Enterprise resource planning (ERP) plays a critical role for the organization growth and development. It is a platform where all the departments of your organization comes under one central system. If you are planning to implement ERP system in your organization. First, you need to understand your business requirements, product features and functions, vendors in the market etc. In this article, we will discuss the steps involved in selecting ERP software system for the organization.
1. Create a vision: Clearly define why ERP system need to be implemented in your organization. For that, first take inputs from all the major participants in your organization to examine, identify and rethink of existing business process. Once vision is approved by the board, announce the vision to the entire organization.
Then build a team who are familiar with the various software packages, organization process and industry. These participants are responsible to identify software features and functions required to effectively support each functional area of the organization.
2. Research in your industry: Talk to enterprises within your industry who are using ERP system. Take their opinions on its features and functions. This helps you know what they like and dislike in the product.
3. Create a list of ERP software providers: Prepare the list of ERP software vendors of all sizes and capacities. The list may be extensive but most of the vendors will be eliminated after the fourth step.
4. Send request for information (RFI): Send request for information to all the selected list. The main purpose to identify which vendors have experience in your industry and geography. You can ask question in RFI like do they have experience in specific to your industry and size, do they have worked for your competitor, etc.
5. Create a short list of vendors and send RFP: Based on the vendors answers. Eliminate those vendors that are not specific to your industry. Send request for proposal (RFP) to the shortlisted vendors. This RFP contains software features and functions list – describes how the organization want each department to operate, terms and conditions, supplier response forms, etc.
6. Judge the proposals: Review the proposals and ask for the additional information which are required and appropriate. You can ask like how much does the product cost? – it may not be major factor to select the ERP but it is a valid consideration, how the system is easy to use etc.
7. Ask to demonstrate software packages: From the finalist, ask vendors to demonstrate their ERP software packages. At the time of demonstration, make sure all the selected team are present. This helps to choose best vendor for your organization.
8. Justify investment: Compare the tangible and intangible benefits of implementing ERP system to the investment cost. Tangible benefits like improved inventory control, increasing productivity, improved customer services, on time deliveries etc. Intangible benefits includes improved communication among all the departments of the organization, high morale and others.
9. Evaluate upgrades investments: Along with the ERP investment, you may also need to invest additional like to upgrade the database software, server hardware, network infrastructure, authentication server etc.
10. Select the vendor: With the help of score-carding process, select top ranked vendors that are based on vendor support, product features and ease of use.
11. Formalize your project plan: Have a meeting with the finalist vendors to negotiate and finalize the contract, which includes services contract, licensing & maintenance agreement. At this point of time, you and vendor both need to discuss and assign roles and responsibilities. This is to probable confusion during the implementation.