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ERP Selection Process Details

 

ERP Selection Process Details

The following chart is shown to establish a one-page view of the major process steps and typical schedule for project completion. The process steps are further explained on this web page after the chart. The suggested schedule is based on a pace that protects project quality and momentum.

 

Phase One: Business Review and ERP Long-List Development

1. Selection project set-up and training: As with any complex and important initiative, it is crucial to be prepared and to have a realistic understanding of what resources, energy, and commitment will be needed. Based on the experience of over 1900 projects, we have continually built our process to help a company better prepare for an enterprise software project. These few hours of meetings, presentations, and team discussion can significantly contribute to project continuity and momentum. Return to Chart
2. Strategic and global influencer discussions: Current and projected (1) preferences from your customers and prospects, (2) industry trends, and (3) overarching best practices should influence your future-state business processes. In turn this may influence the priorities that drive a selection of ERP software. Based on this, we conduct efficient interactions with executives and business process area leaders to detect, develop, and understand these top-level—and potentially future-state influences. Return to Chart
3. Business process reviews: Determining key ERP selection criteria is the first purpose of the business process areas interviews. Other benefits of these interviews are (1) increased awareness (and confidence) about the ERP improvement project for personnel involved and (2) the development of valuable project data (improvement ideas, current problems, and uncertainties) that are very useful to prepare for—and control the implementation. Before the interviews, we provide training to business process area representatives so they may better prepare for the interviews. Return to Chart
4. Set business process boundaries of software project: What portion of the overall business processes should ERP support at your company? This question needs to be reasonably answered to enable a concise review of ERP and effectively purchase ERP licenses. Often a buyer’s expectations of ERP do not align with what ERP should practically support for their company—and this can result in the purchase of inappropriate software and disappointment during the implementation or at some later point in time. In this step we develop an ERP boundary diagram from information gained during business process interviews and using SoftSelect’s deep understanding of the typical and appropriate functional reach for ERP. This boundary diagram also forms the basis for an enterprise-wide business software strategy and future-state business process planning. Return to Chart
5. Software long-list development and discussion: This process step uses (1) SoftSelect business software research and (2) the SoftSelect team’s general knowledge and insight of specific business software, software vendors, and the current business software market. Key influencers for listing ERP are (1) the software’s track record of usage in companies such as yours and (2) that the ERP offering has been substantially modernized (only about 10% of ERP offerings have been). A thorough debriefing and discussion of the long list is provided so members of your selection team can build confidence in the list. This includes providing our opinion on any ERP software for which your company has an interest, but is not included on our suggested list. Return to Chart
6. Long-list debrief and discussions with company leaders: The results of phase-1 (including the long list) are explained to, and discussed with company leaders and other interested company personnel. It is important to keep all selected company members appropriately involved to continue building overall company wide confidence and to proactively detect concerns and potential misunderstandings. Return to Chart

