When it comes to evaluating ERP, there are so many things that can go wrong. You could go in without a clear vision. You could go in without support from end users or executives. You could rely on false information from an unscrupulous vendor. You could forge into a decision without understanding the nuance. Or you could end up with the opposite problem—paralysis by analysis.
The Challenge: Seemingly Endless Options Results in an Endless Selection Process
The last one of these stems from the greatest benefit of modern ERP. Too many choices? Too many providers able to deliver on our needs? It sounds like a great problem to have. But despite this market diversification providing you with a wealth of options, it can also lead to delays in selection and misguided perfectionism.
“We have too many choices” can quickly turn into “wait, who had this feature?” “There are too many providers” can turn into “why can’t we get this shortlist narrowed down?”
Meanwhile, you’re spending money on the selection process, seeing your implementation budget shrink as your selection budget grows, and running the risk of selection burnout—all while wasting away on the product you’re working to get rid of.
The Way Forward: Take a Breath, Know What You Need, and Set Your Sights
ERP selection can be overwhelming, with so many options to consider around features, functionality, pricing, and hosting. However, sometimes it pays to focus on a good old-fashioned best practice-based model. By taking a second and taking a breath, you can reduce the risk of analysis paralysis and keep your selection budget under control.
Following our articles discussing the ongoing challenges faced by manufacturers and distributors, importance of a balanced and pragmatic cloud journey, and the basics of finding a hybrid cloud sweet spot, we would today like to turn our attention to the selection process.
Four Best Practices for Choosing an ERP System
As discussed in the Sage whitepaper titled Guide to ERP: Make the Right Choice for Your Business, IDG analysts list four best practices for ERP selection, exploring how following these can help you reduce analysis paralysis while still making an informed decision.
Due Diligence: Finding the Right Fit
As we’ve mentioned above, there are likely a lot of different solutions that can fit your needs. That said, IDG notes that just because they might work, not all solutions are right. Some cater specifically to the needs of midsized companies, and some are more experienced in certain industries. Ideally, you want a provider that checks both boxes.
This all comes from documenting your needs. Long before you even ask for information, you should be talking with your staff about the move to ERP and gauging their responses. Not only will this help you to gain a clearer picture of your needs, it will also ramp up the excitement regarding the project.
For example, distributors should seek an ERP platform that supports flexible inventory management, including the ability to prevent stockouts or surplus, identify under- and over-forecasting items, and orchestrate centralized warehouse consolidation.
KPIs: Seeing How the Analysis Works
A unique business has unique goals. Measuring these goals, however, is a process. In turn, it pays to ask how a solution will handle the numbers and present information you need to work. IDG recommends that decision makers identify the key performance indicators (KPIs) for your business and then map those goals to the capabilities of the software you’re evaluating.
A focus on KPIs will require you to take a deeper look at your current practices, goals, and expectations over the next few years. The whitepaper notes, “if inventory optimization is a key objective, steer toward an ERP platform with robust inventory management capabilities; if boosting production quality or reducing materials cost is a goal, make sure the platform has integrated tools for centralizing production processes; if you’ve recently acquired a business, look for functionality to help consolidate financials.”
The list goes on, but your ERP should be able to provide you with the data you need—when and how you want to see it.
Open Platform: Supercharging Processes and Connecting Your Business
One thing we’ve noted above and will continue to document throughout this article—your business is unique. Much like the unique goals and metrics you need to measure, you also have unique processes, some of which can’t be solved with one product.
IDG adds that there are two areas to explore—proven integration and a robust, mature community marketplace.
- Flexibility and Readiness: Look for a solution that offers flexibility for customization and supports an open architecture. An open environment enables seamless integration with other core systems like CRM, inventory management and optimization, production planning, and productivity applications like Microsoft Office.
- A Community of Established Developers: In addition, the platform should be able to tap into a third-party developer community offering complementary tools that extend core ERP functionality.
Buy-In: Getting Support from Your Entire Company
Too often, companies will forge into an ERP project without gaining the right backing. Whether it’s from the employees or the executive team, lack of buy-in can come back to bite you. Without support from employees, you may end up seeing your staff fight back. Without executive buy-in, you may see the plug get pulled at the first sign of adversity. Either way, this lack of buy-in can derail a project.
ERP is all about redefining and optimizing core processes. To succeed, you want a vendor that will work with all key stakeholders—the controller/CFO, production manager, heads of operations, purchasing, order entry, and sales—to identify their pain points, understand their needs, and map those against your KPIs. Involving them in the process early on will increase the chances of buy-in across the business.
The right vendor (and partner) is going to get to know you, listen to your needs, concerns, and expectations, and get everything in order long before they set out to implement. Honest partners may even back out of a project if they find out the alignment won’t work, because after all, it’s your money—but their reputation.
Many Paths on Your Journey to ERP—The Right Partner to Guide You
The market for manufacturers and distributors has diversified and continues to get more challenging. Whether it’s increased competition or higher customer expectations, you need to ask yourself what is needed to stand up to the challenges. Enterprise resource planning can help. ERP is a type of management software that integrates day-to-day business processes. It helps business leaders streamline company activity by connecting all data points and providing accurate business insights.
Solutions like Sage100cloud are built for the modern challenges of today’s distributor and manufacturer, helping to increase visibility, decrease risk, and do more with their time. How can you tell if you’re ready for ERP? Download this free guide from analyst firm IDG on how to make smarter choices in ERP.