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Charlotte McConville07-Nov-2023 14:44:1212 min read

5 ERP selection misconceptions - and what you should focus on instead.

Think for a second about what led you here. I can almost guarantee that it had something to do with implementation, budget or hosting options when it comes to selecting ERP software. I’m right, aren’t I? 

You aren’t alone. Our research shows that these are the main concerns for many businesses looking to change or upgrade their current ERP system. I’m here to tell you why these shouldn’t be your biggest worries, and what you should focus on instead for a successful ERP software selection. 

We all know our SAPs from our Oracles, and our Microsofts from our ServiceNows, but regardless of which ERP vendor you choose you need to focus on the things that are going to drive business value.

Implementation is a journey and it’s important to take the right road at the right time to arrive on time, on budget, and most importantly on value. 

So let's take a look at what you shouldn’t be worrying about…

What’s the easiest ERP software for training and change management?

Getting your people on board and up to speed with new ways of working in a new system is important, no doubt about it, but it shouldn’t dictate how you make your ERP selection. 

When you implement a new system everyone needs to be on the same page and eager to use your new ERP system - and making that happen starts on day one of your program.

But, while adoption is an important part of program delivery and the number one driver of SAP program success, it requires the same approach and the same effort whichever ERP software you choose. 

So, when you’re choosing a new ERP system don’t let vendor claims about training and change management throw you off track - choose the ERP software that best delivers your system requirements.

Change management best practice stays the same regardless of what software you choose.

What’s the cheapest ERP software to implement?

Let's talk about the “M” word — money. Budgets can be tight and everyone is always looking for a way to cut costs. But let's be real, ERP implementation is always going to be costly and there’s no use overthinking it.

When you consider your budget for ERP selection and implementation, keep one thing in mind - realistic expectations. You can’t expect a full-scale business transformation on a shoestring budget. 

ERP is expensive, and getting the budget for what you need can be tricky. The best way to do this is to align ERP selection with your business strategy.

You need to build a strong business case that demonstrates how ERP is going to deliver value for your organization. 

By having a strong business case up your sleeve, you’ll be ready when the inevitable question of cost arises. Use your business case to show why ERP is a worthwhile investment, and what your business people are going to get for their hard-earned cash. 

Your business case should demonstrate how ERP will deliver your ERP strategy and the return on investment the business can expect. You might find that not only do you win over some stakeholders, you might even increase your budget.

One thing to consider is licensing models. Most ERP systems now run on a subscription basis, so there is no longer a one-off cost but an ongoing fee. Ultimately reducing your initial CapEx spend, but increasing your OpEx costs. 

The fact of the matter is, ERP selection and implementation is going to cost what it costs - even the cheapest ERP system is going to be a big business expense. 

Instead of choosing the cheapest ERP software, choose software that does what you need it to do, and it will pay for itself in the long run.

Cloud vs. On-Prem ERP Hosting

In this day and age, there are very few choices left around hosting, in fact, there’s one - the cloud. Okay, so it’s not the only option but it soon will be. On-prem ERP is going the way of VHS and LaserDisc, so worrying about hosting will do you no favors,

You may have concerns about the security and robustness of cloud hosting, but consider that even governments and defense companies are now embracing the cloud and it’s clear the perceived risks have largely been addressed.

As vendors are now responsible for the maintenance of their client’s systems, cloud hosting is constantly under development to ensure that there are minimal risks to your organization and its data. 

Of course, if you really don’t want to rely on the cloud, you can always discuss on-premise or hybrid options with your vendor. The problem is that in 3-5 years you may have to transfer all that data over to the cloud anyway. 

Also, consider this — do the business people using your current system know where it is hosted?

Hosting is a technical consideration. As long as your future ERP system runs your business processes and delivers on its business case, hosting will be pretty far down most people’s list of priorities. 

You should treat ERP implementation as a business project, not an IT project. Make your ERP selection based on strategic business objectives. The technical considerations of that strategic decision can be managed by your SI and your vendors who are well-equipped to host your system in a safe and secure environment wherever that may be.

What’s the easiest ERP software to implement?

ERP implementation is never easy. Whatever software you choose it will likely be the biggest, most complex program your business ever runs. Don’t look for easy solutions, it isn’t the way to go about things. 

That’s not to say that program delivery isn’t important - it’s very important. But best practices look the same regardless of what software you choose. If you’re a big organization with multi-faceted operations - implementation is going to be messy regardless of what you choose. 

When it comes to making implementation easier, it’s the work you do up front that makes the difference.

Preparing your data in advance will give you a better scope for what your implementation is going to entail. Whether it’s assessing, cleansing, or archiving, understanding your data and how it works within your system is vital. 

Reducing customization as much as possible is also important. Heavy customization and reworks take time and money to implement and increase the complexity of your implementation. The catchphrase for implementing is; keep it simple, keep it short. 

Implementing ERP will never be easy. There are things you can do during the selection process that will make it easier, like having a clear understanding of your requirements in advance so you can choose a software that requires fewer customizations to deliver your business requirements. 

But is there a single ERP software that is easiest to implement? Absolutely not.

NFRs - Non-functional Requirements

NFRs are an important part of ERP selection - they are a requirement after all - but to what degree should they impact the software you ultimately choose?

As ERP becomes increasingly SaaS and IaaS the difference between vendors is shrinking in a lot of respects - including NFRs. In the Wild West days of the 1990s, you had to be much clearer about what your NFRs were. 

Today, a lot of NFRs have become pretty standard, both in terms of what customers expect and what ERP vendors offer. 