Phase Two: ERP Long-List to Short-List

1. Develop high-level differentiating factors (HLDs):These are carefully chosen objectives that should effectively differentiate long list candidate ERP software. Specifically:
1. Using the results from business process discussions in selection phase-1, develop functional HLDs. The total is typically 10 to15 HLDs.
2. Review and tune SoftSelect’s standard HLDs, which address overarching selection criteria. The total is typically 5 to 7 HLDs.
3. Combine all HLDs in a particular order that is more productive for reviewing candidate software and assign a relative weighting to each HLD.
4. Work with your company’s business process managers and operational executives to review and approve the HLDs. Return to Chart
2. Coordinate and conduct test of long-list versus HLDs: Locate appropriate personnel at each candidate software vendor firm to discuss exactly what the selection team requires so vendor personnel can properly prepare. Then your company’s selection team holds an approximate two-hour interview to review the HLDs with these representatives from each software vendor. In these interviews the HLDs are discussed and an opinion is obtained from each selection team member using standard scoring methods. For each ERP reviewed we conduct a process to detect the more accurate opinions (from all team members) and a team-level ERP score is developed. Return to Chart
3. Visual review of long-list (2-hour introduction): This web-based review is intended to be a visual introduction to the interface, flow, and overall ease-of-use of each candidate ERP. Typically 4 or 5 selected HLDs are further discussed during this event. In addition to further screening the ERP, an additional benefit of this visual review is a general education for the selection team on modern capabilities such as workflow engines and the configurability layer of current-market ERP software. Return to Chart
4. Process to control price and terms for ERP and other software licenses: We have extensive experience in controlling the cost and terms for buying ERP software and other business software that augments ERP. For our clients this typically results in very large improvements in cost and terms over what is otherwise arranged when buyers are unaware of their options. This process is comprised of the following major steps:
1. Develop cost and terms objectives: This step is comprised of working with your team to:
   • Define ERP for your company in terms of (1) different User Types and (2) business process areas to be supported—which affects what software modules/add-ons will be needed from specific ERP sellers.
   • Develop buyer-centric ERP license cost and terms objective amounts—based on the license types and process areas included from the prior step. These amounts are typically 40-50% lower than the normal discounted pricing—and are achievable and fair for the sellers. Also the ongoing maintenance cost objectives are developed.
   • Collectively maintain our ‘poker face’ to achieve better (and faster) results with the sellers. This includes discussion on (1) what tactics or arguments you may hear from candidate software vendors, and as needed (2) strategies for negotiating with an ERP vendor that presumes they have the deal won. This coaching builds useful resilience and confidence for the selection team and executive sponsors in this process.
2. Present ERP license cost objectives to the candidate ERP vendors (typically the long list): This step is comprised of:
   • Developing a cost-control approach, specific for your company, based on (1) the quantity of ERP vendors (including only one), (2) which ERP vendors are present, and (3) how the vendors believe they stand to win your company’s business.
   • Establishing appropriate vendor points-of-contact and brief them on the ERP license cost and terms objectives to determine vendor questions and concerns.
   Gaining the points-of-contact’s acknowledgement that they understand the ERP license and maintenance objectives and seek reasonable confirmation that they can materially compete to meet these objectives.
   • Explaining the detailed ERP license and maintenance cost discussion for the final two candidate ERP vendors.
3. Processing ERP vendor replies and reaching the buyer-centric purchase arrangement: This step is typically conducted in phase-3 on the final two candidate ERP vendors. It is an iterative process that requires different amounts of calendar time and consulting time based on the culture and attitude of the finalist ERP vendors, and to a lesser degree, factors to do with your company. Key aspects of this step are:
   • Work with finalist candidate ERP vendors to understand how they breakdown their ERP (license types and software modules/parts/add-ons) and align this to the ERP license types and business process areas to be supported plan developed in step 4a above).
   • After a vender’s offering has been aligned with your company’s ERP descriptions, then (and only then) discuss (1) proposed pricing and (2) maintenance costs/terms from the ERP seller—in the context of the objectives set forth in step 4a.
   • As needed, interact with the candidate vendors to improve the vendor’s offer. Return to Chart
5. Evaluate and augment all findings to develop finalist: Quantitative and qualitative results of the software vendor interviews, visual review, reaction to ERP license costs and terms objectives, and other relevant inputs, are organized and discussed to develop two to three finalists. Return to Chart
6. Short-list debrief and discussion with company leaders: The results of phase-2 are presented to management and other interested company members. This step is designed to build high confidence in the ERP short list. This type and level of confidence is valuable through the remaining selection process and eventual implementation. Return to Chart

