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

Enterprise Resource Planning 100 Success Secrets – 100 Most Asked Questions: The Missing ERP Software, Systems, Solutions, Applications and Implementations Guide

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Enterprise Resource Planning 100 Success Secrets – 100 Most Asked Questions: The Missing ERP Software, Systems, Solutions, Applications and Implementations Guide

Addresses the top 100 Enterprise Resource Planning consultancy & education forum questions, with tips & success factors on investigating, evaluating & implementing ERP Software, Systems, Solutions & Applications.

Enterprise Resource Planning 100 Success Secrets – 100 Most Asked Questions: The Missing ERP Software, Systems, Solutions, Applications and Implementations Guide

ERP Vendor Selection

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: How to Assess Accounting Software Vendors Viability

ERP Vendor Selection

When to use ERP Software Consultants

Many times companies try to select and implement ERP software on their own. Sometimes this works and sometimes it doesn’t. So the question is, when should a company use an ERP Software Consultant to guide them in their ERP Selection or ERP Implementation?

The answer is not so simple. If a company is mature and has the resources that can look independently at the business processes, then it may make sense to embark on a selection on their own. Most of the time in mid-market sized or even smaller clients, then it is difficult for them to 1. Spare the resources and 2. Look at the business processes objectively.

Any good ERP Selection begins with a company evaluating their business processes. Borrowing from the Toyota Production system (aka Lean Manufacturing), a company should first eliminate waste and then consider automating. Automating bad processes will only make things worse faster. However, automating good processes will help grow the business and promote better communication.

: Image via Wikipedia

ERP Software Consultants – Best Practices

The real question becomes how much is the company willing to flex their processes to adapt to “best practices” that are usually built into a commercial software system. If the company is flexible (and this takes a lot of leadership to make happen), they can select a system and model their business around that system. The larger commercial systems, such as those from Microsoft, Infor, SAP, Oracle, and others have all grown up from thousands of implementations from all sorts of companies. They have developed efficiencies that many companies who adopt the software’s methodology can benefit from.

The real key is understanding the fit of a software package to the business. If the company does some niche processing, then a mainstream commercial package may not fit. However it the company is a distributor or a manufacturer of discrete products as an example, then a standard mid-market product would likely work for them.

So how do you choose the software, it is back to the business processes and the key requirements. “Key Requirements,” not just all requirements. The things that the old system does not do well and those things that it does very well are good places to start. Additionally, discover those requirements or processes that set your company apart from others in your industry. Usually processes around your competitive advantage are part of the key requirements.

Going back to the original question, should you use independent ERP Software Consultants? If you have a clear and objective understanding, you can afford the time to really research the vendors and you have a strong will with salespeople, then going it on your own might be reasonable.

If you do not have the time, the understanding of the ERP Software market, or the will power to manage at an arm’s length the software vendor’s salespeople, then an ERP Software Consultant would be a wise choice.

ERP Software Consultants

Netsuite to offer an ERP Manufacturing Edition for Discrete Manufacturing

Just saw that Netsuite together with Rootstock Software are putting together a SAAS based ERP offering for Discrete Manufacturers.

This seems to be a big win for Netsuite as there are very few, if any, good Manufacturing Software packages available as a SAAS offering. It also fills the gap in Netsuite’s offerings. Currently they have supply chain and distribution management, but nothing for actual production.

It will be interesting to see how SAAS manufacturing will tie into MES (Manufacturing Execution Systems) and Demand Planning systems.

You can read the article at ERP-Software News.

ERP Survey – Please Participate

A fellow ERP blogger is running a survey on his blog about ERP implementation strategies. Specifically, which implementation strategy (big bang, phased roll-out, or parallel adoption) has the best success rate.

Please help by completing the survey found in an article at: http://www.softwareadvice.com/articles/manufacturing/erp-implementation-strategies-1031101/

Green ERP?

With the drive to being more environmentally responsible, corporate management is (or will be) setting initiatives to reduce carbon emissions. While moving towards Green and reducing the carbon footprint, the question becomes, how do we manage this? Should ERP be modified to include the tracking of carbon emissions?

ERP systems are essentially large accounting systems that capture oodles of data and summarize it in a report to management. Traditionally, they are focused on financial, operational, human resources, and other resource data reporting. It would seem that the next logical step would be to begin tracking and reporting on carbon footprint data. It is surprising though that major ERP vendors have not yet announced this sort of system module or functionality.

[ReviewAZON asin=”0470393742″ display=”inlinepost”]With efforts in reducing the carbon footprint focused on the data center, such as reducing power consumption of the server farms, management may be missing the point. FedEx, for example, has reduced fuel bills by up to 30 per cent through better route planning for its trucks. That justifies a lot of server power.

Without the tracking of this sort of key data, management may be focused in the wrong direction. With proper information and analysis, companies can make better decisions and reduce emissions where it gives the most added value. It seems that an ERP system would be perfect in tracking, analyzing and notifying management on the results of their green strategic initiatives.

What do you think?

ERP as a Service

Software as a Service (SAAS) is growing significantly in the CRM space, but it has yet to take off in the ERP market.

Gartner predicts that at least one-third of business application software spending will be on service subscriptions rather than on product licenses by 2012. The analyst firm also predicts that by 2010, 30% of new software purchases in the Asia-Pacific will be delivered via an application utility or Software as a Service (SaaS) model.

The following article looks at ERP as a Service (SaaS applied to ERP) and weighs the two sides of the coin. (Note: the article is from India, so it has a South Asia slant to it, but it is still very informative)

http://www.expresscomputeronline.com/20080721/market02.shtml

Tags: ERP, ERP as a Service, SAAS