Selecting ERP System

Prof. Chandan Singhavi

 FACTORS TO CONSIDER IN SELECTION OF THE ERP SYSTEM

1. The organisations functional

requirements
2. Packaged software vs. developed
software debate
. Open source software
 FACTORS TO CONSIDER IN SELECTION OF THE ERP SYSTEMcontinued

3. Identification of packages that can fit the needs of

the organisation

4. Assessment of fit between needs and attributes of

the ERP package

5. The organisations readiness for ERP

implementation
7 IMPORTANT ERP PACKAGE ATTRIBUTES TO CONSIDER:

1. Functionality
2. Reliability/ stability
3. Cost
4. Ease of use
5. Ease of customisation
6. Ease of implementation
7. Vendor reputation
History customer references
Available resources
ERP product knowledge, industry
knowledge, business knowledge
IMPORTANT READINESS FACTORS

1. Structured ERP implementation strategy

Alignment of internal strategy with ERP vendor s
implementation strategy
2. Internal Project Planning
Committed project co-ordinators
Team dynamics
Communication lines
3. Business Process Engineering and Re-engineering
4. Change Management Plan
Personnel skills requirements analysis
skills development
Organisational structure evaluation and optimisation
ERP Vendor selection
Preview
The selection of a vendor that best meets
the needs and long-term direction of the
company is a critical first step in a
successful implementation.

The company may want to hire a specialized

consulting firm to assist in the selection
process.

The steps involved in selecting a vendor

generally are based on best fit of an ERP to
business functions and the overall ERP
vendors product performance in the
market.
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High Level ERP Purchase Process
1. Vendor research and information gathering
2. High-level vendor demonstrations and evaluation
3. Needs and requirements assessment
4. Development of request for bid or proposal
5. Release request for bid to vendors
6. Analysis and selection- Evaluation of bids,
Functional evaluation, Technical evaluation,
Vendor-detailed demonstrations, Contact
references, Develop a total cost of ownership
7. Vendor negotiation,
a) Contract review and change,
b) Pricing- software, maintenance, and consulting, support
8. Purchase system

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Vendor Research

First step is to identify a short list of vendors

who will help to shape business
requirements.
Identifying and researching all aspects of a
vendor package will assist companies in
determining the total cost of ownership.
Including end-users will help with change
management and also help to gain trust for
later in the implementation.

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Vendor Research (Contd)
Consider the following for vendor selection.
Other businesses using the vendor
The vendors financial position
The vendors implementation philosophy and support
issues
The hardware and software infrastructure used to
support the ERP
The vendors direction and currency of software
The vendors release and upgrade strategies
The vendors user-base involvement in defining future
functional changes
The vendors development and maintenance
resources

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Short List of ERP Vendors
SAPSolutions are for all types of industries and
for every major market. Its products include
mySAP Business Suite, SAP NetWeaver, and
solutions for small and midsize companies (e.g.,
SAP Business One and SAP All-in-One).
Oracle/PeopleSoft (Acquired PeopleSoft in
2004) Provides solutions divided by industry
category.
Lawson Provides industry tailored software
solutions.
SSA Global(Acquired Baan in 2004.) Claim to
offer solutions that accomplish specific goals in
shorter time frames.
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Short List of ERP Vendors (Contd)
Great Plains- Part of the Microsoft Business
Solutions group of products, its solutions can be
tailored according to business needs.
Epicor- Focuses on enterprise software solutions
for mid-market companies.
Infor Visual- Flexible, fully integrated, and easy-
to-use ERP suite that is widely deployed across
many industries from aerospace to biomedical,
capital equipment, precision tools etc.
Plex Online- Plex Online provides a full suite of
enterprise resource planning, manufacturing
execution system, and supply chain management
solutions

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Matching User Requirements to
Features
Identification and documentation of user and
system requirements can be done by
documenting current legacy system
functionality or by using business process re-
engineering.
Two major documents are often a result:
Data and functional flow of departmental or business
processes.
Table or description of functions in each department
and the level of importance of each function.
Identifying vendor system functionality based
on documented processes will help to purchase
a system based on facts.
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Request for Bids (RFB)
RFP
Often known as Request for Proposals (RFP)
Expensive and time-consuming process for
both the company and vendor, but it can yield
significant software savings when done right.
RFB should always include the following:
Type of ERP system the company wants with specific
functionality
Specified hardware and software infrastructure
Training requirements
Any specific contract issues required by the company

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Vendor Analysis and Elimination

Office staff will need to evaluate functionality.

IT staff will evaluate the technology
requirements.
Contract staff will need to evaluate the
contract and pricing of the system.
No vendor will meet all requirements so
vendor discussions and negotiations should
focus on the best fit for the business.
Develop and analyze the total cost of
ownership (TCO).

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Contract Management and License Agreements

Things every ERP contract should have:

All deliverables must be clearly identified with
delivery dates associated.
Ensure that you, the customer, have acceptance
authority.
Identify those responsible on both sides for
contract management and who has the
authority to authorize changes to the contract.

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Selecting consultant
 Selecting Consulting Partner
Selecting the right consulting partner is crucial for ERP project
success.

There can be different consulting partners for different phases of the

project like;
One for package selection
One for doing package implementation
A third one for doing all technical works from a low cost country

Large global implementations these days are mostly broken between

multiple partners. When multiple partners are involved in an
implementation, coordination between different players become
extremely important.
Selection Criteria for ERP consulting Partner

Process consulting Industry

Experienc Client Satisfaction
experience
e

Price / Value for

Client References
Money

Can provide End to Reputation

End service

Global Presence
Quality of Project Mgmt

Methodology, Tools
 RFP Process For Partner Selection
Some of the large organizations follow RFP (Request For Process)
process for selecting consulting partner for ERP implementation.

RFP process is must for Public Sector Organizations.

Sometime a RFI (Request For Information) is issued prior to RFP. Based

on RFI response a few vendors can be short listed among many.

An RFP can contain details like

High level Scope and Project Duration
Overview Of Companys business and operations
Business benefits the company is expecting from the project
Proposal submission details when and how the offer to be submitted
Payment schedule, Bonus, Penalty etc
 In house implementation Pros and Cons

Cons Pros

Better process knowledge

Better industry knowledge

Product Expertise No money goes outside

ERP Project Mgmt Skill

Lack of methods and tools
No implementation experience

High chances of failure

ouse implementation may work in case of Rollout projects where implementation

rst site had been done by consulting team and subsequent rollout by in-house te
 Global ERP Consulting companies

Tier 1

IBM, Accenture

Tier 2
Capgemini, Deloitte, HP EDS
Bearing Point, Infosys, Wipro, TCS, CSC

Tier 3

HCL-AXON, Siemens, Cognizant, T Systems, L&T Infotech

Atos Origin, Several Small Companies, Local Players
Project Phase wise what activity can be
offshore

Project Phase % of activity % of activity from Type of activity from offshore

from onsite offshore

Project Preparation 100% 0%

Business Blueprint 90% 10% Building Proof of concept / Demo

scenarios, Blueprint documentation
(Partial)

Realization 30% 70% Configuration, Testing,

Developments

Final Preparation and Go Live 50% 50% Data Migration, End user training
content preparation

Support 20% 80% Resolving Issues, Running routine

utility jobs, System developments,
Managing change requests
 Activity Analysis For Off shoring
Activities that commonly get off shored:
Development

Unit testing, Volume testing

Training content preparation

Activities that can be off shored in limited extent:

Configuration
Data Migration

Activities that is difficult to offshore

Business Blueprinting

Integration testing

User acceptance testing

End user training

Change management activities