Open Source ERP or Managed Services? Finding the right solution for your business needs

Enterprise Resource Planning (ERP) software is an essential component for any businesses, irrespective of the size or industry. An ERP solution enables a business to automate, integrate, and streamline business processes, thereby making operations more efficient. A business may choose to implement either an Open Source ERP or go with a managed services provider, depending on the resources that are at their disposal.

Below is a brief comparison showing the pros and cons of the two options.

The Pros of Open Source ERP vs. Managed ERP Services

Accessibility:

Open Source ERP software is easily accessible, since you can download from the internet, at no cost. For this reason, even the small and medium sized business that had no access previously, have a chance to try out ERP software.

Commercial ERP software must be purchased from the vendor. The vendor will then issue licenses and terms for its use, normally forbidding any form of distribution. For this reason, the software is only made available to those companies that are able to pay, in order to use it.

Cost:

Open source ERP software is available online, free of charge. Therefore, no acquisition, implementation, or licensing costs are necessary. In addition, the developers or third parties make every effort to have documentation and training tutorials, which users can download and use for implementing the system, as well as training their employees. However, third parties may charge a small fee, in order to access their documentation and tutorials.

On the other hand, managed ERP services are quite costly, thus making them out of reach for most small and medium-sized enterprises. Some of these costs include the software acquisition costs, licensing costs, employee training costs, and professional fees.

Scalability:

Open Source ERP is scalable. For this reason, the solution caters for the needs of both small and medium businesses, as well as large enterprises.

Commercial ERP solutions, on the other hand, are designed with the large businesses in mind. Therefore, they will tend to be more complex and have features that cannot be implemented or be applicable for the small business.

Flexibility:

With Open Source software, everyone has access to the source code. In addition, anyone has the right to modify or tamper with the code, provided it is done in accordance with the software agreement. As such, a business has the opportunity to implement some features, or customize the system to meet individual needs of the business.

Commercial ERP software does not allow for any modifications. The license agreement strictly prohibits tampering with the code, and gives all the rights to the respective vendors. Therefore, the vendor must be contacted to undertake any modifications that may be required.

The Cons of Open Source ERP vs. Managed ERP Services

Support:

The greatest disadvantage of using Open Source ERP is the fact that the business has to independently, manage its ERP system. Therefore, no technical or professional support is available. As such, a business is forced to manage, backup, and even troubleshoot their system. In extreme cases, a business might need to hire the services of a competent professional to manage the system internally.

With managed services, the business gets to enjoy various additional services from the vendor. These services may include hosting, backup and recovery, troubleshooting, and regular updates.

Features:

In as much as the developers of Open Source ERP will make every effort to include all the major features that are found in the commercial ERP systems, it is common to find some important features missing. Usually, Open Source software is developed, as a result team effort, relying on the input of volunteers with specialized skill in the various areas involved. Therefore, lack of such skilled personnel results in certain features being left out. Apart from this, the funds that are required to develop and test some the features may lack.

On the other hand, companies that have sufficient resources, in terms of funds and skilled manpower, develop the commercially managed systems. This ensures that all the required features are included.

Overall, the Open Source ERP system has its advantages and disadvantages over the managed service. However, the fact that the commercial solution is out of reach for many small and medium-sized businesses makes the Open Source ERP a viable solution to streamline their business processes.

Top 10 Job Shop ERP Software

What are the top 10 Job Shop ERP Software systems available? Based on our experience and software currently available in the market, we have put together a list of likely Job Shop ERP Software that a company may look at when choosing their next ERP solution.

Job Shops are unique and don’t fit into the realm of traditional ERP systems with their large batch run MRP (Manufacturing Resource Planning) systems. What Job Shop ERP Software must provide is the ability to plan and account for small run or even one-off parts manufacturing. A traditional MRP won’t cut it.

Job Shops are often sub-contracted manufacturers who specialize in small jobs or specific small runs of a particular machined part. Often specializing in a particular metal fabrication, or a specialization around certain types of products, ie. fasteners or machined bar stock. They provide unique services for larger manufacturing operations such as working with unique materials, incredibly tight tolerances, the ability to generate quickly manufactured prototypes, design and CAD assistance, reverse engineering, quick-turn parts, in-house tooling amongst other services.

