Best Practices in ERP Software Selection

Over the past few years an economic recession hacked its way through profits, staff rosters and operating budgets leaving little in its wake other than an obsessive hunger for stingy efficiencies and an over-dependency on IT. In the brave new, albeit reordered, world the mantra in ERP software selection is to buy one-size-fits-all, one-hit-fixes that do ‘more for less’ on the cheap and in a totally hands-off automated way. Turn it on, walk away, don’t even bother turning off the lights on your way out. Yeah, right. And, flying cars are just a tomorrow away from resolving traffic jams.

'Where is the profit in loss?' is the question blazing its way through the more brilliant minds in the halls of true business acumen. For, indeed, cost cutting is a losing proposition as eventually there is nothing left to cut and thus nothing left to gain.

Now that there are no unnecessary workers to drop from attendance roles and no inefficiencies left to weed from business processes, attention must be turned to growth rather than streamlining.

The burning business question is not 'How much can we save?' or 'How little can we spend?' or even 'Can it wait until a more profitable year?' but rather 'How do we stop shrinking and start growing?' and 'Where are the seeds that sow our futures?' These are the thought-framer questions shaping the new course of business in this uneasy new decade.

The answers are most often found internally, deep in the intelligence gleaned from the usage of enterprise resource planning (ERP). But wait, among the carnage wreaked by the recession are the carcasses of battered and abandoned ERP systems. Recently many a company has rushed to resuscitate its ERP initiative. Make no mistake, the heavy-handed rescue of ERP is an urgent effort to save the rescuers in the process.

Here, then, is the dilemma: to upgrade ERP systems of Auld Lang Syne (times gone by) with a few web-based face-lifts or add-ons, or to buy new enterprise software and start over?

While the correct solution to that conundrum can only be determined by the needs of the particular business in question, there is enough common ground to provide best practices to the formula for a truer calculation.

In no particular order of reference, here are the touchstones to making the ERP software selection process a more profitable endeavor:

Understand the Market Movements

Expect ERP vendors to make a really big push this year as ERP software begins to make its comeback. In the Big-Player starter positions are:

1. Microsoft continues to push hard for Dynamics AX, and to a slightly lesser extent for Dynamics NAV while also bolstering its vertical market solutions. With Dynamics AX the company clearly has its sights on the enterprise market (and SAP ERP) but is unfortunately still late to the game for a real software as a service (SaaS) or cloud ERP offering. The company is advancing with multi-tenant ERP systems—for both AX and NAV—which will be heavily promoted to the middle market.
2. SAP’s Business ByDesign is a broad, feature-rich ERP system with a native Cloud ERP multi-tenant architecture, but has suffered poor product launches, false starts, internal competition with SAP ERP and poor sales growth. To fix SAP Business ByDesign, the company has put its top cloud executive, Lars Dalgaard, in charge. However, thus far Lars has been met with internal and external resistance and even after a few years progress can only be described as disappointing. Nonetheless, look for SAP to shake things up yet again.
3. Oracle’s Fusion applications are seeing increased customer adoption with near equal allocation among Fusion ERP, Fusion CRM and Fusion HCM, and about two thirds of new Fusion apps are being deployed in the cloud. Oracle Fusion apps are still somewhat new, and implementations can be challenging. But Fusion is the new Oracle flagship for enterprise apps and Oracle is dramatically picking up its promotion for cloud ERP systems.

Meanwhile, open-source ERP systems are increasing in adoption, many times as companies stall in a freebie frenzy – forgetting for a bit that open-source often requires more IT support or paid vendor support thereby nullifying the claim of ‘free.’ Nonetheless, open-source ERP software will enjoy the same surge in popularity as companion open-source technologies, such as CRM and platform software.

Many of the other, proprietary ERP vendors who often focus on vertical markets or niches will be in full acquisition and merger mode as consolidation continues in this arena.

The good news in all this market movement: ERP solutions will be stronger, more versatile, more agile, and more dependable than we've seen in the past. You will have many options ranging from full rip-and-replace systems to a la carte cherry-picking from a wide array of modules.

So, Enterprise Resource Planning software will offer you plenty of promise. However, the vendor you buy from today could be owned by another vendor tomorrow. If you have a real rub against a given vendor, a sudden acquisition could leave you feeling raw. If not, it’s all good as acquisition and merger action typically strengthens an industry overall.

Nevertheless, your first consideration in evaluating any vendor should be in assessing its financial standing and staying power. Ultimately, you want to know the vendor has enough financial resources to power frequent upgrades, product maintenance and full support for the duration of your product ownership. Do not neglect your due diligence in determining a vendor’s financial status. If buzz of a potential acquisition exists, extend your due diligence to the merging company or buying company as well.

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