The Short on ERP Vendor Shortlisting
You need a new enterprise software solution, you know it, your business has been screaming for it. There are an ungodly number of excel sheets being used to track, record and analyse information, your staff are having to enter information into multiple systems and your clients are starting to notice. The pressure is on and you know what it is that needs to be done, it’s time the dated system your using is changed.
So you begin googling what modern ERP systems are out there, you may even look on forums and hit up some old networking buddies to see what new innovative system they are using. After scrolling forums and talking to your peers your list of systems is longer than you thought. News spreads that you’re looking for a new system and soon vendors you didn’t even know existed are calling you or friends of friends start telling you of other solutions you should check out. Now your list of requirements and possible vendors has grown even more.
You think you have the perfect solution to cutting this list back and you begin calling the vendors on your list hoping to cut back. Then each vendor starts telling you of the cool new functionality they have, how they are on “the cloud”, can talk to social media and can even help you lose weight… I mean drop costs… anyway, your list isn’t any shorter, but that’s ok right? The wider the net the better the chances are of getting the right system… does this sound familiar?
By taking such an approach an organisation increases the risk of choosing the wrong system for their business and falling for the hype of some sweet talking sales men. A new ERP solution is a good investment at best and an expensive mistake at worst. For this reason, it is best to mitigate against the risk of selecting the wrong system and culling your possible vendor list to a targeted and more manageable number. This article looks at some tips to help you shorten your vendor short list and have a more targeted system selection strategy.
Vendors need to meet your scope of business requirements
We can’t over stress this point, a consistent theme amongst all the articles on ERP selection and the ones written by Solution Minds is that, prior to any selection process your organisation needs to have clearly documented the requirements of the new system.
Even if this is at a high level, your organisation should at least have an understanding of what functionality it is that you are looking for. For example, are you after a system to improve your financial processes like journaling or invoice processing or budgeting? Or are you after a solution that also manages organisational structures, payroll and leave?
There are many generalist solutions out there, but by determining the scope of your business requirements you will be able to target the vendors that are specialists in the areas that mean the most to your business.
Vendors should have experience in your industry
Another way to cut down the number of vendors and to better target those that are most likely to deliver the best solution to your organisation is to look at vendors that have referenceable experience within your industry or industries similar to yours.
There are a couple of reason for this. Firstly, it shows that the vendor is aware of the needs of your business and have a solution that at least meets the basic requirements of organisations operating in your industry. Secondly, future updates and improvements will most likely be tailored to suit the needs of your industry because many vendors will plan their development efforts on the needs of the largest segments of their user group. Finally, the vendor should understand the terminology used in your industry making it easier to communicate to your users, which could make implementation a little easier for your staff.
Vendors need to operate in your location/country
There is no point in having a vendor on your list, if the vendor is unable to service you because of your location. This is important for both the initial set up of the system and for the on-going support once your organisation is already using the system.
The cost of having to source implementation consultants to set up your system from overseas or interstate location can quickly blow your budget. Worse still if the vendor solution has no experience operating within Australia, then the time required to ensure compliance with Australian legislative requirements may further increase the cost of the system.
Furthermore, if vendors are located overseas, then their ability to service support calls once the system is up and running maybe an issue. Therefore, vendors with local presence or implementation partners should be weighted higher than vendors without a local presence.
From our experience it is very difficult to successfully implement a system remotely because of the complexity and scope of most ERP system projects. Remote implementation can easily see project timelines extended and compromise the quality of implementation services.
Vendors should offer solutions that are the right size for your organisation
Solutions are targeted to businesses of certain sizes, whilst many will say they are scalable to any size, the truth is the number of features and complexity of workflows for systems tailored to larger organisations may not be that suited to smaller organisations or vice versa. You wouldn’t use a small car to transport seven passengers and a dog or a 7 seater mini-van for fuel efficient daily travel, so why would you buy the Ferarri of ERPs if you are never going to push it to the redline?
For this reason, it is important to consider the relative size of organisations that have used the vendor’s solution before to gather an understanding if the solution is too bloated for your organisation or too lean.
If you choose a solution that is too bloated, you may find yourself paying for functions that you do not use or implementing processes that reduce your efficiency instead or increase it.
