ERP Selection Process

Survival Guide
Michael Poirier

Dan Andrea

ERP Selection Process Survival Guide

Seminar Agenda
Introductions
ERP Defined
Indicators that it may be time to select a new
ERP System
Steps associated with selecting an ERP
system
Success and Failure factors (Dos and
Donts) impacting the selection process
ERP Landscape May 23, 2006
Questions
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ERP Selection Process Survival Guide

ERP Defined
ERP = Enterprise Resource Planning
ERP is an integrated business system that provides a
company with the decision support tools needed to
effectively manage and grow its business
Provides an organization with access to the
information that it needs when it needs it
For Manufacturers and Distributors, ERP systems
typically consist of the following applications:
Financials (G/L, A/P, A/R, Payroll)
Supply Chain Management (Purchasing, Order Management
and Shipping)
Manufacturing (Inventory, Shop Floor Control, MRP, Bills of
Material, Standard Costing, Routing, Engineering and QA)
Customer Relationship Management
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ERP Selection Process Survival Guide

ERP Defined - continued

ERP incorporates many of the other
technospeak acronyms prevalent
today:
CRM
HRM
SCM
EMS

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ERP Selection Process Survival Guide

Indicators that it may be time to select a
new ERP application
If your company is experiencing one or more
of the following, it may be time to consider
implementing a new ERP solution:
Rapid and uncontrolled growth;
Your exact financial performance is unknown;
Unknown or inaccurate job costs, large
manufacturing variances, etc.
Inventories that are far short or far exceed
production requirements on a consistent basis;
Duplication of data in performing functions;

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ERP Selection Process Survival Guide

Indicators that it may be time to select a
new ERP application - continued
Inability to hit customer expectations (failed
promises);
Missed shipment and delivery dates;
Unknown operating performance;
System retarding corporate growth;
Limited ability in budgeting or forecasting
production requirements with accuracy and;
Custom systems relying on antiquated
technology supported by a limited IT staff
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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system
The days of the 200 page RFP are over;
There are multiple variations in the steps
associated with selecting an ERP system;
However, there is a commonality in the
overall approach that is the basis for the
ensuing discussion and;
With the presence of the Internet, there are
also tools available (for a price) to assist
you through the process (requirements
analysis)

ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system
Step 1 Organize the Project and Identify
the ERP Selection Team
Team represents all functional areas (although
the selection will be business process driven);
Identify the Project Team leader;
Team is generally comprised of individuals who
are already booked solid;
Team will be responsible for establishing the
ground rules for selection (discussed next) and;
The team ultimately selects the system
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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 2 Establish ERP Selection Criteria
The ERP selection criteria are those elements that serve as
the rules for selecting the system;
The Selection Team establishes the Selection Criteria;
The Selection Criteria helps in keeping the project on track;
The Selection Criteria helps to instill objectivity in the process
and often serves as a tie breaker during difficult situations:
Examples of Selection Criteria:
Functionality
Weighted as necessary towards Selection Team
identified critical applications
Budget/Price
Technology
Ease of implementation

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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 3 Identifying and prioritizing Critical Needs and
Requirements
The Critical business requirements (typically no more than
10-12 per area) are identified (typically in process specific
interview sessions) and documented;
The ERP solution selected will have successfully demonstrated
its capabilities in addressing these requirements

Emphasis during this step is on Critical see previous

comment regarding the RFP;
The requirements identified during this step serve as the
basis for the vendor demonstration scripts (discussed later);
The Selection Team will prioritize the requirements
Internet sources available to assist in this process but
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leverage at your own risk

ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 4 Conduct Preliminary Vendor Screening
Based upon the Evaluation Criteria defined in Step 2 and the
Critical Requirements identified in Step 3, preliminary vendor
screening can be performed to reduce the large population of
potential vendors to a select few;
Ideally, the Selection Team will want to reduce the number of
detail vendor evaluations (i.e. demonstrations) to a manageable
number (usually 3 no more than 5)

This step is occurring concurrently with the next step (Prepare

Vendor Demonstration Scripts)
As noted in Step 3, the Internet can be a useful resource (both
good and bad) in performing this step as well as direct
communication (phone screening) with the vendors;
This is where an outside consultant can provide valuable
assistance and insulation and;
At the completion of this step, you should have the list of ERP
solutions that the Selection Team will be able to identify
candidates for product demonstrations.

