The ERP Evaluation Process: A Detailed 10-Step Guide
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Many organizations begin the Enterprise Resource Planning (ERP) assessment process when they realize that their existing ERP system is no longer meeting their requirements and that it is time to replace it with a more modern solution with advanced features to address their organization’s growing requirements.
In this article we cover
- Step 1: Getting Commitment to the ERP Project
- Step 2: Determine Your ERP Software Selection Team
- Step 3: Define Your ERP System Requirements
- Step 4: The Request For Proposal (RFP)
- Step 5: Narrowing your Vendor and Product Search
- Step 6: ERP Vendor Demos
- Step 7: Assessing the ERP Product Roadmap
- Step 8: Getting Customer Referrals and Feedback
- Step 9: Evaluating the Assigned Vendor Teams
- Step 10: Making Your Final ERP Solution Selection
- Getting Selection Assistance
While the desire to replace the old legacy system might be strong, it is important to approach the ERP evaluation and selection of a top ERP system in a methodical and detailed manner.
Following a methodical approach will save your organization considerable time and greatly reduce the risk of failure if you select the wrong system. Not to mention the negative impact a wrong solution will have on your customers, vendors, employees, and overall business.
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In the following article, we will outline the crucial steps in the ERP evaluation process and lay out a methodical approach to finding the right system for your business.
Step 1: Getting Commitment to the ERP Project
First, we need to consider the level of commitment for a new ERP project, and that all begins with senior management’s support. While senior management might agree on the need for a modern ERP system, ensuring their support goes beyond merely approving the project is important. Deeper strategy and planning are necessary.
This strategy can take form through hiring an experienced consultant to guide the process, appointing the project team members who will lead as the internal point people, and site visits to other offices to learn about organizational needs and challenges.
Engaging Key Stakeholders
Beyond senior management’s support, it’s important to engage with key stakeholders across various departments and functions of an organization before making any significant decisions. Talk with individual employees across all levels regardless of seniority – what about the current system do they like, and what are they most frustrated with? Which processes can be streamlined better or improved upon?
To define the requirements of a new ERP system, leadership must assess and understand the needs across the organization to better inform their decision-making and ensure the selected solution does not heavily favor only certain business functions. Engaging early on also helps mitigate resistance to change later, typically if a new system introduction surprises employees.
Addressing Conflicting Priorities
Furthermore, management should consider any conflicting priorities or events. For example, if the company has other major milestones and internal goals that require considerable time and attention, this can become a problem.
To avoid derailment of the ERP project, all plans, interests, and priorities should be addressed upfront wherever possible. This includes discussing resource allocation, timelines and scheduling, and the level of involvement from the specific project team members.
ERP system implementation is time-consuming and expensive, so it’s critical to flesh out these conversations in advance. By understanding the complexity and scope of the project, especially as it relates to other company priorities, leadership can make sounder decisions on timelines, budget, and employee focus.
Preparing for Change Management
Commitment to an ERP project also means preparing for resistance to change. Organizations that focus on change management from the very start will achieve greater support and adoption rates for their new ERP system. Early employee buy-in will lead to stronger system utilization and a smoother transition process for all parties involved.
Leadership can help cement this commitment to change by devising a communication plan and involving all departments and staff in the process as early as possible. Creating a culture of enthusiasm for a new system will be difficult if employee voices do not feel heard.
Step 2: Determine Your ERP Software Selection Team
Building an internal project team for an ERP evaluation and selection project is a critical step that demands careful consideration and strategic planning. The team should be a diverse mix of individuals from various departments such as IT, finance, operations, and any other key functional areas affected by the ERP implementation.
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It is crucial to select members who have a deep understanding of their respective areas and possess a broad view of the organization’s operations and strategic goals. This diversity ensures that the team can assess the ERP system from all necessary perspectives, ensuring it aligns with the broader business objectives and can meet the unique needs of each department.
Appointing a Strong ERP Evaluation Project Leader
When assembling the internal project team, it’s also important to designate a strong project leader who has both the authority to make decisions and the ability to navigate the complexities of an ERP project. This leader should have experience in project management, a clear understanding of the ERP landscape, and the capacity to communicate effectively with both the team and senior management. The project leader is pivotal in keeping the team focused, motivated, and on track with the project timeline.
By establishing clear roles, responsibilities, and expectations from the outset for each member of the ERP evaluation team. The project leader can ensure that the team works cohesively and efficiently, making informed decisions that will ultimately lead to the successful selection and implementation of the ERP system that best fits the organization’s needs.