Job Shops serve a number of industries, including Aerospace, Automotive, Furniture Manufacturing, Machining, Medical, and specialty manufacturing. While this is a broad list of industries, the key elements of a job shop remain the same. They all have small runs or batches, unique parts for a contracted order, demands upon them to reduce costs while shortening delivery times, and the requirement to be flexible in their design, setup and manufacturing processes.

Because of these unique factors, most off the shelf manufacturing software does not fit these smaller manufacturers. As such, we have listed below our Top 10 Job Shop ERP Software solutions (in no particular order). Were possible, we have included links to request a demo or get a price quote.

Our List of the Top 10 Job Shop ERP Software

1. Fitrix ERP
About | Demo | Pricing

2. Epicor Manufacturing Express Edition
About | Demo | Pricing

3. Made2Manage ERP
About | Demo | Pricing

4. JOBSCOPE Enterprise Edition
About | Demo | Pricing

5. Intuitive ERP
About | Demo | Pricing

6. E-Z-MRP Manufacturing Software
About | Demo | Pricing

7. ECi M1 ERP Software
About | Demo | Pricing

8.DBA Manufacturing
About | Demo | Pricing

9. Global Shop Solutions
About | Demo | Pricing

10. Exact Globe Manufacturing Software
About | Demo | Pricing

Worth Noting: (Not an ERP software, but a Job Shop floor control system)
Shopvue Job Shop Floor Control System
About | Demo | Pricing

Other Job Shop ERP Software

The list above is 10 potential vendors, but you may want to look at our Vendor Directory for other candidate Job Shop ERP Software vendors. Keep in mind that sometimes a vendor can support Job Shop ERP Software requirements, but that is not their primary focus. This is something to look for, but also should be something to watch out for. Just because they say they can handle job shop requirements, does not mean that they are successful at it.

If you need more assistance in your search, you can talk to the experts at Software Advice to help you narrow down your search. Call them to schedule a free, no-obligation consultation.

Be sure to check out the Free Software Evaluation and Selection tools we offer. These tools can save you time and money as you proceed on your evaluation of different systems.

We hope that this top 10 list has been useful.
Let us know if there are other Job Shop ERP Software that you think should be included.

Job Shop ERP Software

Top 7 tips for getting an ERP Software Selection on Track

You’re looking to find out how to get an ERP Software Selection back on track. This means that you probably have an evaluation that is going poorly and you are being led by the ERP software vendors, right? The ERP Software Selection process can be a struggle, but they don’t really have to be. If the ERP Software Selection follows a clear process, then things will run smoother. The trick is to not let the software vendors drive ERP Software Selection process.

Key ERP Software Selection Tips

1. Get Senior Management on board now
2. Be sure you have clear goals
3. Define your both your technical requirements and business requirements
4. Have a neutral third party manage the process.
5. Eliminate vendors early, and without regrets
6. Be sure you are working with the right software providers
7. Reassess your internal team

One of the top things you can do to ensure success of any Enterprise Software Selection project is to ensure that senior management is on-board with the project and that they fully support the goals of the project. If top-line management is not supportive of the project, there will be departmental and division contentions during the implementation. Often these arise during the selection process. Usually it is the case of one department competing for the same resources as another department. This often will show up on conflicting requirements for the system. Senior management must be the tie-breaker and define the future path the system should take.

If the project does not have clear goals, it is bound to flounder. Goals should not be general such as replace our system by next January. The goals should have significant business impact. A goal like “Reducing inventory by 25% while increasing sales throughput by 15% one year after implementation” is a clear goal that benefits the business and lays a stake in the ground that the system must achieve. You may find that the system can help you exceed that goal, but if you do not measure in a clear goal such as this, how will you know you have succeeded? The pain and inconvenience of an implementation will create a lot of problems within the company, but a clear goal is a great focus agent to get past the disagreements and personality conflicts.

ERP Software Selection Requirements

Often a company will define a set of requirements for a system and these requirements will have no impact on the decision of the system. Requirements need to be business driven and be tied to the factors that make your company successful. Look at the following two requirements and see which one makes it easier to help in a selection:

1. System must have serial and lot tracking.
2. System must be able to report on all shipments by a particular lot with traceability back to the original batch or incoming receiving document.

