Ten steps to making an investment in a brand new ERP
If you’re investing in a new ERP (enterprise resource planning) system, whether it’s to replace your existing one or buying your company’s very first system, there are a few things all retailers and suppliers should look for before they sign on the dotted line.
Despite the prominence of a few ERP giants, there is never a one-size-fits-all solution. Each company should consider their own unique needs and look at how well their ERP will play with other systems, especially their biggest trading partners.
One thing EDI Here has done for our clients is eliminate the need for customizing your company’s product data formatting to fit within each individual partner’s ERP. Instead, our EDI (electronic data interchange) solution is mapped to practically every possible ERP, so you can just plug your system into ours (or we’ll map to yours), and you’re ready to exchange data with every trading partner you have.
We’ve done that for thousands of retailers and suppliers over the years, so we know a few things about ERPs, including the ten steps you should take when investing in your new ERP.
- Conduct a process review and analysis. Evaluate what you currently have and how it’s working for you. Identify your pain points and your must-haves and wish-we-hads. Then consider what you want to do in six months, five years, even ten years. This will give you a good idea of what you’ll need, which will help with item 2….
- Get upper management support. If you’re looking for a new ERP, something is already wrong with your current ERP or your business needs have evolved beyond its capabilities. You’re more likely to get management buy-in if you can show your pain points, and how much you’re losing by dealing with them. Be prepared to show how the new ERP will solve those problems and save money in the long run.
- Consider who will be using the ERP. Do all the stakeholders work in your office, or do they work remotely too? Do they work on laptops, or do they need mobile access? Do you want a system that will work on every kind of device and operating system, or do you want to limit access?
- Evaluate your existing network and solutions. Will your ERP connect to other software and systems, such as shipping and WMS? How about EDI integration? How will it connect to your supply chain and customers? A new ERP system could put a strain on your existing infrastructure, so you may need new servers and additional bandwidth. For example, a SaaS product may require more bandwidth, but a local solution may require new networks and internal bandwidth. Make sure your infrastructure can handle your new ERP solution, or look for new ways to expand to handle the new solution.
- Think of the future and possible spikes. You not only want a system that will accommodate your needs now, you want to know whether it will handle one-time seasonal sales spikes as well as consistent future growth. Your ERP needs to be able to scale and change as your company grows.
- Make a clear and extensive list of requirements. Before you even start looking at vendors, make sure you’ve accounted for the different people, systems, current situations, and future goals. Make a list of everything you need, and consider ranking and categorizing these items, like Must-Have, Nice-to-Have, and Maybe-Someday. If you can do this first, you can weed through and find those who can meet your priority items. In addition, this process will help you create organizational buy-in early in the change process.
- Keep your options open. There are at least 70 ERP software providers in the market, all with varying degrees of functionality and strengths. Don’t zero in on only one ERP solution at the beginning. There may be other vendors that can better meet your requirements. Also, be sure to look at their other offerings — ERPs are often sold in suites with other products, like a CRM and analytics. You don’t have to buy a suite to use the ERP, but it’s at least good to know they have other integrated products to offer in case you ever have the need for those systems as well, or want to add a new business process.
- Understand the total cost of ownership (TCO). This is more than just the initial price tag. You have to consider subscriptions, Maintenance/Support fees, training costs, additional hardware, additional bandwidth for a web-based product, additional IT staff, and so on. The lowest initial price tag may end up having the highest TCO and give you the most headaches.
- Get references. Look at more than just the testimonials on their websites. Find out what other companies are saying about a particular ERP. Ask the vendor for introductions to past customers if necessary, not just a sheet of short testimonials. If a company similar to yours is having success with that ERP, that’s an indication that it might work well for you too.
- Develop a realistic implementation plan. As the project manager joke goes, you should carefully calculate the hours you expect the transformation to take, double it, and add 10% for good measure. Because you need to factor in all the changes, new documentation, new processes, and the staff training. Before you sign anything, ask the ERP vendor how long they realistically expect the implementation plan will take. Just try not to laugh at them.
Selecting and changing over to a new ERP system can be stressful and time-consuming. However, with the right information to select the best ERP for your business, and a strategic change management plan, it can be done. These steps listed above should hopefully give you a good idea on how to successfully carry out an ERP upgrade that improves your business processes and integrates with your existing systems.
To learn more about how EDI can help you select a new ERP solution, and make sure it integrates with our EDI platform and fulfillment solution, please ask to speak with one of our EDI supply chain solution professionals.