Ensuring Senior Management Commitment
A key commitment required from senior management to ensure the success of the ERP evaluation process is to provide the project team with sufficient freedom and flexibility. This means relieving them of excess duties by reassigning unrelated tasks to other staff members or recruiting new employees for these roles.
It is counterintuitive for management to emphasize the significance of a new ERP System while simultaneously burdening the evaluation and project team with extra responsibilities. True commitment means empowering the ERP team and supporting roles to excel without unnecessary obstacles.
Step 3: Define Your ERP System Requirements
Before beginning the ERP selection process, an organization must define and document its business objectives and goals. Engaging with both employees and customers to understand current pain points is a great start to defining requirements for a new system, such as through interviews, focus groups, and “town hall” meetings.
Ask Big Questions
What does success mean to your organization, and what is the proposed roadmap to get there? Consider revenue goals, efficiency objectives and metrics, product transformations, territory expansions or acquisitions, customer satisfaction, and employee productivity. Nailing down these business requirements and objectives will help you understand the necessary criteria for a new ERP solution.
Remember that many ERP software systems will come with features that may not be totally necessary or relevant to your business, so it’s key to remain focused. It’s recommended to rank the needs of a new system by department in order of importance so that you are not distracted by the various functions that might initially sound enticing but end up unnecessarily adding more time and money to the process.
Evaluate Technical Requirements
After clearly defining and prioritizing their business requirements, organizations must then carefully evaluate their technical needs and specifications. For example, which is best for you, a cloud-based ERP or on-premise ERP solution? Cloud software is stored on the provider’s servers and accessed through an interface like a web browser. On-premise software is installed through a company’s own server hardware and hosted & managed locally.
Consider other applications in use that must be integrated with the system, such as e‑commerce tools, or other third-party installations you may be using. These factors all become critical requirements during your ERP selection process.
Step 4: The Request For Proposal (RFP)
You’ve got the commitment from leadership and the company; your business requirements are documented, and technical requirements are prioritized. Now, it’s time for the next Crucial step in the ERP evaluation process: crafting your request for proposals or “RFPs.”
Spending time developing the RFP is crucial – a sloppy, scattered process will yield exactly those results.
Essential Components of an ERP RFP
RFPs typically include information such as the organization’s background context, business needs and system expectations, project scope and budget, vendor evaluation criteria (qualifications and requirements), terms and conditions, contacts, and deadlines. This helps the ERP vendors and the internal team organize themselves and clarify the details.
The more detail you can include in your RFP, the better – organizations often receive more thorough responses from vendors when they are given sufficient information upfront. Plus, thorough RFPs can help safeguard a business against misunderstandings or future disputes, such as disagreements on promised functionality and/or costs.
For larger organizations, the RFP can be further segmented by department, ensuring that all major requirements are properly accounted for. Consider grading the order of importance for these requirements — again, not only to assist vendors with their self-evaluations but also for your organization’s roadmap to a new system.
Step 5: Narrowing your Vendor and Product Search
Before sending out an RFP, research, identify, and narrow down a product and vendor group that suits your organization’s industry and business size – ideally fewer than a dozen but more than seven. Sending too many invitations may cause decision paralysis, and starting with too few can leave you starting over if they are not a fit.
Top10ERP offers dynamic comparison tools to help you shortlist potential candidates. These tools allow you to filter ERP systems based on specific criteria and view them side-by-side in a matrix format for easy comparison.
- “Best Fit” ERP Comparison Tool: Select requirements tailored to your business needs, such as industry, company size, and technological requirements. This tool highlights ERP software systems that match your criteria and excludes those that do not.
- “Head to Head” Comparison Matrix: Evaluate specific ERP systems against their competitors’ offerings side-by-side. Remove systems that are out of your price range or unmet needs.
- ERP Vendor Comparison Pages: Clarify how different product offerings from a single vendor differ and determine which ERP systems are best suited to your business.
If you find these tools overwhelming, you can request custom selection help from our experts via an online request or a scheduled consultation. Our experts can recommend excellent products you might not have previously considered.
Once you have narrowed your options, Top10ERP enables you to request free price quotes or software demos directly from the vendors. You can then send your RFP to the selected vendors for more specifics on how to move forward.
Preparing for Vendor Responses
Organize a system in advance to track and grade the ERP vendor responses. Early red flags include poorly written responses, lack of details, or late submissions. If communication is already slow or messy, you likely won’t want to work with that vendor long-term.
Compare responses to your RFP criteria, considering:
- System functionality
- Scalability
- Integration capabilities
- Budget
- User experience/ease of use
- Product roadmap
- Credibility (other companies in your industry using this vendor)
Continuously rank and eliminate options based on your organization’s most pressing needs and long-term goals.