These two statements are essentially asking for the same thing, but when it comes time to solve a problem, the second requirement will distinguish of the system can solve the problem. Define your requirements around business processes, not about system features.

Maximizing Business Performance through Software Packages: Best Practices for Justification, Selection, and Implementation

Additionally, most systems nowadays can handle most of the key things you need. They all do General Ledger, Accounts Receivable, Inventory, etc. The question is, what are their strengths and what are their weaknesses. Defining specific business process requirements around the things that you do frequently is the best way to ensure that you get a system that matches your needs.
Many times when companies get in trouble with an ERP Software Selection, it is because they tried to manage it on their own. Often the IT manager or even the Controller will get the task of defining requirements and shepherding the system selection and all the vendors, value-added-resellers, and reference clients. Since they already have a key role in the company, it often a daunting task to get them to manage the selection process and do their day job. Because of this, it is often advisable to get a third party consultant involved to manage the process. The key thing about this consultant is that they should not have any financial ties to any vendors. They need to be non-biased and have experience in many ERP Software Selection projects.

Why does this help? There are a few reasons, but the key reason is that they can supplement your time and handle all of the details around gathering requirements, building scripts, arranging demos, and being the one to have to tell the vendors “no” at the end. Further, they usually come with a broader vision of how the end result can be achieved. They also make a living out of doing these selections and they know the pitfalls and can help you avoid many of the vendor “tricks” that are often played to ensure that the salesperson wins the sale. If your selection is already off track, bringing in a consultant can often help realign the various team members and refocus the selection.

As you move into the ERP Software Selection process, it is important that you eliminate as many potential candidate software systems early on, so you are not wasting your time and efforts looking at a broad range of systems. Ideally, you start with a long list of 10 and whittle that down to the top two or three. Get the software vendors that are clearly not matching your requirements out of the running as soon as possible. Use resources to help you define the best fit for your company. Many times, the vendor will bow out if they see they are not a clear fit to your requirements. But with each elimination, document why they were eliminated, so that at the end, when someone asks, “What happened to XYZ software, I thought they were a good fit”, you will have the answer as to why they are no longer being considered.

Once you have chosen the two or three candidate software systems, you want to make sure that you are working with the right provider. Software is sold either direct or through indirect channel partners. The channel partners, or value-added-resellers (VARs) each come with their own specialties. You need to find out are you dealing with a VAR or with the Software company itself. If you are dealing with a VAR, you need to make sure that they are the best VAR to help you implement the software. Do your research early, because the last thing you want to do is to change VARs late in the process. This causes all sorts of problems, most of all it delays the selection by weeks or months.

When dealing with VARs, talk to the Software Developer (see our directory of ERP software vendors here) and get their take on the VARs strengths and weaknesses and see if there may be another company you can speak with. Interview the two implementers (VARs) and see which company is a best fit to work with your company. Often it comes down to personality, one group was too arrogant, one group just didn’t get us, or even that VAR’s sales rep had a horrible personality. Find the fit because if you select their ERP software, you will be living with these people for 6-9 months or more. You want to make sure that you can work through the implementation with them as well as later rely on them for ongoing support.

If you are dealing with the software company direct, the same questions apply, but in a sense of is this the software to get married to? You need to be sure that not only the software works for you, but also that the people and company are a good fit to work with your company.

Lastly, take a good, hard look at your team. Do you have functional members from each department? Do they each bring a wealth of experience about their area? Often the hardest thing about the ERP Software Selection process is getting the best people in your company and pulling them out of their jobs to take part in the critical task of selecting a new system. They are usually the person most in demand. They need to be the one to help select the system as they know the current system and business processes inside-out.

Often an ERP Software Selection will go badly because the best people can’t give the time to make the process happen. This is why it is so important to have senior management involved and have a clearly stated set of goals for the project. Having a third party to help move things along and to look at your business objectively will aid tremendously in making the ERP selection process easier. Most of all, by putting all seven of these tips together, you will ensure that you have a successful ERP Software Selection process and that you end up with the best software for the success of your company.

