by Scott Holter, CPIM, Director, Meaden & Moore

photo for ERP webinar series hosted by NWIRCConsidering a new ERP System? Like marriage, it is a decision that should not be taken lightly. While there are many choices, what we ultimately seek is a long-term, mutually beneficial partnership. In business, it is perhaps the highest IT investment risk in an organization from a time, revenue, and execution standpoint. The cost of switching is high; thus, companies should deliberate the following elements when endeavoring on an ERP Selection Project.

• Customizability – The ability to customize the system can be a blessing and a curse. This depends on the business and IT strategy. While it may not be important for companies competing on a low-cost/low-price model, it is vital for companies that compete on product or process differentiation.

• Technology Innovation – Advanced, modern technology protects investment longer with leading edge product development. Many prefer the latest offerings, but not everybody needs modern web-based tech. Although somewhat outdated, mature products serve a good purpose. Provided there is a large installed base that isn’t shrinking with customers fleeing the platform, it can be a viable option.

• Total Cost of Ownership (TCO) – Enterprise software costs can vary greatly between deployment models. On-Premise or Hosted Model solutions generally have high initial application costs, with lower annual maintenance fees. Software-as-a-Service (Saas) Models implement a mid-range perpetual subscription structure, indefinitely. Elements to compare and contrast include user devices (handhelds), specialty hardware, licenses, support, upgrades, implementation services and internal staff costs. In addition to general company preference, by taking a look at the TCO over the course of ten years, this provides an investment baseline during the evaluation process.

• Internal Resources – Equally crucial to success, proper resource allocation is required from the initial selection process through implementation. Project management and championing are important functions to ensure tasks and milestones are timely executed, run “business as usual” during the transition, and garnering user adoption. If there are constraints, consider dedicating an internal team member or 3rd party for additional support.

• User Experience – Ease of use, aesthetics and automation all appeal to the next generation of users. Businesses evolve and grow, and so does the workforce. It would be wise to consider the new users of the system in succession planning discussions. Remember the days of wired, rotary phones versus the mobile touch screen devices we have today? The work environment is changing. With virtual and remote settings, gamified incentives, social media connections, AI, automation, and the expanding self-service nature of business, adapting is key.

There is a lot to consider, and the above items are the tip of the iceberg in a selection process. The various layers and facets of a business need to be thoroughly examined. Pairing comprehensive requirements (form, fit, function) that align with strategic initiatives will lead you down the aisle of a successful ERP software matrimony.

Side Note: NWIRC is hosting a free webinar series featuring Scott Holter in February. See all the details at: www.nwirc.org/events.