Customization and Costs
Avoid products that require considerable customization to fit your business, as this can drive up implementation costs significantly. For a primer on costs, refer to our ERP System Pricing Guide for 2024.
Maintain a positive relationship with eliminated vendors, as they can provide valuable information and guidance regarding the remaining candidates and any future needs.
Step 6: ERP Vendor Demos
Many vendors may offer live demonstrations, an excellent way to see how a proposed ERP system works in real-time. It’s recommended that you evaluate live demos from all options remaining on your list rather than only a few so that you can assess without bias.
![Erp evaluation demos](https://top10erp.imgix.net/blog-content/erp-evaluation-demos.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=1440&ixlib=php-3.3.1&w=1440&s=a89cb6cd2915337498636d175e001d0f 1440w, https://top10erp.imgix.net/blog-content/erp-evaluation-demos.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=1280&ixlib=php-3.3.1&w=1280&s=baf666270712db48eecc4db5991e0b2c 1280w, https://top10erp.imgix.net/blog-content/erp-evaluation-demos.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=1024&ixlib=php-3.3.1&w=1024&s=08260c364c219974ecd50f4222f73619 1024w, https://top10erp.imgix.net/blog-content/erp-evaluation-demos.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=768&ixlib=php-3.3.1&w=768&s=d1a432889ed742790ba158103119f97a 768w, https://top10erp.imgix.net/blog-content/erp-evaluation-demos.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=576&ixlib=php-3.3.1&w=576&s=b11c5b639d6fcbe6c25a671398a2ebe2 576w)
Engaging with Vendors
Let the vendor know you plan to record the demonstration, whether remotely via video conference or in person on-site. This is useful when deciding whether you want to revisit a specific topic to evaluate or support your business’ position if there is a dispute on functionality with the vendor down the line.
Spend the time creating a scripted demonstration that each vendor must adhere to. This will provide a more accurate representation of each system’s functionality and ability to address your key requirements. If the demos all follow a similar pattern, this script will also help you compare the various systems more directly.
Don’t be afraid to ask questions during these demos – these demonstrations are meant to inform you about their system’s operation, not a glassy sales pitch. Asking questions can help give you additional insights and keep ERP vendors more engaged and cooperative when the scripted demonstrations are done. It also assures a feature or capability is relevant to your specific business processes.
Evaluating the Demo
Ensure all team members who attend have scorecards to evaluate the demonstration. It’s recommended that they complete those evaluations within 24 hours of each software demonstration so that the details are still fresh and more accurate.
Better yet, meet directly after the demonstration to exchange thoughts and feedback while it’s still fresh.
Step 7: Assessing the ERP Product Roadmap
Given the typical lifespan of an ERP system within an organization — usually spanning seven to twelve years or more — it’s crucial to look beyond current functionality. Understanding the vendor’s long-term vision and commitment to ongoing development is equally important.
Insights from the Product Roadmap
An ERP Product Roadmap provides deep insights into the vendor’s long-term plans for the product, ensuring alignment with your business’s evolving needs and future growth objectives. It details future direction, including upcoming features, enhancements across modules like Sales, Finance, and Inventory, and planned technological advancements such as integrations with MS-Office, Business Intelligence, Cloud, and Mobile technologies. The roadmap highlights plans for innovations like Artificial Intelligence and Machine Learning.
Using the Roadmap for Strategic Decisions
Organizations can use the roadmap to determine if the ERP system will fulfill their future needs, aiding in strategic investment decisions. This is particularly vital when exploring solutions from vendors with multiple ERP offerings or smaller vendors with limited financial resources.
Finding and Evaluating Roadmaps
Many ERP software developers publish their Product Roadmaps online or distribute them through their sales and marketing teams. When considering a specific ERP system, review the current roadmap and request previous iterations to assess the vendor’s track record in delivering promised functionality.
Examples:
- Microsoft — Release plans for Dynamics 365, Power Platform, and Cloud for Industry — Dynamics 365 | Microsoft Learn
- SAP — SAP Road Map Explorer | SAP Community
Aligning with Strategic Objectives
Assessing whether the vendor’s future plans and technological advancements align with your strategic objectives is paramount, especially in fast-moving fields like artificial intelligence (AI), machine learning, cloud computing, data security, and mobility. Understanding these plans allows you to anticipate leveraging these technologies to automate processes, gain deeper insights from your data, and enhance decision-making, ensuring the chosen ERP system will protect your data against evolving threats and support a mobile workforce.
Step 8: Getting Customer Referrals and Feedback
Skipping vendor due diligence is a risk no organization should take. Evaluating the experiences of current customers can uncover valuable insights. Request vendor customer references from current clients in your industry around the same company size as yours.
