Understand ERP Software

If you are contemplating the purchase of a new ERP software solution, accept the fact that this project is going to be time consuming, complex and very frustrating at times.  Now add on top of this the fact that a significant number of ERP implementation projects fail to meet all of their objectives or in the worst set of circumstances flat out fail altogether.

What can you do to increase the odds of a successful ERP software selection project?

There is no universal answer, but one concept comes to mind: Understanding.  The more you know, the greater will be odds of identifying and avoiding the potholes that stand in the way of any ERP software selection project.

If understanding is the key to success, what do you need to understand?

Understand that you need to start your ERP Software selection project quietly.  

You cannot just charge into an ERP software selection project like a bull in Pamplona.  Take your time.  Talk to everyone who is going to be affected by this project.  Ask them what they need to improve their individual jobs.  This will give you knowledge you may not have had otherwise and support for the project simply because you asked.

Understand your limitations.  

Do you know and accept that your ERP software selection knowledge is limited?  Do you know how to acquire the required ERP software selection knowledge?  The minute you assume too much could be the tipping point to failure.

Understand that everyone in your firm must be a stakeholder.

While executives must support an ERP software selection project, the key stakeholders are the people who are going to use the product.  These people must be ready to change.  If people are afraid of change, they will actively or passively resist the new ERP software system and that will dramatically reduce the effectiveness of the system.  You need these key people on your side.

Understand that organizational excellence must come before ERP Software excellence.

If you drop a new engine in a rusted heap, you may lead the first lap, but you will lose the race.  If you are going to replace your current ERP software system, this is an ideal opportunity to improve your business as well.  Notice that I did not use the term business processes.  Certainly business processes should be analyzed and improved, but the single most important contributor to excellence isn’t the processes.  That’s just the technical side of how the business is going to operate.  The real key to success is the way people interact with and support each other as a single cohesive whole.  Define how your business is going to achieve excellence and then use the ERP software system to support those key objectives.

Understand what’s possible.

You may not even know what’s possible in terms of today’s ERP software functionality.  Knowledge acquisition must be one of your early project objectives.  Read articles.  Conduct research.  Talk to people in your industry.  Talk to ERP software providers (primarily resellers).  Learn as much as you can regarding what’s possible in terms of ERP software functionality and reporting systems.  Then use that knowledge to determine precisely what you need.

Understand that ERP Software selection is a significant investment whose ROI needs to be calculated and approved.

If you are going to invest in any powerful business equipment (production machines or ERP software), you need to know how much it’s going to cost and what benefits it’s going to deliver.  While it’s certainly difficult to “guess” at benefits, you have to understand and define precisely the impact of a new ERP software system.  One of the other decisions you need to make is balancing the dollar investment with other financial needs of the firm.  In many cases you cannot be the “best of the best” simply by throwing money at the new ERP software system.  You may have to limit your enthusiasm.

Understand that you don’t have to be a clone.

Your research into software functionality possibilities will reveal many delightful fruits.  That doesn’t mean you have to do what other people are doing or adopt functionality requirements simply because a product offers such benefits.  Define what you need to achieve competitive excellence, but do not become a clone of others.

Understand that the path to ERP Software selection success lies in the details.

Many ERP software vendors say they know best how a business should be run.  Don’t be a clone.  Use this project as an opportunity to really know what you need to be more competitive.  Then find a product with the detailed functionality that will help you achieve this objective.

Understand your strengths and weaknesses.

Take time to really understand your strengths and weaknesses.  Create a requirements document that supports your strengths and helps you improve your weaknesses.  Don’t search for ERP software that supports today’s requirements.  Find one that matches your future needs.

Understand what information people need to make sound business decisions.

ERP software functionality carries out specific business tasks.  That’s certainly important, but the information that is extracted from the business management system will help you make sound business decisions and that’s absolutely the most important aspect of any ERP software.  With the exception of audit, regulatory and business research, row and column reports do not support the decision making process.  How can you possibly make a decision based on a single value at a single point in time?  You need business metrics (a.k.a. Key Performance Indicators).  If you can see something like labor as a percentage of revenue in a manufacturing environment and display those values in a graphical format, you will be able to see in an instance where you have been, where you are today and where it appears as though you are heading.  That’s the key to business decision making.

Understand that vendors and resellers will try to sell you their software, not your solution.

Vendors and resellers want to sell software and may “stretch” the truth.  You need to control this evaluation.  The best way to do so is to absolutely require that vendors and resellers show you (via in depth demos) that they can meet your requirements.  As you are evaluating each product, please don’t forget that it’s also important to “like” a product.  That’s why your employees need to “see” and approve” the product they will eventually use on a daily basis.

Understand that top rated products may not necessarily meet your requirements.

The fact that a product is well received in the market doesn’t necessarily mean that product is right for you.  You have to find a product that does what you want it to do and is easy to use according to the people who will have to use that product.

Understand that you need to create a mutually beneficial partnership with the product representative.

Finding an acceptable ERP software product is certainly critical but please remember that a product reseller is going to implement and support that product.  The business relationship is almost as important as the functional relationship.  The reseller knows the product, but you know your business.  You will educate each other and both parties must work to a single common goal: your firm’s profitability.


The process of selecting ERP software isn’t easy.  In all likelihood you will go into this project with limited knowledge.  Your first task is knowledge acquisition.  Your second task is recruiting everyone in your business.  You need their support and you need their knowledge.  Your next task is defining exactly where you are today and where you need to be tomorrow so you can become more competitive.  If you don’t define what you need, how can you possibly find what you need?

Take your time.  Understand every step you need to take and then follow that path.  If you know what potholes lay ahead and are vigilant, you will achieve success.