The SoftSelect ERP Selection Process Details
Phase 1: Business Review/Develop ERP Long-List
As with any complex and important initiative, it’s crucial to be prepared and to have a realistic understanding of what resources, energy, and commitment will be needed. We’ve continuously enhanced our methods to help clients better prepare for enterprise software projects, based on the experience of more than 900 projects. These few hours of meetings, presentations, and team discussion can significantly contribute to project continuity, momentum, and quality.
Client companies are discussed in the context of how the company might be different for the reasonably foreseeable future. These are major differences, such as new product lines, new locations, international business, changes in customer status, etc. These findings in turn may influence the priorities that drive a selection of ERP software.
Determining key ERP selection functionality 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 those involved and (2) the development of valuable discovery (improvement ideas, current problems, and uncertainties) which is 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.
What portion of the overall business processes should ERP support at your company? This question needs to be answered to enable a concise review of ERP and purchase appropriate ERP access. Often a buyer’s expectations of ERP do not align with what ERP should practically support for their company, which if not corrected can result in the purchase of inappropriate software access and disappointment during the implementation or at some later point in time. In this step, we develop an ERP boundary diagram from (1) information gained during business process interviews and (2) SoftSelect’s deep understanding of the appropriate functional reach for ERP for a company of the size and type as our client. This boundary diagram also forms the basis for an enterprise-wide business software strategy.
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 business application’s track record of use in companies similar to our clients and (2) that the ERP offering has been substantially modernized (less than 20% of ERP offered today have been). A thorough briefing 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 not included on our suggested list in which your company has an interest.
The results of phase-1 (including how the Long-list was developed) are explained to, and discussed with company leaders and other interested employees. It’s important to keep all interested employees appropriately involved to continue building companywide confidence and to detect concerns and potential misunderstandings about the ERP project.
Phase 2: ERP Software Long-List to Short-List
These are carefully chosen company objectives that are designed to differentiate long list candidate ERP applications. They are referred to as High-level Differentiators or HLDs. Specifically:
- Using the results from business process discussions in selection phase-1, develop functional HLDs, typically 10 to15 HLDs.
- Review and tune standard SoftSelect HLDs, which address standard ERP tools for developing functionality, workflows, metrics, and integrations that should be present in a modernized ERP, typically 5 to 7 HLDs.
- Combine all HLDs in an order more productive for reviewing candidate software.
- Work with your company's business process managers and operational executives to review and approve the HLDs.
This first review of the candidate ERP is called the ERP Introductory Event—which is an approximate 2.5 hour event to introduced to the ERP vendor and conduct a ‘first pass’ test of the candidate ERP against the HLDs. First we identify appropriate personnel at each candidate software vendor firm (or appropriately selected reseller firm) to discuss the SoftSelect selection process being conducted and then work with them to prepare for the ERP Introductory Event. Then your ERP selection team conducts the ERP Introductory Event with each ERP seller, and each selection team member provides a structured opinion, for each HLD, using standard scoring methods.
We have extensive experience in controlling the cost and terms for purchasing access to ERP applications and other business software that augments ERP. This typically results in large improvements in cost and terms for our clients over what is otherwise arranged when buyers are unaware of their options. This process is composed of the following major steps and is the same whether one is accessing ERP with on-premise licenses or in the ‘Cloud’:
- Develop cost and terms objectives: In this step, we will work with your team to:
- Define ERP 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 a specific ERP
- Develop buyer-centric objectives for what we seek for ERP license/subscription cost and terms, based on the license types and business process areas included from the prior step. These amounts are typically 40 to 50% lower than the normal discounted pricing, and are achievable and fair for the sellers. Ongoing ERP access cost objectives are also developed.
- Discuss techniques to achieve better (and faster) results with the sellers. This includes (1) discussing typical tactics or arguments you may hear from candidate software vendors, and how to handle them, and (2) strategies for negotiating with an ERP vendor that presumes they have the deal won. This coaching builds resilience and confidence for the selection team and executive sponsors.
- Present ERP access cost objectives to the candidate ERP vendors (typically the Long-list): This step is composed of:
- Establishing appropriate vendor points-of-contact and brief them on the ERP access cost and terms objectives to determine vendor questions and concerns.
- Gaining the ERP vendor points-of-contact’s acknowledgement that they understand the ERP access cost objectives and seek confirmation that they can compete to meet these objectives.
- Discussions explaining the detailed ERP license/maintenance or subscription cost discussions/negotiations will occur with the final two candidate ERP.
- 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 It’s an iterative process that requires varying 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. Based on these factors it’s not practical to accurately predict the time required to complete purchase negotiations of immediate and ongoing ERP access costs and terms. However, this proposal includes consulting time intended to complete the ERP access cost and terms negotiations. If more time is needed for this activity, it can be identified and discussed when it’s detected. Usually at this time in negotiations, the cost of extra consulting time is easy to tie to relatively large improvements to the ERP access purchase arrangement. Key aspects of this step are:
- Work with finalist candidate ERP vendors to understand how they breakdown their ERP (user types and software modules/parts/add-ons) and align this to the ERP access objectives developed in an early project step).
- After a vendor’s offering has been aligned with your company's ERP business process support objectives, then (and only then) discuss (1) proposed ERP access pricing and terms in the context of the objectives set forth in an earlier project step.
- Take possession of the finalist ERP seller’s contracts for ERP access (agreements for licenses/maintenance or subscriptions). Then mark up these documents with SoftSelect’s established commercial terms favorable for buyers and negotiate strongly on the buyer’s behalf.
- As needed, interact with the candidate vendors to improve the vendor’s offer.
Develop two finalist ERP from quantitative and qualitative results of the software vendor HLD reviews and other screening factors to do with (1) strength of ERP systemic tools, (2) projected software costs, (3) known or presumed status of ERP access contracts, (4) status of implementation offer to do with talent of team, terms and rates, and (5) ERP technical layer status, and other potential factors.
Phase 3: ERP Short-List to Software Selection
Develop an ERP application demonstration plan, coordinate with candidate ERP vendors/representatives, and lead full-day ERP product demonstrations. Based on the bulk of functions needing to be demonstrated and the level of all participants interests in various functional areas, there may be additional focused demonstration events. These are usually done after the full demonstration, take one or two hours each, and are delivered remotely. 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.
Typically at this point in the selection process, the finalist ERP offerings are from relatively strong software vendors that have mature implementation service 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 key business process analyst who also should serve as the operational project manager (in our terms, the Anchor Consultant), (2) the hourly rates for various team members and (3) the willingness to provide solid commercial relationship terms to the buyer. EAI-SoftSelect has a list of relationship control objectives for implementation contracts that we arrange with candidate implementers significantly as a condition to being selected as the implementer.
The total cost estimate for services and statements about methodology are usually not that relevant in selecting an implementer. The implementers simply do not know with any precision what a prospect needs and project obstacles they will encounter and therefore service proposals are developed to win business and not scare off prospects—in other words full of wishful thinking. For the leading vendors, methodology is nearly the same, despite the marketing language and bold statements used to suggest otherwise.
Develop the ERP selection recommendation based on results of the (1) ERP application functionality demonstrations, (2) strength of ERP tools for development, workflows, metrics, and integrations, (3) software access costs (initially and ongoing), (4) status of commercial terms for ERP access and services, (5) status of implementation offer to do with talent of team, terms and rates, (6) ERP technical layer status, and other potential factors.
The selection team makes a final ERP recommendation to executives/owners 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 ERP application and implementer and contribute to overall project confidence in the pending implementation.