Avoid Costly Mistakes when Choosing ERP Software

Choosing new enterprise software for your company can be a demanding process. Whether it includes accounting, distribution, or manufacturing, it will affect all areas within your business. The better you plan and the more you know, the fewer the surprises and overruns. Here are six steps to make the process easier and more successful.

Create a Project Team.

Choose an executive to head the team. The executive needs to be someone high enough in the organization to cut across departmental lines. Other critical members of the team are staff from the various departments that may be using the system, as well as any technical staff. Your CPA may also need to be included if he or she requires specific reporting during tax time or for audit purposes.

Gather System Information.

Compare a list of requirements and review against your present business software to determine the gap between what you are currently using and what you would like to have in your new system. Include a prioritized list of each department's needs and requirements and also create a "wish list" of features you would like to have.

Set A Budget

Before you can move forward you need to determine a budget. You don't want to waste your time looking at $200,000 solutions if your available funds are $50,000. There are many alternative solutions at various price points and you need to be realistic about your goals in relation to your budget.

Analyze Possible ERP Software Solutions

Arrange to see various enterprise software options and analyze each solution in terms of how well it addresses each of your goals and requirements. Give special attention to report output, on-line queries, ease and speed of data entry, processing time for updating and reporting, as well as the friendliness of the user interface.

Choose a Solution and Negotiate a Contract

Break down the cost of your proposals to hardware, software, installation, training, support, conversion, and custom programming. Ask if any hidden costs or additional items are not listed in the proposal. Are they willing to state in writing that there are no additional costs?

Check References

Contact five or more of the chosen software vendor's existing clients. These references should have at least one year's experience with the software. Ask them about their overall satisfaction with the software and the service they have received. It is also important to have some structure to the questions you ask. Remember that it is unlikely that the software vendor gave you the name of an unhappy customer so it is important to ask specific questions about issues that concern you.

Although not every factor can be foreseen, you want to have as clear a vision of the outcome as possible. A good rule of thumb is to take three to six months to make a decision. Get as much help from upper management and your project team as you possibly can and then spend some time documenting priorities, costs, and analyzing your possible choices. Remember that the planning you do now will save your company a lot of time and money in the future.