How to avoid the common pitfalls of ERP selection

Many organizations are in process of selecting a new ERP system for their organization but when selecting a new ERP system, here’s how to avoid the common pitfalls.

1.       Lack of a systems strategy

The first priority when setting out to select a new ERP system is to have a clear vision as to what the company is looking for. We need to know what’s definitely in scope, what’s definitely out of scope and what might be in scope should the right solution be available.

This should be driven by a systems strategy that assesses the benefits of implementing ERP – strategic, financial and intangible – and the likely costs of the various options.

Unfortunately, many organizations jump straight into systems selection projects without taking the time to consider what the business needs and what it’s going to cost.

2.       Inadequate specification of requirements

Many companies fail to spend time defining and documenting the specific requirements. They select a system that works perfectly well in certain industries but lacks functionality in their industry.

The important thing to remember is that most systems on their shortlist will probably do 80% to 90% of what is needed as standard. Focus on requirements that give the company a competitive advantage, drive business benefits, are peculiar to their industry, or which their current systems struggle to manage.

3.       Lack of focus on the vendor’s ability to deliver

Regardless of the functional capability of any ERP system, a successful ERP project is hugely reliant on the vendor’s ability to help the company deliver a solution that delivers the expected benefits.

A common pitfall is to focus almost entirely on system functionality and cost. However, a comprehensive selection process will also involve reference site visits and calls, an assessment of the caliber and experience of the consultants being proposed for the project, and an assessment of the implementation methodology being proposed.

4.       Focussing on costs rather than benefits

Everyone wants their ERP implementation to be delivered on time and on budget. In general, that’s considered a success. As a consequence, it’s natural during the ERP selection project to ensure that software and implementation costs are kept within initial expectations.

However, this approach takes no account of the ability of the solutions being assessed to deliver the expected business benefits. Everything else being equal, a solution that costs 15% more but helps that company achieve multiples of that in financial benefits over a period of time is clearly a better option.