ERP software ought to be able to handle every area of your company. There are numerous options for corporate resource planning. So you must pick the one that is most appropriate for your business requirements. ERP selection involves serious thought and reliable vendor standards.
Manufacturers must efficiently manage their manufacturing business operations in the face of Covid-19, supply chain hiccups, and inflation worries. There are also glimmers of potential recovery. The Institute for Supply Management discovered that 16% of midsize businesses experienced a drop in revenue, while nearly 75% of companies reported supply disruptions.
Manufacturing firms can use an ERP solution to improve flexibility and control over their core business processes. They also have advanced supply chain management capabilities, allowing them to overcome these challenges while increasing productivity and profitability. A sound ERP system will assist manufacturers in remaining agile and resilient to reduce risk. It can also manage, track, coordinate, and connect dynamic manufacturing processes.
This is why choosing the right ERP system is critical for your company. It is also an excellent time to review the key steps in selecting the best ERP software for your manufacturing company.
Selection Criteria
It is essential to assess potential vendors and software using basic selection criteria. To avoid costly customizations, delays in implementation, and replacements of ERP systems, you must use a reliable method to evaluate ERP systems. There are many ERP options, and it can be overwhelming to consider all of them.
Establishing a core team to guide the ERP selection, comparison, and implementation process is critical. The selection team should include functional business leaders, managers, and subject matter experts (SMEs). They must thoroughly understand their respective departments' upstream and downstream impacts and processes.
Your team must be committed, understand the organization well, and be willing to work hard on this project. The team starts by creating an initial plan, a strategy for the future.
1. Functionality and Ease of Use
In ERP selection, the first question is: What system features and how easy can you use it? What functionalities do you require, and what level of user-friendliness is needed? These questions will allow you to determine if the product is a good fit for your company on a fundamental level.
This criterion is the longest and most tedious to complete. It entails a thorough examination of your business size and the ERP software. But don't be concerned. This evaluation is critical to your work.
These steps will assist you in better understanding ERP software and gathering requirements.
- Gathering of Requirements: Think about your company's challenges and how an ERP system could help. Next, determine which system functionality would achieve this.
- Consider Business Process Automation: Look at all the business applications processes in your company that could be automated, and then evaluate whether the solution can accomplish that.
- Check out End-Users: Are your end-users tech-savvy? Can they navigate complicated software features? Are they familiar with ERP systems? These questions will allow you to determine if the product's user-friendliness matches your needs.
- Plan for Centralization: Look at the systems you use and ask about integration options. How does the CRM interface to the ERP system?
2. Vendor Viability
It's a good idea to research the vendor's reputation before you decide on investing in that solution. Can I trust them over time? It doesn't matter if a product is functional. Still, it should only be a decision if the company is trustworthy and secure.
To determine whether the transaction can last beyond the company's credibility, you must evaluate the product's scalability.
Vendor viability is an essential indicator of an exemplary system and a great business partner. Consider the following when comparing ERP systems and the vendors who provide them:
The Credibility of a Company
Examine how the vendor's organization has changed in the past years to determine their future plans. Also, take into account the financial and age of the company.
Product Viability
Inquire with the vendor how long the ERP product has been on the market. Also, request customer references. Ask the vendor how long the product will be in production and whether it will be updated or improved regularly. If you want to ensure everything is covered, ask the vendor about future products.
Scalability
Product scalability evaluation requires you to look at your company's future and plan for the future. Are you planning to expand functionality or add users in the future? Can your company expand into new markets, and is it possible?
Consider the system's features that can help you improve your business strategy. This is a crucial consideration for growing businesses. Your chosen Enterprise Resource Planning system must be able to grow with your business models.
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3. Technology
ERP Systems can incorporate a lot of technology. Standard software should include capabilities for business intelligence, reporting, and customization.
You should also ask the following questions: What technologies are offered by the solution, and which technologies do you need?
- Customization: Consider whether the solution can be customized to your business functions and specific business growth processes. If you need the answer tailored to your needs, ensure the vendor can fulfill the request.
- Requirements: Think about whether the solution meets your technical needs. Can it create visual, real-time sales reports that can be used in presentations, for example?
- Value: Assess if the ERP can take advantage of the latest technological trends and whether the vendor plans to update the system regularly. This will ensure that you spend time and money on something other than a system that will likely become obsolete.
4. Cost
Although it may seem obvious to consider the cost of an ERP solution, it can be challenging. Given all the different elements, you must ask yourself how much the solution will cost.
The actual cost is the licensing fees. These depend on your number of people, whether you choose the software or modules, and hosting or hardware. Before you sign any contract, it is wise to make a rough estimate of your ROI.
These are some of the factors to consider when evaluating the price of an ERP.
- Basic Pricing Information: Assess the cost of the platform to determine if it is reasonable for the functionality and technology it provides. You can find another product if the vendor's pricing structure is not fair. There are many fish in the ocean.
