What kind of ERP solution do you seek, Mr. Right or Mr. Right Now?
When evaluating a new ERP system, companies have a hard choice to make. Do you they want something that can satisfy their needs best right now or are they looking for solutions that will grow with them long term and meet needs that they don’t know that they have.
It is a tough choice to evaluate and determine both short term (Mr. Right Now) and long term best fit (Mr. Right). Just like when you are searching for your soul mate, you need to think about this decision in the long term.
Therefore it is best to focus on a total evaluation of the vendor and the solution. Most companies do not rip and replace their ERP system frequently, so selecting the right solution for you now and long term is critical. As part of the total evaluation, you should evaluate the vendors based on several broad categories including:
- Functional fit
- Alignment of the solution to strategic goals
- Application architecture
- Technical architecture
- Vendor assessment
- Total cost of ownership
- Implementation approach
- Post production support requirements / process
In the next few blogs, we will explore some of the common questions and decision criteria for each category. On this blog, we will explore the first two categories:
Functional fit and alignment to strategic goals
There are a wide array of cloud applications in the market. They are at different maturity levels in terms of their features and functionality. One of the challenges of evaluating a product is that the evaluation team is typically grounded based on what you as a company do today. Evaluators’ rankings are often based on “can I do what I do today in your solution”. Although a critical factor in the evaluation process, this type of thinking needs to be balanced with an open mind when reviewing the products. Here are four additional considerations:
Consideration 1: It’s the status quo you know
What you do today is often based on the limitations of your existing solution. Do you do what you do today because that is the best way to do it or the only way to do it?
Consideration 2: What is your goal? Replication or improvement
When making such a monumental change, you should challenge your team to ask a simple question – Why? Why do we do this? Can we accomplish the same goal a different way? You may find that this opens up opportunities to streamline your processes and transform parts of your finance function.
Consideration 3: Evolution (vendor)
The beauty of the cloud model is that the vendors can sink all of the R&D (one leading vendor invested $460M into their product in 2015) into one version of the software. The vendors release two to four new versions a year. For large organizations that are evaluating their options, you must take this into account. If you are evaluating the products now, you will probably not go live for 10 to 24 months by the time you finalize the contract and actually implement. That is four releases of stuff between what you see today vs. what you will implement. You need to take into account the roadmap for what will be there on your Day 1 (not today which is 300 to 600 days before you flip the switch).
Consideration 4: Evolution (you)
Most businesses do not say, “We are going to stay stagnant.” You are picking a solution that will last you for the next five to twenty five years. You will change. Regulations will change. Technology will change. Your needs will change. What can you live with not being there on day one from a feature perspective for a year or two for the long term benefit of a cloud solution that is constantly releasing new features? What vendor is best aligned to help you meet your long term strategic goals, which are without a doubt different than what you do today?
If you only evaluate on what the system can do today, you are potentially making a short term decision for Mr. Right Now. He looks good. He will make you happy in the short term, but do you want to marry Mr. Right Now?
You should hold out for Mr. Right – the right fit for you long term as you go through the many phases of your ERP life from selection, implementation and the many phases of change. This system will be with you for the long term – make sure you choose wisely. If you look closely enough, you might realize that Mr. Right is actually pretty good now.
Posted on Tuesday, May 3, 2016