ERP selection – how to prepare for it – Paweł PrymakowskiCEO
You know that you want to implement an ERP system in your company. But what’s next? How to prepare for ERP selection? And what should you know before making a decision about choosing the system and supplier?
Choosing right ERP system to managing company is not an easy decision. Reviewing the available solutions, we come across dozens of systems and hundreds of companies that propose implementations. Therefore, choosing the right system and implementation partner is not easy. Launching or changing ERP system is a huge investment, which is carried out once every few years. That is why it is important to make in this aspect the best decision, tailored to the company’s specifics. What is more, right implementation partner is responsible not only for launching the system in our company. But also for subsequent support in its use, development and updates. That is why it is worth remembering that the implementation partner will also work with us after implementation.
Fortunately, you can prepare for choosing the ERP system and the company responsible for its launch. Thanks to this, it is possible to choose the right system and implementation partner – best suited to the enterprise.
DEFINE THE EXPECTATIONS AND NECESSARY FUNCTIONALITIES
At the very beginning it’s worth to ask yourself what we require from the new system. To determine the answer to this question, it is worth gathering a team representing various areas and departments of the company. A good idea is to invite representatives of suppliers or customers to it. If you are creating a team that is devoted to design requirements for the system, it is worth focusing on people who know the company. And who are not afraid to express their own opinion. The team should specify both system and functional requirements.
List of requirements
After creating a list of requirements, it is good to divide the functionalities according to their relevance. It is worth basing such a list on the MoSCoW model. This model also used by IT Vision when setting priorities for the functionality of systems with customers. The MoSCoW model defines 4 groups of system requirements:
M – Must have – mandatory requirements that the system must provide.
S – Should have – requirements that should be in the system.
C – Could have – additional requirements, which are desirable but not essential.
W – Won’t have – requirements that will not be implemented (but may be implemented in the future).
It is important that the list includes system functionalities that are really needed for the operation of your company. It is worth creating such a list together with an implementation partner. This will allow not only for easier ERP selection, but also for efficient management of the entire implementation process and making appropriate implementation decisions. It is worth making sure that there are no unnecessary functionalities on the list.
Think about the future
While creating a list of requirements it is worth remembering that the system is not just “for now”. After its implementation, it will function in the company for years. In the countries of Western Europe, the average time of using one system by companies is about 5-6 years. Polish companies use the implemented solutions even longer. It is therefore important that when choosing the system and setting its functionality to determine the anticipated trends or growth.
DO SYSTEMS OVERVIEW
Before ERP selection, it’s a good idea to review the systems your company uses. It is necessary to determine which systems the employees are satisfied with and which work well in the company. It should be considered whether any of the systems should be replaced as part of the ERP implementation, and which ones should be left and integrated with the new tool.
When reviewing systems, it is good to consider whether it is possible to improve some of them. You should also make sure that none of the supported processes is defective. If we want to increase efficiency, it is necessary. Handling a faulty process by the ERP system will not bring the expected results.
As Thorsten Dirks said, CEO Telefónica Deutschland AG:
When deciding on the choice of an ERP system, it is worth checking whether it will be possible to integrate it with the systems owned by the company. The purchase or replacement of an ERP system is intended to simplify processes in the enterprise – you should make sure that if you leave existing systems, you will not need to perform certain operations twice and the data will be efficiently and automatically transferred between these systems.
SET A BUDGET AND CHECK THE MAINTENANCE COSTS
It is also worth setting a budget that the company has at its disposal to implement and maintain the ERP system. It should be remembered that the cost of ERP is not only the cost of implementation, but also system and user maintenance costs. In the case of on-premise systems, this also includes upgrade costs. The purchase of the system is usually a long-term investment. When looking for the right system for a company, you also need to consider long-term expenses.
It is also good to calculate the ROI (return on investment). As I mentioned earlier, the average time of using one system by companies is about 5-6 years. Therefore, another indicator that is worth calculating is TCO – Total Cost of Ownership. When calculating the TCO, hidden costs such as IT staff, staff turnover, implementation partner costs, failures, updating costs etc. should also be taken into account. The calculation of these indicators will create a real picture of the financial situation. The resources needed to get involved and the financial viability of the project.
It is important not to be guided only by the implementation price when choosing an ERP system. It is worth considering the price of maintaining or running additional modules. ERP systems also have their own specifics. Some of them are more suited to the manufacturing industry, while others to the hi-tech industry or professional services. Choosing the right tool will also reduce the number of customizations.
When talking about short- and long-term costs, it is also worth considering the necessity and possibilities of customizing the system. Cloud systems are usually cheaper to implement, but you have to pay the monthly fee for maintaining the system. Usually, cloud-based systems are less able to adapt the functionalities offered to the company’s specifics. On the other hand, on-premise systems require a greater financial outlay at the beginning. But they allow to a large extent to adapt the functionality to the needs of the company.
REMEMBER – THE RELATIONSHIP WITH AN IMPLEMENTATION PARTNER IS A RELATIONSHIP FOR YEARS
It must be remembered that the selection of an implementation partner is important and cooperation with it will continue after implementation: during service, upgrades or when expanding the system with further modules. Choosing an implementation partner means entering into relationships for many years – it is good to choose one that we trust and who will take care of our company and its development, as well as provide advice and experience. It is important that the partner is characterized not only by extensive knowledge and experience in the field of implementing ERP systems, but also by a good understanding of your company’s operations.
There is no simple answer to the question of how to prepare for ERP selection. However, it is worth spending some time preparing it. Learn as much as possible about the company, gather expectations and explore possibilities. The awareness of our expectations and requirements will be invaluable when choosing a system and its supplier.