- Actual Cost: Determine the true cost of your solution next. Calculate the long-term total cost of ownership (TCO) and include all applicable charges.
- ROI: After you have completed the evaluations, determine if the projected return on investment (ROI) will be significantly higher than the TCO.
5. Training and Support
Training and support are critical pieces to getting a system running smoothly. Many vendors offer support and training in the ERP market. Access to videos and documentation, an online knowledge base/user community, and the option for in-person training are all part of a comprehensive training plan.
Comprehensive support typically includes access to a call center and other online resources. Some vendors, however, need help or training and outsource it.
These are critical considerations. But what kind of assistance and training do you require? What type of assistance and training do we need? Review the support and training options, make sure they work for you and reach an agreement with the vendor.
When reviewing support and training, consider the following:
- End-user Needs: Consider the needs of end-users first. Which type of training (e.g., face-to-face or virtual) will be most convenient and efficient for end-users? Is there an IT department that can provide technical support, or do you rely solely on outside help?
- Pricing: Will the costs of support and training be included in the licensing fees or a different investment?
6. Industry Expertise
The ability of a vendor to meet your needs is called industry expertise. You can find the right solution for you based on your needs. You will enjoy significant benefits when you work with a vendor who understands your industry and incorporates industry practices into the system.
Consider: Does your business need a specialized platform? Think about how long the vendor has been in your industry and whether they have succeeded.
7. Implementation
Implementation is crucial to get your ERP system up and running. Ask the vendor how they will make sure your installation goes smoothly. This step is vital if you expect a complex implementation, such as migrating from an older system to a new ERP.
This is a quick overview of the requirements for a successful installation plan:
- Search for the Perfect Software: Use Lean Selection or another method to find the perfect solution.
- Plan: Form a team to plan and implement an installation program. Assign and manage project tasks.
- Transfer Data: Conduct in-depth data reviews to reduce repetitive information. If you don't start from scratch, your company information will be the foundation of any ERP program.
- Training Users: Access training materials and distribute them to the end-users.
- Conduct System Testing and Launch: Run program tests to make sure the solution is user-friendly and can perform all your desired features efficiently before you go live.
- Perform all Post-launch Tasks: Analyze ROI and monitor client satisfaction.
Our ERP software selection criteria list is now complete. This list will assist you in evaluating potential solutions throughout the selection process.
8. Risk Mitigation
Investing in ERP software can be a risky business for a variety of reasons. This software is costly, has complex functionality, and can be time-consuming. You must be patient, set a budget with no hidden fees, and use vendor training resources to ensure your operation runs smoothly.
It is also important to note that ERP has numerous advantages, including cost savings, increased productivity, customer retention, and competitive advantage.
9. Scalability
Companies can expand or contract at any time. Scalability tools are available in many ERP systems, allowing you to manage more employees, warehouses, facilities, and other resources. Ask your employees if they want to see the company grow or shrink over the next ten years. Ask vendors about the possibility of expansion if you are looking for it.
10. Current Clients
For more information, ask potential vendors if they are willing to speak with current clients. You can also learn about the system's advantages and disadvantages from other users. Customers can also provide information about vendor resources and customer support.
Similar to potential recruits being asked for job references, employers can use this process. You'll be more likely to choose the vendor if you receive great reviews. The vendor is not the best choice if you don't get great reviews.
11. Tools for Post-Go-Live
It would be best if you also inquired about the support and resources provided by vendors after you go live with their software. Are they dependable in their assistance? Can they provide tiers of support (for example, silver, gold, and platinum)?
Although vendors are experts at implementation and data migration, they should also be available to provide post-installation support if any issues or questions arise.
Methodology of Lean Selection
We'll give you more details and walk you through the Lean Selection Methodology. This will assist you in selecting the best ERP for your industry and company size.
This simple nine-step process will help you identify your company's needs, compare solutions, validate technical requirements, and negotiate a large contract.
1. Establish
Our process and ERP software selection begin with assessing your company's operations. These are some of the questions:
- What are the benefits of a new program?
- What is wrong with your current software?
- What are you looking for in a solution that simplifies and automates your life?
These and other questions help you to create a base for your requirements list. It will also help you identify the solution that you are looking for.
2. Collaborate
ERP selections can be easily delegated to one or two people. A committee of stakeholders, partners, leaders from various departments, and others is required.
Department heads are precious. While you can conduct research and attempt to develop requirements for your marketing, human resources, and accounting departments, these leaders know precisely what they require.
Inquire about the solutions of your industry partners and stakeholders. Seek out their recommendations. More qualified people on your selection team increase your chances of finding the perfect solution.
3. Define
Create a master requirements and feature list with your team as a critical step in ERP software selection.
4. Distribute
Find the vendors that meet your needs. Create a vendor shortlist and compare their performance to your requirements.
