Good ERP software should address every part of your business. Countless enterprise resource planning solutions are available, but you should choose the one that fits your organization. ERP selection requires thorough steps and solid vendor criteria.

Select the Right Software with the Free Lean Selection Book

Don’t worry if you’re not familiar with the ERP selection process! We discuss selection criteria, our nine-step Lean Selection Methodology and pricing considerations. This article can also compliment your ERP software requirements checklist.

Table of Contents:

• Selection Criteria
  • Functionality and Ease of Use
  • Vendor Viability
  • Technology
  • Cost
  • Support and Training
  • Industry Expertise
  • Implementation
  • Risk Mitigation
  • Scalability
  • Current Clients
  • Post-Go-live Tools
• Lean Selection Methodology
• Purchasing Considerations
• Further Reading
• Next Steps

Selection Criteria

It’s essential to evaluate potential software and vendors with basic selection criteria.

Use these 11 requirements throughout your ERP software selection stages to determine if a solution is right for you.

1. Functionality and Ease of Use

The first standard questions in ERP selection are: What are the system’s functionalities and ease of use? And what functionalities and degree of user-friendliness do you need?

Answering these questions will help you decide if the product is the right fit for your business on a fundamental level.

This criterion may be the most lengthy and mundane to complete — it involves an in-depth evaluation of your company and the ERP product — but hold tight. This assessment is vital to work.

Taking the following actions can help you better understand ERP software, gather your requirements or compare systems:

• Requirements Gathering: Consider the challenges your organization faces that an ERP system could solve. Then, evaluate which of the system functionalities would accomplish this.
• Consider Business Process Automation: Ponder all the routine business processes at your organization that could be automated and evaluate if the particular solution has the tools to do that.
• Examine End-Users: How tech-savvy are your end-users, and do they have the capacity to navigate complex software features? Have they used an ERP system before? Answering these questions will help determine if the products’ user-friendliness meets your requirements.
• Plan for Centralization: Consider the systems you currently use that will need to be integrated with your ERP system and inquire about integration possibilities. For instance, how does the CRM interface with the overall ERP?

2. Vendor Viability

Before investing in a particular solution, it’s wise to ask yourself: What’s the vendor’s reputation, and can I work with them long-term? Even if a product has the proper functionality, it should be out of the question if the company isn’t trustworthy and secure.

Beyond company credibility, you should review the product’s scalability to determine if this can be a lasting transaction.

Analyzing vendor viability ensures a great system and a great partner for your business. Consider the following factors when comparing ERP systems and the vendors that provide them:

Company Credibility

Investigate how the vendor has changed organizationally in recent years and inquire about the future direction of their business. In addition, consider the age and financial health of the company.

Product Viability

Find out how long the ERP product has been on the market and seek customer references. Ask the vendor how long they intend to keep running the product and regularly distribute updates or improve it.

If you want to cover your bases, ask the vendor about the products they will issue in the coming years.

Scalability

Evaluating product scalability requires you to look internally and into the future of your business with workforce planning. Will you need to add users in the future or expand on functionality? Does your organization have the potential to expand into new markets?

Consider if the system’s features can support and enhance your business strategy. This consideration is significant for young, growing businesses to consider – your chosen ERP system needs to be able to grow with you.

3. Technology

ERP systems utilize a significant amount of technology — for example, standard software should contain business intelligence, reporting and customization.

Like the functionality evaluation, you should ask yourself: What technologies does the solution offer, and what technologies do we need?

Consider the following factors when you’re ready to compare ERP or are actively performing your software selection process:

• Customization: Ponder whether the solution is turnkey or customizable to your organization and unique business processes. If the solution needs to be customized to function, ensure the vendor can complete the request.
• Requirements: Consider whether the solution can meet the technical needs of your organization. For example, can it generate visual, real-time sales reports for presentations?
• Value: Evaluate whether the ERP leverages the most recent, cutting-edge technological trends and if the vendor plans to update the system consistently. Considering this factor ensures you aren’t investing time and money to implement a system that will soon become outdated.

