What criteria should be used to evaluate modern ERP systems?
The evaluation of ERP systems has advanced significantly over the years and choosing a modern ERP system for a company involves many more considerations thavn a typical on-premises ERP.
The cloud-hosted ERP makes a significant change in reshaping the organizational landscape, but the change isn’t limited to the optimization of business processes; it has also gone further and provided a very high level of collaboration capability with more internal and external apps than ever before.
We’re trying to put the modern ERP evaluation process into four main categories: internal, technical, commercial, and vendor evaluation. For each of these, I’ll explain our point of view in more depth.
The modern ERP opens the world by encouraging collaboration with office productivity tools, social media data, mobile apps, third-party applications, Chat bots, automated approval workflows, vendor and customer portals in real time without compromising the security of internal data. When business requirements are defined, it should look beyond the ERP perspective and consider the aforementioned
ERP collaboration capabilities.Modern tools for data engineering brings in all the data in a centralized repository in real time. This gets rid of data silos and makes it easier to get operational and predictive analytics, as well as real-time reports, all in one place.
When writing the report specifications, it’s important to think about what modern ERP stacks can do in terms of reporting, BI, and analytics.
If a company decides to use modern cloud ERP for its back- office operations but still wants to use its legacy application
on a private cloud or on-premises server, it can do so with the hybrid cloud deployment model. However, the business should be prepared to switch from legacy operational applications to more contemporary stacks in the future. Determining whether to replace legacy applications with a modern stack of applications now or in the future should be taken into account when drafting the RFP.
The task of preparing the RFP and defining the requirements appears to stay the same; nevertheless, there have been some shifts in the way the details need to be specified. Although we won’t be discussing the proposed solution here, it is important that the goals be made crystal clear.
- Organization write-up- Your organization must create a written description of the company’s details, including its size, the business portfolios it operates in, and its objectives. In addition, you should explain the challenges of the existing system and state your expectations and improvement for the new system. This piece of writing will help the vendor comprehend the business and its goals to develop a solution portfolio and implementation strategy that meets your
- ERP Budget outlay – In addition to the initial budget outlay items, such as product costs that are either subscription-based or perpetual (Opex or Capex), implementation costs, and any applicable infrastructure budgets, additional customization fees, ongoing maintenance costs, upcoming Upgrades, and additional unforeseen costs should all be
- Businesses Requirement Specification – The requirements should be specified in accordance with the short- and long-term objectives of the company. A Core Committee of business decision makers and IT team members is the most effective way to generate a thorough RFP requirement description that encompasses both functional and non-functional demands while taking current business and IT challenges and future requirements into account. As said above, when the business requirements are defined, make sure that it looks beyond business process optimization and consider the offerings from the modern ERP stack and its eco-system.
- Data-Centric RFPs – In addition to process coverage, RFPs should focus on democratizing data by incorporating relevant reporting, analytics, on-screen querying, and so on at all levels to encourage data-driven decisions. The most effective organizational decision-making process is based on centralized data management, and RFPs should reflect
- Prioritize requirements! –. Always, the businesses intend to keep all the requirements as a high priority, but the core committee can decide based on the larger picture in the mind. Because of this, the organization will be able to concentrate more on the primary business demand that must be met quickly. RFP should also provide provisions for ERP suppliers to suggest workaround solutions for the business requirements if there aren’t any direct fits or standard processes available.
- Go live and Data Migration Strategy- It is helpful in planning the method that will be taken for the system to be put into live operation. It may be done all at once, with the new system going live on a predetermined date, or the rollout may be done in stages, or both the old system and the new system may be run in parallel until the users are familiar enough with the new system to feel comfortable using it. Before choosing a method, it is important to do your homework and understand the benefits and drawbacks of each. Go live strategy should be combined with a data migration strategy to decide whether to use historical data or to start over with the master and opening balances uploaded to the new system.
Before one can get the full response from the vendors, you need to have a session with them to answer any questions and address any concerns that they may have. Suppliers can be summoned to a shared
location to answer their questions. After the meeting, an addendum with all the questions and explanations can be sent out to the responses as part of the RFP that was previously distributed.
Proposal review primarily focuses on evaluation and rating the responses given by the supplier for the requirement specified in the RFP sheets. The evaluators should also consider the supplier’s overall solution portfolio and determine whether it meets the organization’s culture.
All the ERP provides functionality for financial, supply chain and HR activities of an organization. The key point to check is whether the vendor-recommended application is part of a modern ERP system that offers easy to use interface, remote system access from anywhere at any time and seamless data integration capabilities with other systems.
Even though the RFP evaluators would have included these points in the RFP requirements, The following are the key factors to consider while selecting modern ERP system:
- Personalization Features – The modern ERP provides easy to use tool that allows end users to alter the form layouts as he/she interacts on day-to-day basis. And, there are features like personalization of workspace that stores shortcuts such as KPIs, Tiles, and frequently performed tasks based on the role played in the company without navigating through Check those that give a great deal of freedom to the users without taking the help of developers.
- Centralized Data Repository: Verify that the comprehensive set of solutions includes a centralized data repository that ensures data availability throughout the enterprise for consistent decision-making.