Read More: Improve your ERP Software's performance
5. Justify
This stage allows you to evaluate all the information you have gathered from the previous steps. There are three options available:
- Are you interested in continuing your software selection journey with these potential vendor partners?
- Are you looking to add functionality or integrations to your existing software?
- Do I want to stop selecting ERP software and keep my current program/practices in place?
Regardless of your decision, this step will help you truly understand what you want.
6. Could You Do It?
Either you've decided to search for a new platform or additional modules to enhance your existing system. You have a list of potential vendors. Now you want to see how their solution meets your specific needs.
This allows you to request demos, proofs-of-concept (POCs), and use cases from providers.
Demos
This is where you request assistance from vendors in completing tasks. You can create demo scripts and a list of tools you want vendors to demonstrate.
Examples include:
- "Show me your general ledger."
- "Show me your reconciliation tools for accounts."
- "Show me your bill for material (BOM) accessories."
7. Use Cases
Demos need to be increased. Use cases are more in-depth than demos. You can instruct them on how to complete specific tasks. You can request that they demonstrate how to perform end-of-month bank reconciliations or automate employee payroll.
This option can also be provided with a script.
8. POCs
POCs are much more than demos and use cases. Vendors can recreate the solution using current or previous user data to demonstrate how the system works as a simulation.
This method is efficient but takes more time than demos and use cases. We advise you to use POCs only for the best solutions.
You can assign a score to each solution based on its performance in demos, use cases, or proofs-of-concept. These results will enable you to rank the best applications.
9. Rank
To better understand ERP selection, rank your solutions based on demo scores and requirements. Consider calculating the TCO and final cost of each programme. Prices can range from a few thousand dollars to $100,000.
10. Negotiate
Lean Selection allows you to have up to two to three programmes that fit your company well. After you've ranked your options, select your top pick and read the reseller and vendor agreements.
Once you have reviewed the legal terms and agreed to negotiate, you can decide if this vendor is right. You can proceed to the signing phase if you are satisfied with the vendor. If you are unsatisfied, continue to the next provider on the list and complete this step.
11. Sign
It's the perfect time. After thorough evaluations and research, it is time to sign with your vendor. You can begin planning for implementation once you have signed and agreed to the payment terms.
Purchasing Considerations
It's like buying a new car: selecting ERP software is like shopping for a new one. It is a worthwhile investment if you are clear about what you want to achieve the best results for your company. TCO can be affected by company size, deployment options and department needs.
How Big is Your Company?
It is critical to consider your company's size. Is your business a Fortune 500 company or a start-up?
As previously discussed in the selection criteria. Scalability allows you to grow your business by adding more employees, departments, and users. Small business software can be an option if you expect little growth in the next five to ten years.
What do Your Other Departments Need?
ERP can have many functions that support different departments. It is not surprising. It is essential to consult your department heads to find out what they want in an ERP system.
Consider your department heads to be regional ambassadors. Although you could learn everything there is to know about accounting, Customer Relationship Management, and human resources, more is needed to be an expert. These executives are experts who understand what is required to streamline operations.
What Amount Are You Willing to Spend?
ERP software is another important selection criterion. It can run anywhere from $100 to $100,000. You need to set a budget to find the right system without spending too much.
Which is Your Ideal Deployment Option?
ERP software is another important selection criterion. It can run anywhere from $100 to $100,000. You need to set a budget to find the right system without spending too much.
On-premise
This is the traditional method of deploying software. It restricts access to the solution to your company's servers only. On-premise can be more expensive due to the various support packages (e.g., gold, platinum, and silver). If your company is involved in local clientele and work, this option might be right for you.
Cloud
Cloud software, or SaaS, allows you to access the solution and data via strong internet connections from your laptops, smartphones, and tablets.
Instead of your company's hard drives, vendors provide data storage to third-party or internal vendors. This option offers additional security options to protect your data from cyber threats, such as encryption and multi-factor authentication.
If you have patrons or partners worldwide, this deployment option is best. Cloud solutions often offer subscription-based pricing that is manageable.
Hybrid
This deployment combines the best of both on-premises and cloud to ensure your data is always available and secure. This option is available from different vendors, so ask about their capabilities.
Conclusion
Choosing the best ERP software can be difficult. Segmenting the selection criteria, ERP selection methodology, and purchasing considerations is simple.
You can invest in ERP for the first time or replace your legacy system. Clearly define your ERP selection criteria and communicate them to vendors. Make certain to:
1) Choose between cloud, hybrid, and on-premise deployment. Consider how many people will be using the system.
2) Examine your budget, total cost of ownership (TCO), and return on investment.
3.) Consider the system's underlying technology, future scalability, functionality, and any customizations that may be required.
These five essential steps will help you focus on the critical details, shorten your selection process, and select the best ERP system for your company.