ERP Software Selection

Adding Value to your ERP Requirements

ERP Requirements Refinement

When you start a system selection, you first need to determine which business process are the “value add” processes. In other words, which processes in the business add to the value of the service or product you are providing to the market. The customer is only willing to pay for those activities that help you produce, ensure quality, or account for your product or service. All other activities are waste.
ERP Requirements

When defining your ERP requirements, you need to be cognizant of these “value add” activities. These are the activities that should be captured in your requirements. Non-value-add activities should not be included in your ERP requirements. These do not produce results that create additional value to the product/service and these are only distractions when it comes down to the actual implementation.

ERP Requirements and Lean

All of this comes from Lean Manufacturing or the Toyota Production method. Essentially, as stated above, you want to eliminate “Muda” or waste in the process. Many firms have successfully implemented this in their manufacturing processes, but a smaller group have implemented this Lean system in their business office processes.

Consider this example. When defining your ERP Requirements you determine that there is an accounting process that has people spending 2 man days per month reconciling the cost of keeping track of the tools used in manufacturing. Does this process add any value to the actual production of the product? Possibly, but it sounds like this process can be reworked and possibly using the new ERP system you can eliminate this process and drive the data down to the actual transactions on the shop floor. You don’t need accountants researching the transactions. What you might need is a system that tracks the tools and their usage as part of the production process and can give a report on what these transactions cost. These transaction costs can then be factored into the pricing of the product, without the overhead of 2 man days of reconciliation.

The time when you are defining your new ERP Requirements is the perfect time to start looking critically at your processes and keying in on what brings value to the process. Then you can design your new system (both process and software) around those items that bring value to not only the customer but also the bottom line.

Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updated

Mapping your ERP requirements

When you are cataloging all of your ERP Requirements, you should write down all of your requirements (perhaps on a spreadsheet) and then give them an identifying number (such as R1, R2, R3, etc.) You can then evaluate each of these requirements with the business team to determine if the requirement is one that you want to carry forward into your deliverable of requirements that will be provided to the ERP software vendors. There is an excellent article on how to do this mapping, by author Brett Beaubouef, that describes this process.

He advocates that “Starting with the desired business results ensures that we drive to only those requirements that directly support true business value. First, it is an exercise that really puts into perspective the purpose of a business model (results). This exercise is not only useful to the project team but also the business stakeholders. Second, it is an approach that can help you justify why certain existing business activities are not being carried forward in the new business solution. Third, taking a business results oriented approach enables your project team to be more successful at focusing on the right business requirements and not wasting time on capturing requirements for non-value-add activities. ”

Another useful article that you may want to examine is the article 7 Ways to Fail in an ERP Selection

Keep in mind that some ERP Requirements that you identify may not seem valuable at first, but you need to review these requirements with the functional user team to ensure that key processes are not eliminated by mistake. There may be requirements that are a requirement because of a legal concern or perhaps a health and safety issue.

In the end, if you have successfully mapped out your business processes and defined these in your ERP Requirement list, then you will be a lot closer to selecting a system that actually functions in a way that brings value to everyone.

We hope that this will aid you in better defining your ERP Requirements.

The Top 10 Process Manufacturing Software

Top 10 Process Manufacturing Software

Process manufacturing is a unique vertical market that is unlike traditional manufacturing in that thecompanies in this niche process liquids, chemicals, and fine blended ingredients. Usually the inventory is combined in a batch based on a recipe or a formula, the inventory is not assembled, but rather blended.

Many different industries use Process Manufacturing ERP software. Companies that make paints and coatings, chemicals, foods, or any other liquids based product manufacturers would benefit from this type of software. This results in some unique properties, including yield factors and re-blended waste products.

Because of these unique factors, traditional manufacturing software does not fit these manufacturers. As such, we have listed below our Top 10 Process Manufacturing Software solutions (in no particular order):

Our List of Top 10 Process Manufacturing Software

Other Process Manufacturing Software

The list above is 10 potential vendors, but you may want to look at our Vendor Directory for other candidate Process Manufacturing Software vendors. Keep in mind that sometimes a vendor can do Process Manufacturing, but that is not their primary focus. This is something to look for, but also should be something to watch out for. Just because they say they can do process manufacturing, does not mean that they are successful at it.

If you need more assistance in your search, you can talk to the experts at Software Advice to help you narrow down your search. Call them to schedule a free, no-obligation consultation.

