Evaluating Your Current ERP Software Solution

There are any number of articles and blogs that list the top 5 or 10 steps or top 5 or 10 mistakes to avoid when it comes to an ERP selection project. In truth I think there’s no perfect methodology for evaluating ERP solutions.
The fact that there are just as many positive steps as there are mistakes and the fact that there are far too many failed implementations leads me to believe that the most critical time in an ERP software selection project is the very beginning before the first product has been reviewed. If that’s the case, maybe we should spend our time creating a foundation for success.

Build a consensus that it’s time to evaluate your alternatives.

There is no such thing as a perfect ERP solution. Every firm will have some issues with their current business management system. At some point the sum total of these issues will exceed the firm’s collective tolerance. This doesn’t mean that a change is in order, but rather that a critical mass of users has decided that maybe there’s a better alternative.

Rather than immediately launching a search for a new ERP solution, maybe you should evaluate your current ERP system and see if it’s possible to improve what you have. You could probably call this an informal evaluation to assess options. In this case the comparison is made between your current ERP product and what you could create if you were to improve it and improve your business processes.

Just as you would expect to find once a formal ERP software selection project has been launched, all of the key stakeholders should be involved with a notable difference. This analysis is bottom up rather than top down. By this I mean that system users are really driving the analysis. Once this morphs into a formal ERP software selection project, executive sponsors and other top managers will need to drive the project.

Identify strengths and weaknesses of the current system.

Each person who has any relationship with the current ERP solution needs to say what they like and what they do not like. This includes functionality and reports that the current ERP product does not apparently support. If this preliminary analysis moves into a formal ERP software selection project, considerably more detail will be required. The information collected here doesn’t have to be that detailed, but it does have to be sufficiently detailed that each reported deficiency can be properly evaluated.

Evaluate what needs to be improved.

While some users might identify a specific weakness, this doesn’t mean that changes will be made. Managers need to evaluate whether the weakness reported is sufficiently critical that some form of action is required. In some cases an analysis might reveal that there is no weakness at all. Maybe it’s just a matter of a user’s perception of the current ERP solution. Maybe it’s just a matter of supplemental training. The end product of this preliminary analysis is a list of actual weaknesses.

Determine where you want to be.

While it’s certainly important to improve your current ERP solution, duplicating what you are doing today will not allow you to excel. All it will do is help you maintain your competitive position, and that may not even be possible. A critical part of this preliminary analysis is defining where you want to be in the future. Rather than concentrating on where you are and improving that, ignore your current ERP system. Define instead what you need to do to increase your competitive excellence. Avoid daydreaming of course. Create instead a reasonable picture of where you would like to be in terms of business processes and the ERP functionality that would be require to support that level of excellence. Define where you need to be (mandatory minimum) and where you would like to be (optional maximum).

Identify changes that can be made to the current system.

At this point you have a list of changes that should be or could be made to your current ERP solution. Before you launch a formal project to replace your ERP product, you need to determine if the current system can be improved sufficiently that a new product is not required. For each weakness identified determine what can be done to eliminate it completely or improve it significantly. In addition determine what functionality you need to support your future. Are there functions in the current system that you are not currently using or might be underutilizing? Can reports be created or modified? Can fields be added to track critically required information? Can third party products be integrated? Can the system be modified, keeping in mind the fact that cost is not a factor at this point? All you are evaluating is whether changes can be made, not how much these changes might cost. Most important of all, is there an upgrade available that will eliminate some of these weaknesses or support your future requirements? Please don’t forget that your current ERP software solution is going to be improved over time. Therefore ask your current vendor if some of the weaknesses that persist after you have completed this analysis could be added to the system in the not too distant future.

Determine if you need to evaluate other products.

Once you have completed your analysis, gaps may persist. The question you need to answer now is whether these gaps are sufficiently serious that you may need to make a change or that the cost of improving your current system might be significant. Virtually any ERP product can be modified. The issue you have to address is whether these changes may so alter your current ERP system that the vendor’s normal product upgrade process might be impaired and/or too costly.

This entire preliminary needs analysis has one primary objective. Is it possible to improve your current ERP product and improve your current business processes to the point where change is not mandated? If you are not convinced that you can achieve sufficient improvements or compete more effectively using your current ERP product, then you need to evaluate other products.