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Top 10 Questions to Ask when Choosing a Midmarket ERP Solution

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By Marcia Doron, Altico Advisors

This morning, the president of my company forwarded an e-mail to me that he had received from with the above title as the subject line.  It contained an offer for a free white paper download from INSIDE-ERP.  Over the last 11 years that I’ve worked in the ERP software space, I’ve seen many such “Top 10” lists.  By and large, they’re all valid to varying degrees, but each author tends to have a somewhat different take on what that top 10 list should include.  Some are more strategic.  Some take a more tactical approach to software selection.  Some are clearly geared toward the business owner.  Others are more directed at the IT professional. 

I liked many of the points elaborated on in this particular white paper, so I bring you a summary of its content, with this caveat:   When you’re evaluating ERP solutions for your company, the first 10 questions are just the tip of the iceberg.  There’s a whole lot more you’ll need to know and understand before you’ve completed your search.

  1.  Do you know and understand the business problems your organization’s business leaders plan to solve with ERP?   According to British financial software provider Lakeview, “Many ERP installations have fallen short of expectations precisely because of a failure to determine and define detailed project goals at the outset.” My comment:  Sure.  This is a given.  And if the software firms you’re speaking with aren’t emphasizing the critical nature of this step, you’re speaking with the wrong firms.
  2. Does your organization have a business-application vendor already?  If you’re not satisfied with your current vendor’s performance or if the ERP functionality doesn’t suit your organization’s needs, you don’t have to be locked in.  Changing to a different vendor will probably interfere with the business to a certain degree, but it may be worth the disruption…My comment:  This is probably the point I find the most confusing on this top 10 list.  Why would you already have identified or be working with a vendor at this early stage?  And if you’re not satisfied with your current vendor’s performance or if the ERP functionality doesn’t suit your organization’s needs, changing vendors should not be considered as “may be worth” it.  Why on earth would you even consider continuing with that vendor?
  3. Does your organization have any legacy ERP systems to contend with?  The author cites the obvious:  integration issues.My comment:  It’s a valid question but in many cases, isn’t this exactly why you’re evaluating new systems?  It almost seems like this question is too obvious to be included in a top 10 list.  If you don’t already know whether your organization has any legacy systems, you’re in deep trouble. 
  4. Is a vertical ERP solution suitable for your organization?  In an effort to make ERP more accessible to midmarket companies, most vendors have released bundles with software tailored to specific industries.  Such a solution may speed deployment and decrease the amount of customization you require to fully support your organization’s business processes.My comment:  Here’s a question I can sink my teeth into.  I’ve found that few companies actually understand the difference between a vertical and a horizontal solution.  To my mind, there are pros and cons to both.   There’s enough meat in this question to fill another entire blog post.  So I’ll put this one on my list of future topics. 
  5.  What functionality will your organization actually use?  You may not need an end-to-end solution that incorporates everything from payroll to field-service management…My comment:  Excellent point.  And the author provides some interesting statistics regarding adoption rates based on a midmarket survey:  Purchasing 96%, Account Payable 95%, Inventory Control 94%, General Ledger and Accounts Receivable 93% - versus Payroll at 18% or Event Management at 4%. 
  6. Does the ERP solution align with your organization’s business processes?  To the greatest extent possible, make sure that the ERP system you choose requires very little modification to align the application with your business processes.  …You should not have to change the source code to match your business processes. My comment:  No argument here.  Business process and IT strategies must align.  But just to clarify, there is a big difference between modifying and customizing.  The former should not require tampering with the source code at all.  The latter certainly does and can be the cause of costly problems down the road. 
  7. Does your organization have the IT resources necessary to support an on-premise installation?  Even if your company can support on-site ERP, you may have good reason to consider an on-demand or hosted solution.My comment:  If you don’t know the answer to this question, you need to establish that pretty quickly so that you’re going down the right path and not wasting a ton of time evaluating on-premise solutions that you can’t support.   My experience has been that most companies have a strong preference one way or the other. 
  8. What kind of services will your organization require from the ERP vendor?  …Make sure that your company’s vendor of choice offers adequate support services, training…My comment:  Good Point.  And I would add that it could be important to determine if those services are provided locally or not.  If not, you could incur significant charges for travel and lodging that you haven’t budgeted for. 
  9. What is the true cost of the ERP solution?  …Purchasing and licensing are just one part of the final cost of an ERP solution.  It’s critical to know up front what the costs will be for implementation services, maintenance fees and upgrades.My comment:  Excellent point.  Add up front and ongoing training to that question, too. 
  10. Does the vendor have a clear long-term product strategy?  You need to be sure that your company’s ERP implementation will be able to grow with the organization and adapt to changes in the business, as well as continue to offer the best in ERP functionality as the technology continues to evolve.My comment:  Truly critical.  Technology becomes outdated so quickly that if you’re not working with a vendor that has a track record of regularly enhancing and updating its software, then there is no reason to believe that they’re going to meet your future needs and be on the leading edge of innovation.   Why would you want to invest in software that is already growing old or will soon be out of date?  Ask for their technology roadmap and question their ability to perform against that roadmap.  If they don’t have good answers for you, caveat emptor!

Wow.  This turned out to be a lot longer than I originally anticipated, because the more times I read through this top 10, the more comments and caveats I came up with.  As a thoroughly biased critic, I can go through these top 10 questions and count the ways that as a Microsoft Dynamics GP partner, we would receive high grades for our answers to those questions.  We approach the selection process by probing deeply into question #1 above first.  And that’s already a great start.   

By Altico Advisors, Microsoft Dynamics GP Partner for Manufacturing and Distribution serving New Hampshire (NH)

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