This is the first step of the life cycle where the perfect ERP package has to be selected in agreement that fits your business environment. Quality of selection will have a long term impact on the processes of the organization. It is also not easy to switch to another product with concomitant scale of investment and complexities.
In the selection process, ERP packages that are not suitable they are eliminated. The package has to be carefully selected and testified. The right choice will determine the success of the ERP implementation. A proper study and research should be done before the selection.
Evaluation committee: An ERP implementation is not an IT project but a business oriented development. Therefore, in addition to Chief Technical Officer, this committee should comprise of all functional heads and driven by a top management representative. Since all business functions are represented in selection process, the chosen package would have wide acceptance subsequently.
Requirement Analysis: Requirement analysis forms a base for preparing a Request for Proposal (RFP), where important technical and commercial perquisites are incorporated. Common examples of technical perquisites: flexibility, Upgradability, User friendliness, field level security, Operating system and database compatibility. Common examples of commercial perquisites: cost, reference sites, high level project plan, resumes of consultants, post implementation support, financial health of the company, local presence, number of installation and upgrade.
Selection Criteria: Selection criteria are normally in the form of questionnaire and point system, where each question represents a business or technical need. Weightage for each point or a group of points are predetermined which varies according to criticality of the issue. A pre-determined selection Criteria should be ready before actual selection process commences.
Selection Process: Selection process constitutes various stages as mentioned below:
Evaluation Package: This stage is considered an important phases of the ERP implementation, as the package that one selects will decide the success or failure of the project. Implementation of an ERP involves huge investments and it is not easy to switch between different packages, so the right thing is ‘do it right the first time’. Once the packages to be evaluated are identified, the company needs to develop selection criteria that permit the evaluation of all the available packages on the same scale.
Assessing the chosen packages: A team of Experts with specialized knowledge in their respective field will be asked to make the study on the basis of various parameters. Each expert will not only test and certify if the package is apt for the range of application in their field but also confirm the level of coordination that the software will help to achieve in working with other departments. In simple terms they will verify if the synergy of the various departments due to the advent of ERP will lead to an increased output. A choice is to be made from ERP implementation models.
Short listing of vendors: Hundreds of ERP packages are available in the market, which have different concept, architecture and sets of functionalities. Analyzing all the packages is not feasible. Organization need to identify a few best suited packages by looking at product literatures of vendor, finding out which product is being used by their peer organizations and getting help from external consultants. Once a few packages are short listed, respective vendors should be asked to respond to the RFP, as per its format.
Demo and Presentation: Responses from shortlisted vendors are evaluated by the selection committee after collating scores obtained by them and a consensus is reached about their final ranking. Anyone not fulfilling a predetermined vital requirement is eliminated at this stage. Top two or three vendors, are then invited for demo and presentation. Mode of presentation should be carefully scripted and send to the vendors in advance. They should be asked to walk-through a particular business cycle through their vanilla software. They should be specifically asked to clarify any area of concern about their proposal, which may expose weak/ problem area of their offer.
Site visit and contract negotiations: After the committee has reached a decision on best suited package, visits to reference sites are imperative. The vendor should provide reference sites of similar size and industry, identical version and belonging to same geographical location. Team members should have look and feel of the systems operating at reference sites and ask pertinent questions covering overall satisfaction, functionality, cost/ time over run, support concerns etc. After site visit, if the committee members feel that their selection is right, they proceed with final negotiation and procurement. Negotiations are normally held on license and annual maintenance cost, payment plan including a leasing option, support issues and other commercial and legal terms.