Be sure to check out the Free Software Evaluation and Selection tools we offer. These tools can save you time and money as you proceed on your evaluation of different systems.

We hope that this top 10 list has been useful. Let us know if there are other Process Manufacturing Software that you think should be included.

ERP Software Demos – 7 Things to Watch Out For

ERP Software Demos are usually a key step in the process is evaluating ERP Software. This is usually performed by the software provider, but sometimes it is the value added reseller who demonstrates the software. There are usually two software demos provided by each vendor during the process.

The first step is an high-level demonstration of the overall look and feel of the software and it shows general functionality. This is usually to help you narrow down your list of prospective vendors.

The second ERP Software demonstration is very detailed and speaks directly to your unique software requirements. Ideally, you have provided a list of requirements and even better a demonstration script to the vendor that explains step-by-step what you want to see from the software.

We’ve compiled a list of seven items that you should watch out for when evaluating ERP software. These are common things to tune into when watching the software demonstration to ensure that you are getting to see the real software functionality in action.

ERP Software Demos – key things to watch for

1. Tell, but no show

Vendors tell you, but do not show you

One of the most often used tricks in demos is where the vendor discusses a requirement and yet does not show how the system works. You should enforce a demonstration of the methods that the software uses to fulfill the requirements. Often this maybe on oversight on the person demonstrating the software, but many times this could be a very difficult process that they don’t want to show you.

2. Unnatural fit to requirements

Vendors spend time working on getting your requirements to work in the demo but, does it feel natural that it can be done in “real life”?

Often a complex requirement can be done by the system, but it takes a number of “unnatural acts” to make it work in real life. This is a red flag for a process problem. There are two solutions, one is that you adapt the business process of the software, or two, you live with the complex processing in order to fit your business method. If you think you can live with the software process, then mark this down as a good function. If you cannot live with the software’s best practice and you must use your process, resulting in a work around method in the software, then consider this feature as a negative response to your requirement.

3. The “herky jerky” ERP Software Demo

The speed of the demo changes with certain functionality

This can be related to number 2 above. This is more a feeling to the flow of the software. An unaturally paced demonstration usually means that there are some features that the software does not do well. Sometimes it relates to your evaluating user’s questions. Be aware of the pace and determine if the unnatural flow is due to software issues or some factor in your demonstration script.

Many times the vendor will ask if they change the order of the demonstration script to fit the flow of the software. This is usually okay, so long as they have hit upon all the areas that your script requires. If you limit them to sticking strictly to your script, then you may end up with an unusual flow to your demonstration.

4. “Its in the next release!”

Vendors offer solutions that are they are not able to show

This is a classic ERP Software Demos maneuver. Your requirements cannot be fulfilled by the current revision of the software, but the vendor assures you that it is slated for the next release. According to them, this will be available by the time you go live on the software. This is often true, but keep in mind that new release features often bring bugs with them and are not as polished as older functionality. Further, you may end up being the first ones to use this new functionality. Just keep this mind and consider using this as a point of negotiation, or simply document these features for your reference so that during the implementation you can keep track of when these items will actually be released. It is not uncommon for something that is slated for next release to be bumped and postponed until a later release.

5. How can I get there from here?

Vendors fly around the screens, but there is little sense to how they are navigating

Many systems have shortcut keystrokes. You sometimes can type in a short code and the screen will jump to another window. Or, the code is a numeric value representing the screen you want to go to. So the real question is how useful is this to the typical user within your company? Will they be able to grasp the jumping around shortcuts or will they rely on the navigation menus. Are the menus cumbersome? Often these shortcuts are implemented in systems where the navigation is not so straightforward. Test a few use cases out on how a typical clerical person might get around in their daily work. Good systems allow you to create custom menus for individual users.

6. Great feel getting data in, but can’t get data out

Overall feel to the software: is it efficient, can you see yourself using it on a daily basis, and does it provide the information you need?

Often you will run across a great ERP software. The look and feel is good and your users will really like it. But the question is, can you get the information you need out of it? How are the lookup screens? How are the data views (information providing screens)? You need to be careful of systems that require all data inquiries in the system to be only output as a report. Ask the vendor to demonstrate things such as an A/R or A/P account information screen, or Supplier/Customer profile screens. How easy is it to see on-screen the data you need to run your business? How easy will it be to answer customer inquiries?

