. It is not enough to think you know it. Talk to all levels of users and managers. Ensure that everyone’s needs are defined and a priority is placed upon those needs. If you are not sure of how to run an ERP Selection, then get outside help from a consultant who is non-biased towards systems and can guide you. Be careful of assistance from a company that has an SAP practice, or an Oracle practice, etc. They have internal motivation to help you choose their flavor of software.

Most importantly, understand that you need to drive the process. It is your selection and you need to live with the results. As any good project manager will tell you, start with the end in mind. What do you want the system to do for your company now and in seven years from now? Understand this and go forward in your ERP selection.

Chris Shaul is a Senior IT Consultant who is a regular contributor to ERPandMore.com

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