This ERP solution’s interface gives in-depth financial insight.

Compare Top ERP Software Leaders

4. Cost

It may feel evident that you should consider the cost of an ERP system, but unfortunately, it’s not as simple as it sounds. With several disparate elements to account for, it’s essential to ask yourself: how much will the solution cost?

The actual cost consists of licensing fees, which depend on how many users you have, the software itself or the modules you select, hosting or hardware, implementation, maintenance, training and support.

Determining a rough estimate of your Return on Investment (ROI) before you sign any contract is wise.

Consider the following factors while evaluating the cost of an ERP:

• Basic Pricing Information: First, assess the cost of the platform and whether it’s appropriate for the functionalities and technologies it offers. If the vendor’s pricing structure is unjust, you can likely find another product — plenty of fish in the sea.
• True Cost: Next, work on determining the actual cost of the solution. Calculate the long-term total cost of ownership (TCO), guaranteeing to incorporate all applicable charges from the list above.
• ROI: Once you’ve finished the latter evaluations, estimate whether the projected return on investment (ROI) will be significantly more than the TCO.

5. Support and Training

Support and training are the pieces that get a system up and running and always functional. In the current ERP market, there’s a wide range of what vendors offer for support and training.

A comprehensive training plan typically includes access to training videos or documentation, an online knowledgebase or user community, and options for in-person training.

Comprehensive support typically includes access to a call center and various online resources. Conversely, some vendors outsource or lack help or training materials.

While considering these points, it’s vital to look closely: What kind of support and training will you receive? What type of support and training do we need? You should review support and training offerings, ensure they’ll work for your end-users and draw an apparent agreement with the vendor.

Think over the following factors during your ERP software selection quest:

• End-User Needs: First, take some time to consider the needs of the end-users. What sort of training, such as face-to-face versus virtual, will be the most convenient and effective? Do you have an internal IT team to assist with technical support, or will you rely entirely on external support?
• Pricing: Is the cost of support and training included in the licensing fees, or will this be an additional investment?

6. Industry Expertise

Industry expertise refers to a vendor’s ability to cater to your needs. Depending on your requirements, you may be able to find a solution designed specifically for your business type and size.

Obtain significant advantages when working with a vendor that understands your business and allows for industry practices built into the system.

Ask yourself: Does the nature of your business require a specialized platform? Consider how long the vendor has worked in your industry and if they’ve proven successful.

7. Implementation

Implementation is vital to getting your new ERP system up and running. Ask how the vendor will ensure a successful installation. This step will be critical if you anticipate an involved implementation, such as migrating from a legacy system to a new ERP.

Here’s a brief overview of what a successful installation plan requires:

• Find the Ideal Software: Use Lean Selection or another methodology.
• Plan: Gather an implementation team and structure an installation plan. Also, allocate and perform project management duties.
• Transfer Data: Perform in-depth data reviews to diminish repetitive information. Your company information is the foundation of any ERP system unless you start from scratch.
• Train Users: Access and distribute training materials to the designated end-users.
• Conduct System Tests and Launch: Perform program tests to ensure the solution has a suitable interface and performs all your desired features effectively before and when you go live.
• Complete Post-Launch Tasks: Analyze ROI, study employee performance, monitor client satisfaction and measure other company KPIs to gauge the software’s results over time.

We’ve concluded our list of ERP software selection criteria. This list can evaluate solutions throughout your entire software selection process.

Get our ERP Software Requirements Template

8. Risk Mitigation

Investing in ERP software is risky business for several reasons. It’s pricy, has complex functionality and takes time to implement.

However, establishing a reasonable budget and allotting for hidden fees, using vendor training resources and having patience will help you overcome these risks to ensure you’re running your operations at maximum power.

It’s also good to know that ERP offers several benefits, such as saving money, boosting productivity, maintaining customer relationships and giving you a competitive advantage.

