Self-assessment checklist for choosing the right ERP

Businesses are moving to modern cloud-based ERP systems to improve visibility and planning, enhance security, minimise risk, and ultimately create a scalable business ready for whatever obstacles the future throws at it. 

The ERP selection process does not simply begin with talking to technology vendors. Far from it, there is a substantial amount of internal investigation required to effectively map out the business requirements of a new system, both to meet your immediate needs and to ensure future success.

This is a major project, and there is a lot riding on the selection committee getting it right. The C-Suite or business leaders should be heavily involved and provide leadership from the outset to ensure decision making is tightly aligned to business goals. In this article, we provide you with five points for senior leadership to consider before you embark on an ERP selection process. We have developed and refined this list through many years of experience of guiding our clients through ERP system selection and implementation. 

Why do a self-assessment as part of the ERP selection process?

While there is no “one-size-fits-all” blueprint to ERP implementation, our experience tells us that by aligning your company to leading practices, you will reap the benefits of scalability, flexibility and integration scope. By going too customised, you actually might end up creating more barriers to growth as each incremental evolution of your ERP system needs specialised support to your unique setup. The self-assessment process enables you to get a full picture of “where we are now” so that it’s easier to understand where you can follow best practices and where customisation is completely necessary.

Use this self-assessment checklist to ensure you cover all the bases before embarking on your journey. It has been designed to eliminate unexpected costs, reduce risk and guide the decision-making process in as personalised a manner as possible. There are no shortcuts here but let this checklist reassure you that a pragmatic approach will help prepare for a successful outcome. 

ERP selection self-assessment checklist

1. Clearly collate your ERP and Vendor requirements

While many ERP systems offer powerful out-of-the-box functionality, it is how a system performs specifically within your desired business processes that will be key in determining the suitability of one platform over another for your business. 

To truly understand what it is you need from a new ERP system and how the implementation process will pan out, it is critical to gain a company-wide understanding of current processes, pain points and quirks. Furthermore, it is essential to understand dependencies and integrations of other systems for each department and how the current processes are likely to change to adapt to the future ambitions of the company. 

  Conduct process reviews with your key stakeholders

  Identify pain points with the current system/process

  Categorise your requirements in order of ‘must have’ and ‘nice to have’ functionality

  Map out your data and systems landscape and plan for where and how you ERP will sit within this architecture.

2. Ensure you receive buy-in from the key stakeholders 

The key stakeholders of your senior leadership team not only need to see the clear plan for ERP implementation, but need to understand the lasting impact of a new system and how that supports company goals. Each stakeholder will have their own requirements and reasons for and against any new system. It is essential to consider each of these wider perspectives when developing and communicating a change plan. Only then will they give their buy-in and, more importantly, their support to the project and are less likely to derail things later on. 

  Align with your senior leadership team on the need for a new ERP

  Define the individuals who need to be part of the selection process

  Align this decision with your wider finance and technology strategy

  Outline the key benefits and risks for each stakeholder of implementing a new ERP system

  Ensure you are thinking ahead and considering how you want the ERP to support your business in the future.

3. Define your budget

As a strategic investment, drawing up a budget for ERP implementation is nuanced and complex. There are seemingly straightforward upfront costs such as software licensing, professional services and other technical costs like applications, hosting, hardware and integrations, but even these can be tricky to calculate. ERP implementation projects tend to scale over time as more users are added, technology partners can handle a range of the workload, and there may be personnel changes required, all contributing to a sliding scale of costs. Furthermore, it is helpful to calculate projected cost-savings from the new system to help offset these numbers.

  Ensure you are factoring in the software, implementation and any on-going support costs

 Understand what potential costs will be saved with the purchase and implementation of a new ERP

  If necessary, engage with a third party that can help you define the budget and business case which can be presented to your leadership team

  Understand the total cost of ownership from the ERP vendors – this will include costs such as software costs, implementation costs, support costs, costs to develop any custom solutions, costs of integrating with third party solutions, costs of hiring new people.

4. Identify the timelines for the ideal ERP "Go-live"

We recommend mapping out realistic timelines for the implementation to keep teams and software partners accountable and help stop costs from spiralling. With any business, there will be a myriad of factors affecting the project timeframe and events in the calendar that will affect start dates and completion dates. 

Take into account the phasing of your rollout. It may make sense to initially implement your new ERP system to a subset of the wider organisation as a test before the wider rollout.

  Account for external change factors (mergers, acquisitions, listing on exchanges)

  Timelines could be influenced by expiry of contracts with current vendors or termination of support by current provider

  Define the phasing samples for implementation rollout.  Provide an ideal timeline for the initial sample phase and subsequent phases. Remember to consider user acceptance testing (UAT).

5. Look for vendors with credibility within your industry

While many ERP systems are industry agnostic, it’s important to ascertain the suitability for your specific industry. Vendors should be happy to point you towards customer reviews and case studies, and even put you in touch with an example of their customers from a business similar to yours who’s found success with their ERP system. 

  Ensure that the vendor has experience within your industry and/or the ERP is used in similar types of organisations.

Bonus

Don’t rush into making a decision

Implementing a new ERP can often be the most costly investment a business will have. That is not a decision to be taken lightly or rushed. Ensure your team has enough time to conduct the required internal research, get stakeholder buy-in, and effectively plan budgets and timelines. 

We recommend working with a technology partner from the outset as they will have specific expertise related to your industry and business size and will ease the pressure of decision making. You can lean on them to guide you through the selection process, help calculate the budget, and ensure you’re set up for success in your ERP implementation. 

Implementing a new ERP is a huge project of change, and engaging with a partner to help you with this can often actually save you both time and money by helping you navigate that change from developing companywide buy-in to mitigating the costly risks that are involved. 

  Review the tasks above and honestly ask yourself whether you have the internal expertise and bandwidth to action efficiently

  If the answer is no, involve a specialist ERP selection partner

  Keep an open mind – the market is changing rapidly, allow yourself to be open to change

  Define a timetable to make a decision by and ensure you have communicated this to anyone who needs to be involved in the decision process.

Conclusion

This self-assessment checklist will provide your selection committee with a plan for reaching a conclusion on the most suitable ERP system. By following these steps, the project will have clear direction and won’t get derailed by unexpected internal or external factors, unconvinced senior leadership members, or pushy sales people. 

The modern, technology-savvy CFO is the driving force behind ERP transformation and powering the selection process. VantagePoint is here to support the CFO. For finance-focused ERP expertise, contact our advisors today to see how we can help you reach your ERP goals.