7. The mystery reporting system

Input screens, Output screens and Reports

This is closely related to number 5 above. There are some ERP systems that don’t have a native reporting system and require you to use Crystal Reports, or some other tool to get at your data. Be aware of this and be sure to have a demonstration of the reporting system. Don’t look solely at the reports themselves, but find out how easy or hard it will be to create and organize custom reports. This is especially true of financial reports as they often have their own report writer separate from the main system report writer.

ERP Software Demos Summary

Lastly, if you are in the process of looking at vendors and deciding who you should have in your ERP Software Demos, you should look at this free vendor analysis tool from SoftwareAdvice.com that helps you evaluate the best vendors for your company. Also be sure to check out ERPandMore.com’s ERP Vendor Directory to find candidate vendors for your ERP Software Selection.

ERP Software Demos – Anything else?

Any other useful ERP Software Demos tips? Please post your comments below.

ERP Software Demos

How to determine your ERP Evaluation Criteria

Defining your ERP Evaluation Criteria is essential for paring down the vendors and getting to the final choice. There are two focus areas for determining your selection criteria:

Determining your ERP Evaluation Criteria

1. ERP Evaluation Criteria – Process

The Process analysis for determining your ERP Evaluation Criteria is the method you would use to determine the flow of data through the system and how it would follow along your established or to-be business processes. For example, following a process flow of quoting an order, receiving the order, manufacturing or purchasing the product, shipping, and finally invoicing the order is known as the order-to-cash process flow.

There are other anther ERP Evaluation Criteria processes such as procure-to-pay, which maps the inventory requirement through the accounts payable billings. Another example could be the HR process of recruiting though retirement.

Using Process Flow documentation to determine your ERP Evaluation Criteria

By mapping out these processes in a tool such as Microsoft Visio Standard 2010 and developing a detailed flow diagram, you will have a good understanding of how your business operates. With this knowledge, your evaluation of various business management software will be a lot easier. Further, you can see how closely the software’s process flow mirrors your company’s or how disjointed the software is when it comes to your business.

2. ERP Evaluation Criteria – Functional

ERP Evaluation Criteria for the system is the detailed list of all of the things you need the system to do, from processing purchase orders, processing a sales order, to invoicing a client and producing financial reports. These are the nitty gritty things that your system should do. A good place to start is to evaluate your current system. What are the functions that the current system does well? Include these in your list. What are the things that your system does poorly, include the desired functionality in your list.

Your list should not be 10,000 lines, but rather it should look at those items that make your business unique. For example, most every business has to cut A/P checks. So most systems can do that. So do not list as a requirement that the software should be able to cut A/P checks, rather make your requirement specific to your company, such as “System should be able to cut 3 copy laser checks, with reprint capability.” That very specific requirement will help you distinguish the vendors from one another.

A good place to start is with an ERP Evaluation Criteria Template. ERPandMore has many different templates to assist you in evaluating various ERP software venders and have best practices built in. In using these as a starting point, you will save yourself countless hours in both preparing these criteria templates as well as in differentiating the vendors your are looking at. We hope this has helped to answer How to determine your ERP Evaluation Criteria

ERP Evaluation

If you have ever been through the ERP Evaluation process, you understand the stress and pressure that is involved with selecting ERP Software. Selecting ERP software is like getting married. It can have a lot of unknowns. If you are just beginning the process, hopefully this article will provide you useful tools to streamline your efforts. An ERP Evaluation process takes time and the level of effort for properly selecting a provider and implementer can be tremendous. Here are some key things that you need to keep in mind.

A company only goes through an ERP Evaluation, on average, only once every seven to ten years. As such, they usually do not have resident experts in selecting software. Companies do everything from the extremely methodical analysis taking years, to the rash signing of the contract at a software convention with no investigation at all. How long should a proper search take from start to finish? If done in a thoughtful and yet expedient manner, it should take anywhere from three to six months. This really depends upon the number of candidate software vendors you are looking at and the degree upon which you investigate the implementers.

Reducing time on you ERP Evaluation

One of the best ways to keep the selection time down is to hire a coach. This coach can be a consultant, a seasoned colleague from a trade association such as APICS, or a Software Selection Service. In either case, they will be able to steer you clear of some of the obstacles that you are likely to run into. You want to choose someone that has a clear understanding of the ERP Software landscape. They must have been through several ERP Evaluations previously.