Take your time to ask what they like and what they don’t like about the system. Who is their vendor team for support and implementation?
Be attentive to significant variances in feedback, especially if one business reports dissatisfaction with features that another praises highly. Such discrepancies warrant further investigation to determine the relevance and performance of those features for your organization. Cross-check with customer references and consider visiting the vendor on-site if you want a final nudge in your decision-making.
At Top10erp.org, we have curated a comprehensive ERP case study library that can be searched by industry to support your customer-based research. In addition to reading vendor case studies, be sure to contact current customers in your industry using the ERP system.
Step 9: Evaluating the Assigned Vendor Teams
A crucial aspect of vendor due diligence is evaluating the team assigned to your project. Distinguishing between employees and independent contractors and assessing their skill sets is vital for a successful ERP implementation and seamless support. The team’s expertise and industry experience profoundly impact the system’s customization quality, integration effectiveness, and promptness in resolving post-deployment issues.
Importance of Knowledgeable Teams
Opting for a vendor with a team knowledgeable in your sector and skilled in the latest technological advancements ensures that innovative insights and solutions are tailored to your needs.
A competent vendor team can expedite the implementation process, reduce operational disruptions, and facilitate a smooth transition to the new system. Thus, evaluating the vendor team’s expertise is as important as assessing the ERP system, laying the groundwork for a productive and successful partnership.
Narrowing Down and Negotiating
Reduce your decision to two or three potential vendors based on the best value proposition against your criteria, not just the lowest cost. Even if one solution appears superior, keeping multiple vendors engaged is wise until the final decision is made. Negotiate important components with the ERP vendors, such as price, payment terms, scope, deliverables, penalties, and possible discounts.
When reviewing the contract agreement, ensure thorough verification:
- Verify credentials and licenses
- Read the fine print
- Ask questions for any clarification needed
Seeking legal review and advice is essential to avoid any unforeseen terms. The goal is establishing a positive, long-term partnership that benefits both parties.
Step 10: Making Your Final ERP Solution Selection
Should you follow these selection processes, you should rest easy knowing you will have at least three quality ERP solutions to choose from. Now, you will need to make a final decision to move forward to implementation.
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At this point, there are likely no bad choices, because you did your homework and followed a proven process. Evaluating and selecting a new ERP system is an exciting milestone for an organization, and it can be done successfully.
The best results come from a methodical approach, including an in-depth needs assessment, leadership support, the right evaluation tools, thorough vendor vetting, and a long-term strategy.
Getting Selection Assistance
There are more options for manufacturing ERP software now than ever before. Manufacturing businesses may find it overwhelming to carefully evaluate the top solutions.
We are here to help and have developed our website exactly for this purpose. Top 10 ERP system index has been a trusted source for unbiased and essential decision support for ERP solutions. Our expert resources, articles, and tools are geared specifically for Manufacturers and have assisted over 950,000 businesses in the United States and Canada.
You can start evaluating ERP software options today with our industry-specific ERP guides or dive into our whitepaper library and case study library to see how these systems have helped businesses just like yours.
![Erp comparison](https://top10erp.imgix.net/blog-content/erp-comparison.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=960&ixlib=php-3.3.1&w=1440&s=dc3cd28561f2ac32bfe25771ff13b436 1440w, https://top10erp.imgix.net/blog-content/erp-comparison.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=853&ixlib=php-3.3.1&w=1280&s=6d9bc64e88fa94058c9d98500a94bbe0 1280w, https://top10erp.imgix.net/blog-content/erp-comparison.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=682&ixlib=php-3.3.1&w=1024&s=c3b011d8f88eafaa5e2281c6662540a7 1024w, https://top10erp.imgix.net/blog-content/erp-comparison.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=512&ixlib=php-3.3.1&w=768&s=1131f9bbbdfba659b25c92e69d4ad0cd 768w, https://top10erp.imgix.net/blog-content/erp-comparison.jpg?auto=compress%2Cformat&crop=focalpoint&domain=top10erp.imgix.net&fit=crop&fp-x=0.5&fp-y=0.5&h=384&ixlib=php-3.3.1&w=576&s=11fdfd7271a2fe8550d73008b7539bd9 576w)
Or let our experts provide a proven short list of ERP systems that fit your needs, free of charge of course. We personally analyze your requirements, handpick the ideal solutions, and connect you with the top ERP vendors for customized price quotes, demos, and next steps.
After reviewing all these steps, you may want to hire a seasoned ERP consultant to guide your business through this process. In our next article, we will address when to bring in a consultant and how to find the best one, so stay tuned!
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