The Five Common Mistakes during ERP Selection and How to Avoid Them
Switching to ERP system is one of the biggest milestones of a business. By integrating the fragmented systems, an ERP software can help a business to boost the collaboration between different its departments, and manage its data and processes more effectively. These advantages prove that it is indeed one of the most important investments that a business can take on nowadays.
However, switching to ERP also has its own pitfalls that can cost a business a lot if not considered beforehand. As the name suggest, the software will be implemented throughout your organization, thus you will be investing significant budget and resources to ensure its success.
It’s a common mistake in many businesses to choose a vendor based solely on what they have shown during the software demonstration
That said, the first step to a successful ERP implementation is the choosing the right ERP software and vendor. In this post, we will discuss the five most common pitfalls of ERP selection, and how you can avoid these mistakes to ensure that you choose the ERP software that best fits your business needs.
1. Not Knowing What to Look Out For
The first mistake that organizations commonly commit is not having a clear idea of the exact features they are looking for in an ERP software. Lacking knowledge about the what’s and what’s not in terms of basic functionalities that your organization requires can lead to waste of money since there’s a greater risk that your people will end up using a software that is full of useless features or otherwise.
This issue can be addressed by developing a systems strategy that specifies the positive effects of using an ERP system to each function of your business- from marketing, sales, and logistics, to human resources, financial, and productions. In doing so, you’ll be able to identify the specific needs of each department and come up with an initial budget for the project.
2. Failing to Document the Requirements
Knowing what your business need is one thing, defining and communicating it with the vendor is another thing. Failing to document your system requirements may result to you selecting software that perfectly suits your business basic needs, but lacks the features needed to set you apart from the competition.
That said, it’s very likely that most of your requirements include standard features that your competitors already have. What you and your vendor have to focus on is the coming up with the functionalities that can give your business competitive edge in the market, or can address an issue that niche is currently struggling to resolve.
3. Improper System Evaluation
Choosing the right ERP vendor is crucial to the successful implementation process. It’s a common mistake in many businesses to choose a vendor based solely on what they have shown during the software demonstration. This often leads to unsuccessful partnership since not all vendors can deliver what they have promised during the demonstration stage.
What you should do is to conduct an extensive research about the vendor, specifically their successful implementations in your industry. You should also ask for advice from your industry peers, and ask for recommendations if they have.
4. Failing to Prioritize the Criteria
Setting selection criteria is another must, yet often forgotten by many organizations during the ERP selection process. When establishing selection criteria, make sure to make it as brief, but include all the important factors that your people will need the most. Though the needs may vary per businesses, few of the common selection criteria that you should include are:
● Functionalities- What are the features you need in the system?
● Cost – Is the system fit to your budget requirements?
● Ease-of-use – How easily can your people learn to use the system
● Mobility - Is the system compatible for use with a mobile device?
● Reliability of Vendor – Are their past client satisfied with their product and service?
● Support – Does the vendor provide a dedicated customer service to answer your queries or give immediate solutions when the system go down?
● Customizability – Can you modify the interface of the system based on your business preference and needs without the help of the vendor?
You should rank your ranking criteria from “most important” to “least important” based on what your project team has agreed your business will benefit the most.
5. Not Securing After-Sales Support from The Vendor
Your chosen ERP vendor is going to be your business partner since you’ll be working closely with them during and after the system goes live. However, it’s a common mistake among organizations not to seek customer support from their vendor, which often leads to unresolved issues in the future. When negotiating with a vendor, consider to ask the support of the following:
● User documentation
● Phone Support
● User Groups
● Implementation Guidelines
Having a solid and strategic ERP selection process is one big step in achieving a successful ERP implementation process. By avoiding these common mistakes, your business can choose a vendor that understands your business and provides you with a solution that fits your needs and budget.