Great Vendors have recent, relevant and consistent references
The information technology industry is very competitive and organisations that manage to thrive in this environment are only able to do so by consistently meeting the needs of their customers. Therefore, it is recommended that the credentials of vendors be checked as part of the short listing process. When checking references there are a few key tips that you should consider, these are the relevancy of the reference to your industry or business needs, how recent the references are and if there are multiple references the consistency of reference responses, cases or success stories.
How to do you get this information?
Now you know what to look for, the next question is how do you then find this information? Listed below are the most common sources of vendor information and the pros and cons of gathering the information from these sources.
1. Vendor Websites
In the ever connected world that we live in, vendor information is readily available on the internet. Most vendors will have their own websites where they post about their solutions, publish case studies about their successful clients and provide information on their Australian contacts and implementation partners if they have any.
This is a good place to start gathering this basic information about vendor offerings to determine whether they make your short list. However, there are some consideration that you need to take when using this information.
Remember, a vendor’s website is their marketing tool, it is made to entice you to purchase their solution. This is inherently biased, because it is in their best interest to sell you a solution. So when searching for the information you require, be careful not to fall for the sales hype, look for vendors who give tangible examples of their capabilities in the areas that you are interested in and not just vague statements.
Also look at what other content they share on their website, are they thought leaders with strong research and development, do they have their clients clearly listed and case studies explaining what they did for them
2. Articles/ Publications
There are now a range of buyers’ guides, selection articles and publication available on websites and events that claim to gather information for the best solutions for your country, function, industry, year or a combination of these things. In fact, we have our own buyers guides here.
These can be good sources of information on vendors, especially if the guides are specific to a region, function or industry as they may have done the research for you already. However, there are still things that you need to be aware of when relying on these guides to form your short list.
Some publications can be quite generic, that is they are nor targeted to your industry at all, let alone your location and function, and as such do nothing in helping you shorten your list of potential vendors.
It is also advised that you research the author of the publication or guide. Authors that are not independent of a software solution will then be more biased to the solution that they are aligned to.
Printed articles and publication may also easily go out of date, as vendor’s and their solutions can change quiet rapidly, information is only as recent as the date or year of the publication.
3. Other Organisations in your industry
Another common method of obtaining information about possible vendors is to reach out to industry networks to understand which solution they are using or have heard of. This method allows you to draw information about vendors from actual users of their system within the same industry as yourself. You will also hear about their strengths and weaknesses from a consumer’s point of view and not the sales pitched view of the vendor themselves.
This is not a bad way of collecting information, however there are still some precautions that need to be taken. It advised, as with articles and other sources of information that the more recent the better, as the vendor may have meet the needs of your contact but other vendors may be out there now that are better suited to your needs.
Furthermore, whilst the vendor/s that are being recommended by your industry network may have met their specific needs it is advised that you still conduct further research to see if they met yours. Whilst you may operate in the same industry there may be some operational differences that could make the difference between what vendor suited them versus what vendor best suits you.
Another consideration when taking advice from others in your industry is that they may not have had the best selection method either and may not have scanned the market though roughly and missed some vendors that may be better suited to the industry than the ones they recommend you look at.
On the flipside, they may also advise against a solution that did not work for them and may in fact be perfect for you.
4. Selection Consultants
One of the best ways to gather this information is to consult with specialist software selection consultants. This is because such firms have experience in the selection process, follow a robust methodology and regularly keep up to date with vendor solutions and offerings. This means that they are aware of the vendors that are most likely to meet your needs based on your industry, location and functional scope and can guide you through choosing the right one for you. Their goal is to reduce the time and risk involved in selecting and implementing ERP systems.
However, with that said there are some precautions that need to be taken with this approach. The first is to understand if the selection consultant you use is independent from the vendors in the market. Independence is key, because it ensures that you are given full information and are able to make a decision without biasness.
Another tip is to check to see if the consultant has worked for organisations in your industry before. This is important because if the selection consultant has dealt with organisations within your industry then they will be more knowledgeable of the options available to you. They will also be able to refer you to other organisations in your industry to talk about multiple vendor experiences, so you can get a holistic view of the market from your peers.
Consider using Solution Minds Australia’s Leading Independent ERP Consultants
Need help getting an independent, unbiased short list of vendors that could consider for your next enterprise solution? We can help you with this, ask about our rapid short list and software selection services. We are an independent consulting firm that has helped Australian companies select the right system for their business since 1999. Contact us to see how we can help you.
Director – Solution Minds
Mob: +61 400 729 559