Modernizing an enterprise resource planning (ERP) system can feel like an overwhelming and all-consuming process. But it does not need to be. With a little bit of planning (and the right checklist), you can break the process down into a series of manageable (let’s say “five”) steps to help you successfully choose the right ERP software solution for today, and tomorrow.
The first step in any successful ERP modernization is to assemble the troops―the right troops. Your selection team should have representation from the executive team, impacted line-of-business (LOB) leaders, process experts, end-users, etc. The chosen ERP solution will have to tick a lot of different boxes for a lot of different people. Therefore, the best way to make sure that everyone’s needs are met is to get all of the right people involved in the decision-making process from the start.
After the selection team comes together, the first assignment should be to define the project’s scope. This requires input (and lots of it) from the entire team. Focus on building a comprehensive list of system requirements and potential areas to streamline/eliminate/automate business processes. This is not the step to rush through. Take your time, and develop your questions carefully.
With your selection team built and your IT and business needs outlined, you are ready to start building your business case. A compelling and convincing business case is critical. A good business case describes the reasons for acquiring a new, modern ERP solution along with substantial, quantifiable issues that need solving. Focus on the benefits the new solution will provide for the entire company, not just the finance department. Transformative, modern solutions should benefit every employee (either directly or indirectly), and the case you make for the migration needs to reflect that as much as possible. So take your IT and business needs that you have identified and tie them to business issues that the executive team wants to address.
There is one more step to winning the support and buy-in of senior executives, and it is a huge step. You will have to demonstrate that you have considered exactly how modernizing your ERP system will positively affect the company’s bottom line. Two metrics will need to be taken into account.
TCO provides a realistic and holistic measure of the long-term costs required to acquire and operate technology solutions. This metric is usually the top consideration when evaluating potential business application options, especially when those options have the same goals and the same processes to achieve those goals. Research has found that a cumulative TCO of a cloud ERP solution was (on average) 45 percent less than an on-premises ERP solution for small-to-medium business (SMBs) over a four-year lifespan. This does not mean that your ERP selection and implementation process will net these same cost savings, but it does show that numbers are big enough to catch anyone’s attention.
ROI is another method commonly used to evaluate and prioritize technology investments. It is typically used to compare investments that uncover new top-line revenue and growth opportunities. The ROI and long-term benefits of a modern ERP solution can also be extensive. Before the executive team approves a large expenditure, they want to know that the money will enable improvements/initiatives/innovation that are worth more than the investment. Otherwise, they would be better off putting the money elsewhere or not spending it at all.
Once you’ve secured your funding and executive buy-in, the real decision-making begins. You will need to narrow the choices of those vendors that can meet the requirements. Create a shortlist of potential offerings that meet most of your general, agreed-upon conditions. Then, with those options outlined, you can start digging a little deeper to discover what it is that truly sets each vendor/solution apart from one another.