In an enterprise resource planning (ERP) implementation, selecting the wrong platform could mean ending up with software that simply “sits on the shelf.” Unfortunately, many organizations seal this destiny when they fail to adequately prepare for software selection.
Today, we’re sharing eight common problems in ERP selection and advice for making the right decisions, instead.
8 Common Problems in ERP Selection
1. Lack of Strategic Alignment
The ERP software you select should help you meet your organizational goals. In theory, this should be straightforward, but it isn’t always that simple.
For one, many organizations don’t have internal alignment regarding their goals. Don’t let this be you. Before you begin selection, take the time to meet with stakeholders across departments to understand their needs. Then, meet with executives to understand what they want in a new ERP system.
Continue these discussions until everyone is on the same page.
2. Lack of Requirements Gathering
Software requirements gathering is the process of documenting your current business processes, reengineering them as necessary, and determining what software functionality you need to support your future state.
As you gather requirements, be sure to seek multiple perspectives, including:
- End users
- Executives
- Partners
- Stakeholders
- Customers
Without this step, you’ll find yourself with a system unable to meet your needs. As a result, you’ll need to invest in expensive software customizations.
A Failed Payroll System Implementation
Panorama’s Expert Witness team was retained to provide a forensic analysis and written report to the court regarding the failed implementation of a major software developer’s ERP/payroll system.
3. Lack of Employee Involvement
An ERP implementation can’t operate in a silo. It’s important to involve your employees as early as possible.
From requirements gathering to ERP demos, be sure to include your employees at each critical juncture. This is a key component of organizational change management.
If employees are excluded from the planning process, the system you select may be misaligned with your organizational needs because you didn’t seek this input from employees.
4. Misunderstanding Available Functionality
ERP software vendors are experts at making their platforms look as appealing as possible. As such, it’s common for them to demonstrate system functionality that they know will pique your interest. What they don’t always tell you is that some of these features are “coming soon” and aren’t available just yet.
This isn’t necessarily an issue as long as you clearly understand the timeline of release. Will the features be released in time for your go-live date, or will you be working off the current platform for the foreseeable future?
Choosing a vendor based on demonstrated functionality that you assume you will be able to access is a recipe for disaster. We recommend making your selection based on the features that are or will be available for your organization at go-live.
Along the same lines, it’s important to understand what functionality is available out-of-the-box and which requires third-party add-ons. These details are often glossed over in an attempt to woo buyers.
If you don’t ask vendors specific questions, you’ll make dangerous assumptions which can heap extra time and costs onto your project.
5. Succumbing to Bias
There are many ways that bias might inform your ERP vendor selection.
For instance, you might be tempted to choose a software partner simply because of their reputation in the market. This is why the SAP vs Oracle dilemma is top of mind for so many organizations.
In other cases, you might be partial to a system that you know a competitor is using with great success.
Regardless of the reason for bias, allowing anything but the facts to guide your decision could derail your efforts. Ultimately, you need an ERP platform that closely meets your organizational needs. This might be a vendor you’ve never heard of, but as long as the vendor has strong references and fits your business, we say, go for it!
6. Purchasing Unnecessary Functionality
During the ERP selection phase, it’s easy to get caught up in the bells and whistles of the top ERP systems. While these features could benefit your business, they take time and money to implement and may distract you from higher priority needs.
Instead of purchasing every module and feature at once, start with the ones that address your most urgent needs. If you find you require additional modules down the road, you can always implement those in later phases.
7. Signing a Vague Statement of Work
Make sure you clearly understand what’s included in your vendor’s statement of work. Don’t sign on the dotted line if any of the following is unclear or lacking:
- Project deliverables
- Roles and responsibilities
- Details regarding change management activities
If any of these areas are murky, we recommend asking your ERP vendor for clarification before moving beyond the point of no return.
8. Failing to Negotiate
As you close a deal with your vendor, make sure you aren’t leaving any money on the table. Often, you can negotiate to achieve more favorable terms and lower costs.
However, take note: there is an art to this process, so working with an ERP contract negotiation expert is a must.
Avoid Problems in ERP Selection
The selection phase of your project sets the stage for everything that follows. When carefully executed, the result is a successful ERP implementation that transforms your organization from the inside out.
In contrast, falling prey to common problems in ERP selection, could lead to ERP failure
Selection can’t be rushed, even if this means you take more time than initially expected. Our ERP software consultants can help you slow your team down and convince them to proceed with careful consideration. Contact us below to learn more.