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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 4 Conduct Preliminary Vendor Screening continued
TIPS:
Generally, every selection team member will bring a
bias to the table about a specific ERP application
make sure to include that application in the screening
process;
Do not disclose your organizations name in
telephone conversations;
If web sites ask for information and an e-mail
address to send literature use a non-corporate email address
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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 5 Prepare Vendor Demonstration Scripts
This step involves translating the critical business
requirements into scripts that will be submitted to the
selected ERP vendors for demonstrations;
Ideally, the scripts will document all business processes
utilizing actual corporate data;
The scripts should be constructed in a manner where
weighting can be assigned to each script component;
Representatives of the Selection Team should meet with
the vendors before hand to review the contents of the
scripts and answer any questions;
Remember, the goal of this entire process is to select the
right ERP system for your organization incorrectly
grading a vendors inability to demonstrate a critical
business process because of a misunderstanding of the
script is self defeating
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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 6 Conduct Vendor Demonstrations
Using the grading sheets that mirror the vendor
scripts, the Selection Team attends each
vendor demonstration and evaluates the
vendor solution;
Depending upon the complexity of the business
requirements and ERP option, the
demonstrations can last up to 1 day (some may
last longer);
All grading sheets are accumulated and graded
for requirements fit

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ERP Selection Process Survival Guide

Steps associated with selecting an ERP
system - continued
Step 7 Selecting the ERP Solution
The results of the vendor demonstrations are
accumulated with the other evaluation criteria assembled
during the process;
Based upon the overall results, the Selection Team
identifies a vendor for subsequent contract negotiations;
References are checked;
Site visits to references are made;
Contract terms are negotiated and the solution selected;
An outside consulting firm can provide significant value
during this step
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ERP Selection Process Survival Guide

Success and Failure Factors (Dos and Donts)
Impacting the Selection Process
Dos
Establish a Selection Team comprised of knowledgeable
individuals from your company;
Obtain Senior Management commitment for the project and
subsequent implementation;
Identify objectively, at the beginning of the process, how the
ERP solution will be selected (i.e. the ground rules) and
adhere to the rules;
Focus on the critical business requirements, not a list of
features and functionality;
Avoid scope creep;
Try to stay with basic application functionality without
customizations and workarounds;
Stay committed to the project starting and stopping the
process has a negative impact on credibility (internally to the
employees of the company and externally to vendors);
You manage the process and ERP vendors, not vice versa

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ERP Selection Process Survival Guide

Success and Failure Factors (Dos and Donts)
Impacting the Selection Process
Donts
This is not an IT project (no offense intended) dont let it be
driven by IT (again, no offense intended);
Have side conversations, however innocent, with the ERP
vendors during the process. Remember, they are trying to
sell you a solution and will use any means necessary (and I
mean any) to close the deal;
The Selection Team has a leader, but no one member
should have less or greater than equal say;
Dont exclude functional areas due to real or perceived
personality or other conflicts;
If you select a consulting firm (which I think you should !) to
assist in the process, satisfy yourself that the firm does not
have existing relationships with ERP vendors that will impact
its objectivity;
Dont try to mirror simply what you do now from a business
process use this as an opportunity to review existing
processes and leverage ERP application best practice !

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ERP Selection Process Survival Guide

The ERP Landscape as of May 23, 2006

Over 550 Manufacturing solutions available

MEGA Vendors
Oracle

Oracle
Peoplesoft
JD Edwards

SAP
Microsoft

Dynamics (Great Plains)

Axapta
Navision
Solomon (limited manufacturing)

Sage

MAS (200, 500)

AccPac

All Others such as:

Epicor
Syspro
SAS
Infinium
Macola
Made2Manage
Visual Manufacturing Pro
Lily
Etc..

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ERP Selection Process Survival Guide

Questions

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Call us: 888.875.9770

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ERP Selection Process Survival Guide

Contact Information
Feeley & Driscoll, P.C.
www.fdcpa.com

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Call us: 888.875.9770

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