Phase Three: ERP Short-List to Selection

1. Coordinate and conduct software demonstrations: Develop demonstration plan, coordinate with candidate software vendors/representatives, and lead full-day ERP product demonstrations. Experienced leadership during the full day demonstrations will help keep the event focused, consistent, and relevant, improving the experience of your team and the confidence in the results. Return to Chart
2. Process final questions and reference checks: Each selection project has a different list of outstanding questions at this point. Because of the focus and discipline in ERP product screening to this point this list is not typically long or confusing. Carefully designed conditional or specific reference checks can also be conducted to gain other useful input. Return to Chart
3. Implementation services and cost control review: Typically at this point in the selection process, the finalist ERP offerings are from relatively strong software vendors that have reasonably mature implementation services options. Based on this, it has been our experience that the most relevant differentiating factors for a candidate implementation service provider are (1) the talent of the proposed team—with a focus on business process analysts, (2) the hourly rates for various team members, and (3) the ability to deliver services with modern collaboration techniques. Nearly irrelevant in selecting an implementer is its total cost estimate for services (the implementers simply do not know with any precision what a prospect needs) and statements about methodology (for the leading vendors it is approximately the same—regardless of the marketing language and bold statements used). Because of these factors, the implementation services component typically has a minor influence in the ERP selection process—however it is still critical to properly screen the implementer and set up the proper business relationship. To do this we (1) conduct a screening process to locate and secure proper team members from the implementer and (2) have a list of relationship control objectives that we negotiate with candidate implementers as a condition to being selected. Return to Chart
4. Contracts: Review and improve for ERP licenses and services: ERP vendor-developed contracts for ERP licenses and maintenance are typically very one-sided—and the same is true for implementation services, but to a lesser degree. Early in phase-3 we request contracts from the two ERP finalists and two candidate implementation providers for review—and all participants are clear this is the process for both finalists. However, if the selection team has a known favorite—we would spend less time reviewing the second ERP vendor’s documents unless this becomes necessary. In addition to fixing contract specific weaknesses, we also maintain and tune a list of buyer-centric contract objectives, which translate to far more control for buyers of ERP and services over the life of the business relationship. It is also the intent to discuss implementation services contracts in an environment in which the candidate implementer (1) does not know if their ERP is selected and (2) understands that your company’s selection team knows about other options for implementation services for the particular ERP. Return to Chart
5. Final selection recommendation to company leaders: The selection team discusses all phase-3 inputs to develop a final recommendation to your company’s management and other appropriate company members. As in the phase-2 debriefing and discussion, this process step is designed to build high confidence in the selected software solution and contribute to overall project confidence in the pending implementation. Return to Chart

ERP Selection Project Deliverables

The following are deliverables of this work.

• ERP selection training: SoftSelect methodology documentation, methodology and tool usage webinars, and other training as noted in this proposal.
• Business process boundary diagram: The diagram that shows the selection team’s estimate of what portions of overall company business processes are expected to be controlled by ERP software.
• ERP candidate long list: ERP software candidate list with standard research details and verbal insight to support the list.
• Project data: Results of the phase-1 process interviews are organized by business process categories. This information includes (1) improvement ideas, (2) statements of current problems, (3) processes that are unusual and (4) other observations from the business process interviews. This information is delivered in a project data toolset and can be further developed to be very useful for pre-implementation readiness work (designing future-state processes).
• High-level differentiators (HLDs):  List of your company’s priorities that drive the phase-2 long list reduction.
• Long-list software candidate performance: Phase-2 performance reports showing how each long list candidate met priorities during the HLD review and the visual introduction event.
• ERP license cost control tools: Spreadsheet tool and documented best practices and instructions. These items will streamline the discussion of software costs and terms with candidate software vendors and improve the results achieved.
• ERP demonstration script structure:  Documented structure and guidance to finalist software vendors to help them prepare and, during the demonstration, deliver information more in line with what the selection team is seeking.
• Implementation service cost and terms control process: Spreadsheet tool and documented best practices and instructions. These items will streamline the discussion of service costs and terms with candidate implementation service providers and improve the results achieved.
• ERP license and maintenance contracts: Marked up contracts for the two finalists ERP vendors showing original changes and additions that are sought in a final version of the contract. A final version of the contract(s) with objectives materially achieved per approach described above in Phase-3, step #4.
• ERP implementation services contracts: Marked up contracts for the two finalists ERP implementers showing original changes and additions that are sought in a final version of the contract. A final version of the contract(s) with objectives materially achieved per approach described above in Phase-3, step #4.
• ERP project cash flow plan (pre-implementation and post-implementation): This model projects when cash is estimated to be needed to pay for software licenses, infrastructure, services, etc.

In addition to the physical deliverables, the main purpose and value of our selection services is tied to:

• Protecting project momentum
• Lowering the stress on your team members
• Greatly lowering ERP license and maintenance costs
• Significantly improving relationship control with extensive contract fixes
• Improving the overall confidence in decisions made