ERP Evaluation of Internal Processes

Once you choose your guide, you then need to look at your internal processes. Ideally, you can document your business and answer the following questions:

What is the general industry of the business are you in? (ie. Manufacturing, Distribution, Professional Services, Retail, Property Management, or Construction, etc.)
What are the things that distinguish your company from others in your industry? (ie. We have a retail store, we only sell through distributors, we manufacturer locally [or offshore], we have a strong customer support staff.) Don’t stop at one item, list out as many as possible.
What is your budget? Are you looking at $50,000 or a $1,000,000 system? (Including implementation services and maintenance contracts)
What does your current system do today that you want to keep as functionality and what does it do horribly that you want to improve upon?
What are the key requirements for each of your various departments or functional areas? Both #4 and #5 should be documented in a spreadsheet with columns to indicate if they are “Must-haves” or “Nice-to-Haves.”
What are the key business process that the system must enable? This is usually a flow from Order to Cash receipts (ie. Order, Inventory management, manufacturing, shipment, Invoicing, and finally payment) or on the other side, Procure to Pay (Inventory Shortage, Requirements Planning, Purchase Requisition, Purchase Order, Delivery, Stocking, Invoice Receipt, Accounts Payable) and ultimately financial reporting and analysis. Today, Customer Relationship Management (CRM) plays a large part in a business processes. This includes marketing to lead to account management to sales opportunity processes and product support with customer service processes. These processes should be mapped or at least documented to both a current state and a wishful future state.

With these ERP Evaluation factors, you now have the basis for an objective review. You can use the list of requirements for your analysis of the vendors. Often the requirements are sent out as a Request for Proposal (RFP) and the vendors are scored based on their requirements. The top two or three vendors are then invited in to demonstrate their product. Usually that begins with a walk through of the company and an extensive question and answer session so that the vendors can get a sense of who you are as a company and learn more about your requirements in preparation for the demonstration.

Using your process documentation, a script should be provided to the vendors who will be involved with the ERP Evaluation process. You can then use the script as an evaluation factor to compare the process flow of the various software candidates. The vendors should be held closely to the scripts processes. Many times, they will want to deviate to the latest release module that has nothing to do with your business, but looks “really cool.” Keep them on track.

Once all the demonstrations are completed, there is usually a sense of which vendor showed their software in a way the more clearly demonstrated that they could fulfill your requirements. You may have eliminated the last place contender, But this is not the decision point yet! Along with the demos, the vendors also need to provide a price proposal. These proposals should include the following:

Software License cost
Annual Support Agreement cost
Implementation costs
Estimate of hardware infrastructure costs
Any other miscellaneous costs

You can also get references that you can either call or visit. In our experience though, these are only good to find out about the user’s experience with the software as they will tell you nothing but good things about the vendor, since they were selected because they are favorable references. But it might be good to hear about their implementation and their user’s reaction to the software.

Once you have all of these facts, you are ready to begin the next phase, which is the negotiation. Your evaluation still needs to look at the financial and contractual obligation you will be signing up for. At this point, you usually are down to the final two. One strategy is to play the vendors against one another, but this is sometimes not a good strategy. They are wise to this and will often dig in their heels. The best thing to do is to give them financial and contractual targets that will convince you that they are the right vendor for them. Don’t be afraid to ask for a lot more than you think they will give. They might just give it to you. Another key strategy is to negotiate at the end of the month. Ideally, the end of the month at the end of their fiscal quarter or year is ideal. The vendors are hungry to show the sale on their books and will often give deeper discounts.

Now with all the facts, you can make your choice. Once chosen, both you and the software provider will need to learn to compromise and respect the other’s view as you proceed to implement. Software can only be configured so far, before you need to change your processes. However, if you ran the evaluation process correctly, you will have selected the best fit for your business, so if there is any change to your processes, it will be by adopting the software system’s best practices. Thus, with your well-run ERP Evaluation, you have laid the groundwork for an even happier marriage!

Download the Ten Steps to Selection ERP Software now!

Download the Ten Steps to Selection ERP Software now!

ERP Evaluation