Instead of spending time building a list from scratch, accelerate the process by using a proven, standardized list that you can tweak in one or two areas to meet your needs. You can then cross reference that list against what your vendor provides - easy peasy.

NFRs are a requirement of ERP selection, but with the increasing standardization from vendors, it’s no longer something you should be overly worried about. 

Your primary concern should be choosing the ERP software that best delivers the functional requirements of your business.

So, what should you consider for ERP selection?

I wouldn’t be a very helpful friend if I didn’t offer a couple of pointers on what you really need to consider on your ERP selection journey. So, here’s a few suggestions:

Where do you want to be after implementing ERP?

Not you personally but your organization.

Don’t treat ERP implementation like it’s just an upgrade. This is an opportunity to transform your business.

To do this, you need to align your ERP selection to your business strategy. 

When you understand your business strategy, you can choose the ERP software that’s best suited to your organizational goals. 

There’s no use implementing ERP that recreates what you have today. You need to consider where your business wants to be in 3, 5 or even 10 years time.

To understand this, you need an ERP roadmap. An ERP roadmap defines your business strategy, your business case for ERP, the technology you have today, and the future ERP solution that will deliver what your business needs. 

Find out how to create your ERP roadmap with the Ultimate ERP roadmapping guide.

Embrace As A Service

We’ve already gone over how ERP has adopted a service-based approach and it's important to embrace this change. Whether it’s software, infrastructure or platform as a service, they all bring their own benefits.

Software as a Service (SaaS):

Cost-effectiveness: SaaS eliminates the need for organizations to purchase and maintain their own infrastructure. This significantly reduces upfront costs.

Scalability: SaaS ERP solutions can easily accommodate the changing needs of businesses, allowing them to scale up (and sometimes down depending on the license) according to requirements.

Connectivity: SaaS ERP can be accessed from anywhere with an internet connection, 
enabling employees to work remotely and enhancing collaboration.

Infrastructure as a Service (IaaS):

Flexibility: IaaS allows businesses to tailor the infrastructure to meet the specific requirements of their ERP systems, providing the necessary computing power, storage, and networking resources.

Disaster recovery: IaaS providers often offer robust disaster recovery solutions, ensuring that critical ERP data and applications remain safe and accessible in the event of an unforeseen incident.

Reduced maintenance: By outsourcing infrastructure management to the IaaS provider, organizations can focus more on using and optimizing their ERP system rather than managing the underlying infrastructure.

Platform as a Service (PaaS):

Faster development: PaaS can accelerate the development and deployment of ERP solutions by providing tools and resources that simplify the development process.

Cost-efficiency: By eliminating the need to manage the underlying infrastructure, PaaS reduces the costs associated with deploying and maintaining ERP systems.

Customization: PaaS allows for customization and integration with other business applications, enabling businesses to tailor their ERP systems to meet specific needs.

Of course, with a new approach comes a new structure. Almost all ERP licenses are now subscription-based instead of a one-off purchase. Put simply, ERP is now Netflix. 

As such, it’s time to walk CapEx out and welcome OpEx. It’s important to be aware of the changes to upfront and ongoing costs to ensure you don’t get caught out. When laying out the costs for your ERP selection and implementation you need to incorporate the cost to run the system into annual budgets. So, not only do you need to budget for the here and now but also for the future.

Routes to Market

How hard can it be, you ask. You write your RFP, go to market, select your vendor and poof done right? Wrong. 

There are four popular routes that you can head down, all of which bring their own benefits and challenges, and depending on how you want to approach your selection journey can help determine the route to take. 

We’ve done a deep dive on these routes to market here - but here’s a quick overview.

Option 1 - Single Source SI Selection

There are certainly benefits in this type of go-to-market approach, particularly as this is often a single-step sourcing process to select an SI, but it requires a high degree of in-house expertise to define requirements in the right way. This can lead to an increased cost, largely due to the increased role of the SI.

Option 2 - Select the application then select the SI

This is a two-stage sourcing process, it can significantly elongate the duration of the selection cycle as the process to select the SI can’t really begin until the software application selection has concluded.

Option 3 - Engage the SI to select the application then engage the vendor

This option effectively combines elements of Option 1 and Option 2, with the SI providing the application and market expertise to help make an informed decision. This is still a two-stage sourcing process, as the SI is selected first but there is still the need to engage with the software vendor/publisher with regards to licensing and the overall subscription cost.

Option 4 - Select the application then select the SI (with independent market expertise)

Option 4 is our recommended route to market. This option builds on Option 2 with the addition of independent market expertise to supplement the internal team. This lowers the risk and can also help to reduce the duration of the sourcing process through the use of accelerators and overall market knowledge. 

It’s important to consider your routes to market in advance of ERP selection as it can significantly reduce the time you spend chasing tails and running around headless. Focus on your business strategy, your current software and your organizational needs and restrictions.

Once you know your route, all that is left to do is engage and start your ERP selection journey. 

Now what?

It would be naive to tell you not to worry about ERP selection. It’s a huge change for your organization and your users, and it will be a significant adjustment. 

The aim of this blog is to provide some clarity on what you should and shouldn’t be worried about. Stop sweating the small stuff and you can truly open up your ERP selection search to a new realm of possibilities. 

If you’ve gone into ERP selection assuming you’ll go on-prem, or assuming you’ll choose SAP, by refocussing on your business requirements with an open mind, you may find that Oracle or Workday provides better overall options that you hadn’t ever considered. 

Still concerned about the ERP selection process and where to begin? We can help. As a totally independent business side consultancy, we aren’t swayed by any particular vendor and we work with your best interests in mind. Speak to us today to find out how we can help you get the most from your ERP selection and implementation. 


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