May 2002 | How-To | Ten Tips

Selecting an ERP System

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Companies often decide to implement enterprise resource planning (ERP) solutions based on demand from customers rather than their own manufacturing departments. Sounds great. But sometimes, after implementation, the ERP solution doesn't quite deliver what the end user wants.

The challenge is selecting the right kind of solution. A small manufacturer with several warehouses will have very different needs than a company involved in global sourcing. If you're not careful, you can buy more technology than you need, or not enough to meet your future goals.

Here are 10 tips to simplify the process of selecting an ERP system, from Audrey O'Sullivan, managing partner for Clarkston Consulting, a technology consulting firm based in North Carolina.

1. Make sure your executive team is willing to sponsor the ERP implementation project. One reason projects fail is because the executive team does not establish a process to resolve issues, and neglects to make decisions in a timely fashion to keep implementations running smoothly.

2. Clearly define what you are going to do, how long it will take, what resources are needed, and what it will cost. Build in contingency plans, manage risk, and communicate with everyone involved. A project manager can make or break an ERP implementation.

3. Select the best and the brightest people for the ERP implementation team. You will be asking them to define how the business will run in the future. Pair the people who understand the business with people who understand the technology. This is an investment in your future.

4. Find the right consulting partner. Find a consulting firm that is experienced in ERP implementation, has a strong project management approach, and culturally blends in with your company. Remember, you will work long hours with these people. Make sure that they have your best interests at heart and good references. It is also important that they understand your industry's needs.

5. Obtain the functionality you need. Bells and whistles are nice, but make sure the ERP system provides the critical functions you need to run your business. Interview all the departments within your company to identify the major features and functions they use on a daily basis to run the business. Understand the unique requirements of your business and industry, if the ERP system supports them, and how you are going to fill that gap if it does not.

6. Plan for the future. Ask these questions: does the ERP system offer enough capacity to help my business grow? How will I support my IT infrastructure? Take the time to understand where your business is going in the future.

7. Select a solid ERP provider. Make sure that the company you are considering doing business with today will still be here tomorrow. Besides reading financial statements, talk to analysts and business contacts about the ERP software provider.

8. Understand skill levels in your company. Look at the skill levels of the people in your company and IT department, and compare them with what you will need in the future. Identify the areas of greatest need and invest in training and hiring people experienced in ERP concepts, business processes, and technology.

9. Focus on training your people. Training and change management is absolutely crucial to the success of an ERP implementation. Each year companies invest millions of dollars in ERP systems, but do not provide adequate training. An investment in technology will not deliver returns without adequate investment in people.

10. Understand your integration requirements. Most companies typically have multiple applications that need to talk to the ERP software. Build integration architecture and use integration tools to help reduce total cost of ownership and build a flexible architecture for the future.

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