During the evaluation process for a new ERP system, a series of choices must be made. Factors such as ease of use, compatibility with existing (and desired future) systems, vendor support and stability, functional fit and total cost of ownership are all significant and must be considered. For most companies, the evaluation process should include the following steps:
Conduct a Business Process Review – Document the processes you are currently conducting in the course of business. Focus on the How, Who, What and Why on individual tasks and processes within your business.
Perform a Gap Analysis -Working with your internal project team and the results of your Business Process Review, conduct a detailed gap analysis, in which you identify any differences between your current software’s functionality and your business needs. For example, your accounting team needs a 13th accounting period to record adjustments, and your current system only accommodate 12 periods. Gaps can be “bridged” by making changes to your requirements, modifying your internal processes or by developing customizations to your software. The results of your Gap Analysis can also be used to measure any proposed replacements systems.
Consider your time horizon - Carefully consider both the short and long-term needs of your company. If you are considering any customizations (based on your Gap Analysis), don’t forget to include the additional costs of maintaining the customizations required as new versions of the software package are released. These costs can be significant; in many cases the cost to upgrade the customization can be equal to the initial development cost.
Cost – Benefit Analysis. Analyze your proposed solution and be certain that your benefits will exceed your costs. If the anticipated benefits do not exceed the expected costs, review your decisions and selections to identify areas where costs can be reduced. At all costs, avoid those situations where you are spending dollars to measure pennies.
Embrace change – Expand your perspective to include addressing changes to your current processes at the same time you are exploring a new software package. Strive to identify and adopt “best practices” for your internal processes, rather than simply continuing to use new software to continue your old practices. Your Gap Analysis can identify areas that require a process improvement rather than a change to the software.
At the conclusion of your internal development of your functional requirements and a Gap Analysis, you now have the basis for analyzing potential replacements to your existing system. (If you are concerned that your own staff lacks either the appropriate available time of skill set to conduct these activities on your own, consider engaging with an outside consultant to assist you). Carefully measure any candidate for their ability to bridge your gaps, support the adoption of best practices for those internal processes that need improvement, and look for a minimal amount of customization. The knowledge you have gained about what you currently have and what you will require, both in the present and in the future, will greatly increase the chance for a successful implementation of a new system.
The functional requirements you have developed can also be used to identify your Critical Success Factors. These are defined as the set of requirements that absolutely must be met for your project to be judged as successful. A failure to adequately address any one of these could potentially jeopardize the project or the company itself. All of your potential candidates for the new system must be measured against your functional requirements and your Critical Success Factors. Separate the remaining functional requirements into two additional categories; Need to Have and Nice to Have.
It is crucial when selecting your Critical Success Factors that the expectations for the systems being considered remain realistic. It is too easy to become distracted by a search for the system that can do everything you want, and to dismiss a system that successfully does everything you need.
Frequently, however, the search for a new ERP system can get bogged down, for a variety of reasons, and you end up being unable to reach a decision. At this point, the momentum for your project is reduced, and eventually, can dissipate entirely. All too often, this loss of momentum and the inability to reach a decision is the result of the pursuit of the “perfect” solution rather than the “optimal” solution.
Put another way, don’t let the search for the “Best Solution Possible”, which may well be one of the systems you are currently evaluating, be turned into a search for the “Best Possible Solution”, which either may not exist or may be cost-prohibitive.
With Microsoft Dynamics GP, we strive to deliver the Best Solution Possible, at a low total cost, utilizing the products that you are familiar with, and leveraging the other systems you already have in place.
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