9. Scalability

Companies scale up and down all the time. Most ERP systems offer scalability tools to help you manage more employees, manufacturing machinery, warehouses and facilities, and other resources.

During the ERP software selection process, ask if you want your company to grow or downsize in the next 10 years. If you see expansion, ask vendors about scalability.

10. Current Clients

Ask potential vendors if you can speak with their current clients for additional input. Other end-users can inform you about the pros and cons of the system. Some customers can also tell you about vendor resources and customer support tools.

This process is similar to employers asking potential recruits to provide job references. If you get great reviews, you’ll consider choosing the vendor. If not, that vendor may not be the right option.

11. Post-Go-Live Tools

Lastly, you have to ask vendors about the resources and services they provide after you go live with their software. Is their support team reliable? Do they offer tiered help packages (i.e., silver, gold, platinum and more)?

Vendors are great with implementation and data migration, but they should also be available for post-installation support in case random problems occur or you have functionality questions.

Compare Top ERP Software Leaders

Lean Selection Methodology

To provide some additional introductory information, we’ll walk you through our Lean Selection Methodology, helping you make the ideal ERP selection for any industry and company size.

This easy-to-follow, nine-stage process helps you determine your business needs, evaluate and compare solutions, validate your technical requirements and negotiate a significant contract. You can perform this methodology with or without SelectHub’s help.

1. Establish

The first step in our process, and ERP software selection, is to self-evaluate your business operations. These questions include:

• Why do you need a new program?
• What’s wrong with your existing software or procedures?
• What do you want this solution to simplify and automate?

Answering these and other internal questions will help you build a foundation for your requirements list and help you pinpoint how you want this solution to rectify your problems.

2. Collaborate

It’s easy to delegate ERP selection to one or two people. You need a committee of department leaders, stakeholders, partners and more.

Department leaders are valuable. You can research and attempt to develop requirements for your HR, accounting and marketing sectors, but these heads know what they need.

You can query stakeholders and partners within your industry about their solutions and if they have any vendors they’d recommend. The more worthy people you add to your selection team, the better your chances of picking the ideal solution.

3. Define

Sit down with your team to create a master requirement and feature list, a critical step in ERP software selection.

SelectHub services offer an apparatus that helps you pick and choose from various functional and technical requirements. You can score how vendors perform with these requirements with values up to 100.

Choose from various requirements in SelectHub’s express app.

4. Distribute

Sift through vendors that best meet your requirements list.

Create a vendor shortlist and review how well they stack up to your features list. You may leverage SelectHub’s tools to create an RFx, or a request for proposal (RFP), a request for information (RFI) or a request for quotation (RFQ) template.

5. Justify

This stage helps you evaluate everything you pulled from the previous step. You also have to consider three options:

• Do I want to continue my software selection journey with these potential vendors?
• Do I want to add integrations or add-on modules to my existing software?
• Do I want to end the ERP software selection and stick to my current program/practices?

No matter your choice, this step will help you understand how you want to move forward.

Select the Right Software with the Free Lean Selection Book

6. Prove

You’ve either decided to find a brand-new platform or search for additional modules to add to your current system. You’ve created a shortlist of vendors and want them to prove how well their solution performs specific requirements.

This step allows you to ask providers for demos, proofs-of-concept (POCs) and use cases.

Demos

Here, you ask vendors to show you how to carry out tasks. Create demo scripts or lists of tools you want vendors to demonstrate.

Examples include:

• “Show me your general ledger.”
• “Show me your accounts reconciliation tools.”
• “Show me your bill of material (BOM) accessory.”

Use Cases

Use cases go deeper than demos. They allow you to ask how to perform particular tasks. I.e., “Show me how to perform end-of-the-month bank reconciliations;” or “Show me how to automate employee payroll.”

You may also develop a script for this option.

POCs

POCs show more than demos and use cases. Vendors can recreate the solution with previous or current user data to show how the system works like a simulation.

Although effective, this method can be timely and more expensive than demos or use cases. We suggest you only use POCs for one or two ideal solutions.

