Requests for Information (RFI) and Other RFx
After you’ve shortlisted several ERP applications, it’s time to send your RFx documents to those vendors. These include formal requests for proposals (RFPs), quotes (RFQs) and other information.
3. Technical Validation
Once you’ve submitted information requests to vendors and received responses, it’s time to thoroughly evaluate the available ERP systems.
Technical Evaluation Scorecards
Tech evaluation scorecards are an invaluable tool when it comes to selecting ERP software. Comprehensive scorecards accurately and thoroughly evaluate ERP systems, providing a detailed breakdown of every function and capability. You should assess the ERP system using at least four criteria: cost, supporting user needs, improvement of internal processes and flexibility.
Demos, Proof of Concept and More Questions to Ask
After you’ve narrowed down your list of vendors by using tech evaluation scorecards and proposal information, it’s time to request demos from the vendors. It’s very important to see an ERP system in action, and a reputable vendor won’t have any trouble arranging a thorough demonstration. In addition to demos, request documentation that addresses how the ERP system will meet your business needs.
For further help during the demo process, here are some questions to ask during an ERP demo to ensure the software is the right fit for your company:
Can the software be implemented in phases? Panorama reported that 61 percent of ERP executions run longer than expected. Implementing ERP software in stages will help improve operations without disturbing the flow of business. It will also allow training to occur in separate stages, allowing most of the company to function as usual as one area or department focuses on learning to use and manage the ERP.
How are technical problems handled? One virus can wipe out an entire program. Find out how the vendor handles malfunctions and service interruptions. See if your ERP vendor provides comprehensive support or if your IT team will be handling most issues unaided.
How is training handled? Will the company need to create and provide all of its employees with training, or does the vendor offer training? Find out what the cost of training will be. You’ll win out if you minimize the cost of training but maximize its effectiveness. ERP software won’t benefit the company if nobody knows how to use it correctly.
What are the costs of hardware and software replacements/updates? In order to come up with an accurate cost-benefit analysis, you need to uncover any hidden expenses. During an ERP demo, find out how likely it is that the hardware (if applicable) will need to be replaced and in what time frame. Ask what’s involved in regular maintenance so you can decide whether it can be handled in-house or by the vendor. Inquire about the costs of updating the software as well.
What features does the software have for managing inventory and logistics? For many companies, reducing the amount of time that employees spend working on inventory and shipping can greatly improve efficiency. Find out if the software can provide alerts when inventory is stocked incorrectly or when a particular product is low. Can the software automatically calculate the most economical shipping method? If inventory management can be automated, it can free up valuable resources to increase productivity in other areas of the business.
Can the software streamline customer service? Find out how the software can be used to simplify your customer service needs. Many ERP platforms can analyze client data to help not only the customer service department but also the marketing and sales departments.
How can the software be used in the human resources department? An ideal ERP will help you manage an employee from the time he or she is hired. Being able to access policies and procedures, timesheets, payroll and training systems in one place can help those in the human resources department increase their productivity.
What are the mobile capabilities of the software? If your company operates out of various offices or if your sales team travels regularly, it is essential for the ERP to be accessible from outside the office. Check out the intuitiveness of the mobile interface and find out which teams can benefit from this accessibility. Ask about the security of the software when accessed from a mobile device.
How long should the ERP last? The longevity of an ERP can vary from vendor to vendor. While many companies start to look for a new system after five to 10 years, seven percent of businesses use an ERP that’s been around for 15 years or more. Find out how long the ERP will work for your company so you can budget for upgrades and plan for potential growth.
ERP software can pull everything that’s going on in the different departments of a company together without much additional manpower. During an enterprise resourcing planning software demo, make sure you ask the right questions to ensure the ERP has the exact capabilities your company needs.
4. Financial Due Diligence
Business Case Review
Evaluate the capabilities and cost of an ERP system against your business processes and needs, your organization’s budget, and the projected savings to ensure the ERP system will benefit your business and that it is financially viable at this time. Budgeting concerns and expenses ultimately determine the long-term viability of an ERP system.
Consider what the true cost of ownership of implementing an ERP project will be. Will fees be one-time or recurring? If recurring, will they be annual or monthly fees? What are the costs of installing the solution on-premise versus in the cloud? What would the estimated costs be to update the software if your business underwent a restructuring? Also consider whether the vendor will provide support and training during and after the installation, which may affect your costs.
Evaluating Potentially Hidden Expenses
Before choosing an ERP, you should calculate the costs of replacing hardware, updating the software program and performing routine maintenance. Proprietors frequently evaluate expenses related to helping inexperienced representatives use the software and connecting the system to existing equipment.
Vendor Viability and References
Before investing in an ERP system, ensure potential ERP software vendors are responsible and respected within the industry. You may want to perform additional research at this point. If you haven’t already, request information from the vendor’s other clients and seek opinions from your professional network.
Contract Negotiation and Close
After you’ve chosen your vendor, received your quote, reviewed your proposal and completed your case review, it’s time to negotiate your contract. Approach negotiations confidently, armed with your business needs, required ERP capabilities and financial constraints.
This strategy allows you to easily find and select your ideal ERP system. While it may be time-consuming and labor-intensive, your meticulous ERP software selection process will pay off. But to make things a little bit easier, we provide technical evaluation scorecards for extra diligent documentation. Before long, you’ll find the perfect ERP solution for your business.
Get our ERP Software Requirements Template.
Selecting an ERP system is a long process with many factors to consider. But as you can see, it can be broken down into manageable parts. Follow the step-by-step process we’ve outlined to answer the questions listed above. With rigorous research and selection, you’ll end up with an ERP vendor that will deliver the system to take your business to the next level.