ERP (enterprise resource planning) 7 successful selection secrets

Posted on 9 Apr 2014 by Malcolm Wheatley

Considering a new ERP system? Some simple hints can ease the pain, advises The Manufacturer's contributing IT editor Malcolm Wheatley.

Selecting the wrong ERP system can be a very expensive mistake—not to mention a career-limiting one. Yet it’s very easily done. Time and again, we hear of ERP systems that have delivered no discernible benefits, or an ERP seletion process where the implementations have failed. Almost as bad: those ERP systems where much effort and energy have been expended on the implementation, yet the manufacturing function derives little of value from it.

Yet it doesn’t have to be that way. Talk to manufacturers, consultants and ERP experts, and several common threads underpin the successful selection of a system that will deliver value. And deliver it on the factory floor, as well as for the finance function.

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1. Go for industry ‘fit’

From an ERP Implementation perspective, different industries have very different characteristics—so it’s important to buy a system with a decent track record in your industry. Food manufacturers, for instance, need recipe management, multiple units of measure, and ‘disassembly’—starting with a chicken, say, and manufacturing several products from it. Likewise, project-based manufacturers need a strong project function, in order to tie costs and bills of material to specific contracts. Textile and footwear manufacturers need a style and sizing capability. And so on. These aren’t trivial distinctions—and buying a system that doesn’t deliver can be fatal.

Better still, a number of Enterprise resource planning software vendors these days offer ‘industry templates’, which come pre-configured with industry-leading best practice. The result: low-cost, low-risk implementations that are pre-wired for specific industries, built around known industry-specific best practices.

2. Future-proof your investment

A mistake that many companies make when selecting a new system is to meet today’s needs, but not tomorrow’s. What then follows is a need to re-visit the whole selection process a few years down the road, and then implement a fresh ERP system to acquire the missing functionality.

It sounds a difficult mistake to make, but in fact it’s worryingly easy. Examples: moving into aftersales service, only to discover your ERP system doesn’t have that module. Moving overseas, only to discover that your ERP system doesn’t support the relevant languages and currencies. And acquiring a company in a different industry—only to discover that your ERP system isn’t a fit for that industry.

3. Don’t dismiss the upgrade option

Sometimes, manufacturers start looking for a new ERP system having previously dismissed the idea of upgrading to a more current version of their existing system—for reasons that may be no longer valid, or indeed, are lost in the mists of time.

Again, it’s a surprisingly easy mistake to make. You begin the search for a new system, and then your existing provider brings out a new release that does everything you need. Ignoring that new release is to ignore the fact that upgrades are almost always a lower-cost, lower-risk option than a fresh new system.

4. Think through your reporting and analytics needs

A common regret among buyers considering ERP Implementation , is not spending enough time investigating the reports and screens that a system provides by way of management information. ‘Conference room pilots’ and similar exercises focus on testing and defining business processes, and not considering what management information the new system produces.

The result: a proliferation of purpose-built SQL reports, ‘spreadsheet hell’, or—yes!—a suddenly-identified need for a new Business Intelligence system. Always ask: does the system provide, at a user level, the information that people actually need in order to do their job? And is that information timely and accurate?

5. Choose the right implementation partner

These days, it’s rare for a system to be installed by the vendor: most midmarket systems are sold and implemented through third-party implementation specialists.

So it’s vital to choose not only the right system, but also the right implementation partner—and there almost always is a choice. How strong is the proposed partner’s manufacturing experience? Have they worked in your industry? What do their other customers say about them? Do they have a strong and robust implementation methodology? And how experienced are the people on the ground who will actually be installing your system?

6. Don’t skimp on the manufacturing functionality

Even manufacturers with simple and straightforward manufacturing business models can overlook what’s out there by way of advanced manufacturing functionality. Finite capacity planning, for instance. Manufacturing execution systems. Rich quality management functionality. And hi-tech forecasting modules.

If you think that you might need this functionality—even if you don’t want to purchase it right now—then knowing that your proposed vendor offers it as a standard part of the system provides a low-cost, low-risk option for obtaining it when the time comes. Otherwise, should the need for the requisite functionality become imperative, you’re looking at standalone packages, bought from third parties, and requiring expensive integration projects.

7. On-premise, server-based ERP is no longer the only option

There’s a lot of hype about cloud computing, to be sure. But equally, that hype is fast turning into reality, and most of the major players now offer solid, cloud-based ERP solutions.

So should you go for The Cloud when thing about ERP selection? It’s not a decision to be taken lightly. But don’t overlook the financial benefits. At a stroke, you’re usually turning a significant item of capital expenditure into an ongoing cost, paid for monthly as a subscription. Likewise, the need for chunky in-house server capacity is also eliminated. Undeniably, cloud-based ERP is usually more affordable ERP.

The bottom line?

In ERP selection, there are pitfalls aplenty. But keeping in mind the points above can sharply reduce the risk—and cost—of choosing the wrong system, the wrong implementation partner, or both. And in today’s world, that has to be good news.