You can add POCs to SelectHub’s system.

Score each solution’s performance in your demos, use case or POC and tack it next to the requirements score. These scores will help you rank your top applications.

7. Rank

Rank your solutions based on requirements and demo scores for better ERP selection insights. Also, consider rating each program’s TCO or the final price tag. This price can range from a few thousand dollars to $100,000 or more.

8. Negotiate

Lean Selection allows you to have at least two to three potential programs that meet your needs. Once you’ve ranked your choices, pick your top option and review the vendor’s or reseller’s agreements and contracts.

SelectHub can review the contract and give you information on this vendor. However, we are not a legal company and cannot provide legal advice. Be sure to review your contract with a law firm.

Create an RFx within SelectHub’s apparatus.

After your legal review and negotiating terms, decide if this vendor is right for you. If so, you can move on to the signing phase. If not, move on to the subsequent providers on this list and repeat this step.

Understand, however, that we charge additional fees if you request other company reviews.

9. Sign

The moment is here. After researching and conducting thorough evaluations, it’s time to sign with your vendor. Set up an implementation plan.

Select the Right Software with the Free Lean Selection Book

Purchasing Considerations

Conducting an ERP software selection is like buying a new car. It’s a worthwhile investment when you know what you’re looking for to align with your company’s best interests.

Factor’s affecting a solution’s TCO include company size, deployment options, department needs and more.

How big is your company?

Company size is vital. Are you a Fortune 500 enterprise or a startup company getting ready to move out of your parent’s basement?

Scalability, as discussed in the selection criteria, can accommodate more employees, departments, users and more as your company grows. You can also invest in small business software if you don’t see much growth in the next five to 10 years.

What do your other departments need?

It’s no secret that ERP has diverse functionalities that serve several company departments. However, it’s essential to survey your department heads and get their input on what they need in a new system.

Treat your department heads like regional ambassadors. You could research everything about HR, CRM and accounting practices, but you’re not an expert. These department heads serve as experts and understand what they need to streamline operations.

How much are you willing to spend?

Another selection criterion, ERP software can cost anywhere from $100 to $100,000 or more. Set a proper budget to find the ideal system without emptying your wallet.

What’s your ideal deployment option?

Knowing your preferred deployment option — on-premise, cloud or hybrid — will make the ERP selection process more manageable. Of course, each deployment has its pros and cons, but choosing the one that meets the company’s needs is essential.

On-Premise

This option is the traditional software deployment because it allows you only to access the solution on your company servers. On-premise is typically pricier because of its different support packages, such as gold, platinum, silver and so on.

This option may be right up your alley if your company deals in local work and clientele.

Cloud

Cloud, aka SaaS, software permits you to access the solution and data on laptops, smartphones, tablets and other devices with a strong internet connection.

Vendors allow data storage on their internal or third-party vendors instead of hosting it on your company’s hard drives. This option offers more security options to protect your data from cyber threats, such as encryption, multi-factor authentication and so on.

This deployment choice is best if you have regional or global patrons and partners you manage regularly. Cloud solutions typically offer manageable subscription-based pricing.

Hybrid

This deployment merges the best on-premise and cloud qualities into one option to ensure your information is safe and accessible in real time. This option varies from vendor to vendor, so ask them about this deployment’s capabilities.

Get our ERP Software Requirements Template

Further Reading

For more ERP software resources, tips and requirements from our market analysts, check out our other in-depth articles:

• Top Expert Software Selection Tips
• What Is ERP and How Does It Work?
• ERP Requirements Template and Checklist
• ERP Implementation
• ERP Functions and Software Requirements List

Next Steps

Conducting an ERP selection is a difficult task. However, it’s not so scary after you break down the selection criteria, ERP software selection methodology and purchasing considerations into manageable parts.

Ready to get started? Look at our in-depth ERP requirements template to find the modules that align with your company’s practices.

What was your ERP selection process like? Let us know in the comments!