Critical ERP decision factors

One of the most critical components in an Enterprise decision process is to ensure that all factors are considered in the evaluation process.

Such factors must include the following:

Budget

Does the enterprise have an allocated budget for the ERP system? Does this budget include licensing, implementation, training, first year support, and, most importantly, up-front pre-evaluation functionality and scope design. Does the enterprise understand what is available in the market prior to setting this budget, and including management scope risks in this process?

What does the ERP budget mean to the organization? Is it a target cost or a strategic fund allocation?

Is the budget agreed with your implementation partner? Usually, if the scope is well-defined with good functional definition, then consulting partners will be happy, and budget should not be a concern. If management is under pressure from a budget point of view, quality may be compromised, and inevitably corners will be cut during the implementation.

Make sure you spend money to save money!

Up-front functional design and data relationships

Don't purchase an ERP system if you have not created a Functional Design of how you want your business to work, or have at least documented how it currently works. Scope creep is usually a major risk factor in any implementation. The reason for this is poor up-front investigation and understanding by management—not of the ERP system, but of the business processes itself.

An Enterprise is measured according to data information and relationships. Document your data relationship entities in as much detail as possible. This does not require a database analyst but will at least ensure that most critical data relationships are identified up-front. Later in the book we will describe the entity relationships in Compiere.

Static out-of-the-box versus dynamic flexible ERP

ERP systems that are more out-of-the-box are usually less flexible. More flexible systems are less out-of-the box.

How important is flexibility now, and what is the experience of the company in its historical systems? Owner-managed businesses require much more immediate flexibility in their systems purely because there is less bureaucracy in the decision-making process and their ground level understanding are much higher. "Safe" decision makers will require a more out-of-the-box solution since this offers a perceived level of comfort.

Internal learning curve and time availability

Managing the internal learning curve is one of the most important aspects of the implementation. The more experienced management is in ERP systems, the easier it will be to manage the learning curve. What is usually quite interesting is that inexperienced management in this area will pay for the system but only want to see the results of the system and not understand what is under the hood.

"Hands-off management" should be aware that the implementation runs a huge risk of failure. It is quite surprising that management will outsource the entire process of implementation and only try to get involved in the end of the project, when the hand-over needs to happen. This is usually too late, and by then the expectation level runs the risk of being out of sync between the ERP implementer and the client.

If senior management don't have the time or inclination to be involved then no matter what system it is, it is going to have its internal political and project challenges throughout the process.

Enterprise readiness

Although ERP changes affect the entire organization, in most circumstances, change is effected through the organization through simple, fast, clear, constant, and concise management decisions and communications.

Employees look up to their management, and key management or owners who have buy-in to the process are worth 100 times more than employee hand-holding sessions.

If the key management is change averse, then simply don't implement an ERP System.

Technology

One of the drivers of the new age is technology. Investing in an ERP system is usually a significant investment. If you are going to invest in a technology , then you should make sure that you understand the underlying technologies of the systems that are going to run those systems.

Technology and proprietary platforms can become out of date or be difficult or even impossible to upgrade or integrate into other systems. Ultimately, the average career for employees is shorter than the technology that is going to be around. In your next organization, you are going to be stuck with the decisions of prior management, and the same truth will prevail about your legacy.

Personal career aspirations

Personal aspirations and career ambitions form quite an interesting dynamic in the entire decision process, and must not be discounted. Employees can be very biased towards their own personal ambitions in terms of technology. Independent thinking should prevail wherever possible.

Brand Loyalty

Take note that most existing brands have been in existence for almost 40 years and in most cases are the sum of diverse acquisitions, and the agility of these brands to adapt to changes in the technology space is recognized to be a major challenge. Evaluate brand loyalty for its emotional or real value context.

Note

Prioritize the selection factors and make sure that you get buy-in from all stakeholders.