9 Mistakes to Avoid in Selecting Your Next ERP

     

Studies show that more than 50% of all ERP and OMS systems are not installed on time and within budget. A significant number of companies spend 8 to 12 months after go live adapting to the new system. What are some of the mistakes that lead to these outcomes? We all operate from our experiences. Many companies and key management have not selected an ERP or OMS before; or in a long time. Here are 9 mistakes to avoid to increase your chances of success.

Mistake #1: Setting wrong initial expectations

There are typically five things management always wants to know upfront in the project before the detail system selection process proceeds:

  • What are your company’s systems requirements from a functional perspective?
  • An idea of the gaps between commercial systems available and your company’s needs which lead to modifications or lack of function;
  • Total cost of ownership for the entire project;
  • Schedule to complete the process;
  • Resources — both internal and external — required to implement and support the project

Catch what I just wrote – they want some idea of the answers to very difficult questions before the detail work is performed. These are not unreasonable expectations but for those that do not have experience in selecting and implementing ERP systems, it may be a coin toss in terms of accuracy. As a result, your project sets expectations which may be faulty and are difficult to deliver on.

Mistake #2: Pushing selection responsibilities off onto IT

It’s not just IT projects. Large-scale ERP and OMS will change the way your company does business and how many employees will do their jobs. Assemble a strong project team of all the departments that will select and use the system. Be sure to have executive sponsorship that supports the project from start to finish. You will need a project manager capable of coordinating and supporting the project.

Who in your company will project management? Don’t rely on the vendor’s project manager to manage the process. They will have a project manager to drive their responsibilities. They cannot be responsible for your people, the process changes, training and procedures and readiness of your company. For large system projects, this is a full-time job; if you don’t have the resources, seek outside expertise.

Mistake #3: Failure to develop detailed business requirements

Best practice is to develop a requirements document, gain user sign-offs, and turn that into a request for proposal document. It will also be useful for scripting demos and tracking the mandatory changes required. We overstate the importance.

Mistake #4: Limited search, limited vendors

What is your short list of qualified vendors that you will work with on requests for proposals and demos? Conduct a multi-vendor bidding process. Not only will you get the best price, but vendors can bring best practice insight to your business that you would not have otherwise gained.

Mistake #5: Picking technology over functionality

Balance technical decisions with functions available from the application system. Yes, platform and systems technology is extremely important. But are you giving up functionality by selecting the most leading-edge technology? Strike the right balance.

Mistake #6: Decision to modify rather than adapt to a new application

Companies often try to make the new system look like their current system. You should minimize modifications throughout the process, at least initially. Modifications add risk and cost, and extend time frames or make the system undeliverable. Merchants abort implementations every year because they underestimated the effects of the contractual modifications.

In software demos and discussions, evaluate the vendor’s alternative processes rather than deciding to modify. Challenge modifications deemed “necessary” after reviewing the alternative processes. Consider changing your business processes or using the system “as is” for six months before making certain modifications.

Mistake #7: Superficial demos

Merchants frequently select ERP or OMS systems after spending a few hours in an Internet vendor demo. This makes no sense to me as these are complex systems with thousands of functions — you need to schedule at least one day to see the major functions.

Take control of the demos. Script and prep for them. What does the entire team want to see? From the RFP responses, what do you need to be demoed?

Prepare in-depth examples with your data, and send them to the vendor in advance. Be sure major stakeholders are involved throughout the demos and that each functional area participates. Develop a process to take notes and record follow-up points.

Mistake #8: Insufficient vendor due diligence

Visit client sites with similar merchandise and operations using the version of the software you’re purchasing. You wouldn’t believe how many companies never see the product “live” in a similar company before signing.

Mistake #9: Signing the contract prematurely

Avoid the sales person’s push to close the deal with offers such as “I’ll give you 20% off if you sign by end of the quarter. Don’t let a vendor sidetrack your process by using sales tactics designed to end your competitive bid process. If you find out later this isn’t the right system, you have signed an agreement and the deposits are generally not refundable.

 

Selecting and implementing an ERP systems is one of the major projects any company will undertake. Additionally, it affects the productivity of all those using its functionality. Follow these guidelines to improve your success rate.