- Extended Analytical Capabilities- The ERP system should be able to link to external BI systems or one from its ecosystem that provides the most cutting-edge analytical capability to enable the company making informed decisions. Look for its analytical capabilities that go beyond what is provided in the standard
- Collaboration Capabilities – Collaboration with Word Processing, Spreadsheets, and email is a necessary component of an organization’s day-to-day operations, and it is necessary to investigate how successfully it accomplishes that.
- Integration capability – Examine the ERP’s capacity for seamless connectivity with other systems, which is a crucial element in removing data silos, data discrepancies, and decision- making
- Configurable automated approval workflow – Look for a feature that allows the document to proceed through an automatic approval procedure. The process may be single- or multi- level approval, depending on the user-defined criteria. This feature improves process transparency and consistency throughout the organization.
- Data Security – Please examine how the ERP system implements user authentication and access controls, as well as the availability of access logs and an audit trail to keep track of any system
- Scalability– Examine the ERP system’s scalability; it should be flexible enough to grow with your company as it grows, whether that means adding more users or acquiring more
- Product updates and releases – Verify the vendor’s overall plan for new features and major product One of the most crucial criteria to consider is whether the product will still be supported in the future. This holds true for both the supplier’s primary ERP systems and the industrial verticals provided by ISVs.
- Deployment Options- Most modern ERPs are hosted in the cloud, which has its own Having said that, it might also be offered as an On-premises alternative. In addition, hybrid cloud alternatives make it feasible to use your old operational application in a private cloud while combining it with on-premises enterprise resource planning tools or vice versa. Determining the deployment options is therefore critical for the organization.
- Future Business requirements: Ensure you understand and reconcile how the future business requirements of the organization can be met on selection of modern ERP.
- Avoid Bottlenecks: Though the modern ERP provides seamless integration, it is better to check the availability of standard/custom connectors, if vendor offers more than a single system to meet the business This is important so that you don’t have to spend more time later writing the connectors.
- Avoid Assumptions: If the vendor offers industry verticals or custom-built modules on top of the ERP solution, don’t assume that it will meet all of your operational business needs. Instead, do your research and make sure the difference is clear and written down.
- Avoid Customizations: Even though modern ERPs have extension concepts that separate the core application from the customization. The organization would always benefit from adapting the standard Process/Best practices of the ERP because it would standardize the existing processes and make future upgrades less complicated.
There are a number of steps to take when deciding on a vendor and evaluating them. During this stage, the project will move forward with clear goals for how to carry them out. The vendor will be judged on their technical, commercial, and their experience in implementing modern ERP stack and its eco system, as well as its service quality, customer focus, and how well it fits into the organization’s culture. Let us evaluate little detailed in the below section:
- Solution Comparisons- Is a very important part of the ERP selection process because it lets businesses compare different systems based on the requirements of the RFP. Based on how the evaluator rates the vendor’s response to the RFP, the vendor may be chosen to move on to the next stage of evaluation.
- Commercial Evaluation-The commercial price point is another consideration that must be understood in addition to the evaluation and ranking of the requirements because it is closely related to the project’s projected budget outlay. It is necessary to break down the cost into the various components of the services it includes, such as implementation, ongoing maintenance, customizations, and any other offerings. This will help in establishing price comparison between the quotes
- Proposal Walkthrough– The potential provider will have to submit a proposal, justify its RFP responses, and give them the opportunity to explain why the solution portfolio it provided in the technical proposal was appropriate. They can be further shortlisted for the subsequent round of product demonstrations based on the walkthrough and the vendor profile, its experience installing ERP solutions, similar implementation case studies, pricing point, and track record in the industry.
- Product Demonstrations-Setting up a configured demo with the vendors who made the short list for this round is always a good The demo should use the organization’s shared data script and data, which will help business users connect with the demo sequence. This will also help us figure out how well the supplier can set up the business case in the standard product and how well they understand and speak the business language. Outcome from this step will aid in further supplier filtration for the next step of evaluation.
- Site Reference- Requesting a customer reference from a business that is like yours would help you find out about the quality of the implementation, the supplier’s commitment to the project, and their ongoing support for the project.
- Consider Peer Review– It’s always best to get feedback about a supplier from the market or from peers in order to check the supplier’s track record and level of
- Proposal Negotiations– Once the supplier is on the organization’s final list of vendors, the price can be negotiated so that the organization stays within its budget. Negotiations should be fair enough that the supplier is willing to make a long-term commitment to help the organization reach its goal.
- Vendor finalization- Once the price has been agreed upon and all the criteria have been met, the vendor can be chosen to carry out the ERP
- Management approval- The finalized vendor must receive management approval before being recognized as a partner for implementing an ERP solution for the RFP scope and the final revised proposal. When the supplier and the bid and the anticipated ROI have been approved by management, the work order will be released to begin the implementation phase.
The narratives that have been presented so far tries to bring a few key criteria that are significant for the evaluation of modern ERP systems beginning with the creation of a request for proposals (RFP) and continuing all the way to the selection of an ERP solution and a provider for ERP deployment.
Big bang – Implementation happens in a single instance. All users move to the new system on a given date.
Phased rollout – Changeover occurs in phases over an extended period of time. Users move onto new system in a series of steps.
Parallel adoption – Both the legacy and new ERP system run at the same time. Users learn the new system while working on the old.