A new ERP is needed – but which one fits the company?

Do you want to introduce a new ERP system? Then take a seat right away in the hot seat of ERP selection.

From now on, questions upon questions will rain down on you, whose answers will decide the success of your transformation undertaking.

A little foretaste:

• Which provider delivers the system suited to our needs?
• Whom do we have to involve, and how much, in the analysis and selection process?
• What does an intensive examination of the status quo need to be for, if it's supposed to change anyway?
• How do we best shape the requirements management?
• By which criteria do we evaluate possible ERP providers?

Against that, the „Who Wants to Be a Millionaire“ quiz almost seems like a stroll.

But no worries! We show you in 4 steps what really matters in choosing the suitable ERP system.

Step 1: Clarify the conditions

There are various reasons why a new ERP can be of advantage for your organization:

• Future-oriented positioning on the market
• Harmonized and smooth processes
• More favorable license and maintenance costs
• Better support
   

…are only some of the added values that a switch offers for your organization. But why does a single software solution have so much influence on your company?

Contrary to a widespread belief, ERP implementations concern not only the IT infrastructure and the processes linked to it. They also have a sustainable impact on the business and operating model of your company. Such fundamental transformations break up firmly established procedures and open up entirely new future perspectives.

Consequently, it should be the strategy of your organization that determines the requirements and rules for your new ERP. Not the other way around.

So if you want to know which ERP system suits your company best, then you have to first define your long-term goals.

-> Make yourself aware of which strategy your organization pursues and make this transparent over the whole process.

-> Determine the essential needs of your company, top-down, starting from the strategy through the business and operating model down into the processes and IT.

-> Identify the main driver of your need. Should a new ERP mainly lower costs or do you, for example, place greater value on the efficiency increase?

-> Consider which areas and processes should be integrated into the new solution.

With this foundation you're able to set the conditions for your ERP transformation undertaking and to create a clearly defined project scope.

That creates clarity. In the planning. In the decision-making. And above all also in the communication.

Step 2: Understand and document the status quo

Have you ever set out on a flight without knowing the departure airport? Sounds absurd, doesn't it?

With a switch to a new ERP system it's no different. You can't reach your destination without first finding out where you actually stand. You need a detailed overview of your company situation.

You can best comprehend the significance of your status quo by viewing it from the perspective of the W questions. This may seem trivial at first glance, but represents an effective approach to preserving the right focus.

Why?

The analysis of your company situation not only brings to light valuable, partly implicit knowledge of your organization. It also creates a discussion basis for all involved and sharpens the view for the really important topics.

Also keep in the back of your mind: A new ERP system should cover at least the functions your company uses nowadays for daily business.

With the help of an examination of the status quo, you can:

• …identify general and individual needs of your current world for a new ERP.
• …make optimization potentials within existing procedures visible.
• …shape the project planning more realistically through valuable insights.
• …foster the exchange between the involved parties early and thus break up silo thinking piece by piece.

What?

The basis for documenting your status quo is a comprehensive as-is analysis of your existing company structure and procedures.

Capture all processes affected by the switch of your ERP system. Consider exactly which level of detail you really need for the ERP selection. Too easily one gets into too-small details or stays too abstract. An experienced moderation is indispensable for that.

Pay attention to existing chains of action on a more global level. Make sure you don't fall into the trap of silo thinking by bringing all involved parties to one table and placing special attention on cross-departmental process interactions. Contemporary ERP systems follow an end-to-end process view and demand the corresponding way of thinking from the company and its users.

How?

Numerous helpful methods exist with whose help you can determine the status quo of your company.

Especially proven have been cross-departmental workshops. They offer you the possibility to identify interfaces and interactions between the various areas and to document them comprehensively.

In addition, it has a positive effect on the results of the workshops if you…

• …incorporate already prepared documentations of the company processes or – if not available – best practices. They ease the moderation of the workshops immensely.
• …structure the joint elaboration of the status quo by end-to-end processes (e.g. lead-to-order, order-to-cash, procure-to-pay). That allows you to understand procedures in a networked and multidimensional way.
• …create a balance between structure (agenda and timeboxing) and free thinking. Give process owners and other involved employees the freedom to contribute. They know the processes best, which is why you can already, just through listening, learn and document many relevant aspects.

Following workshops, create heat maps on the basis of best practices and the documented processes. These help you to get a better idea of the effort that the switch to a new ERP means for your company. Additionally, thanks to the heat maps, gaps in your process landscape can be easily identified.

Where?

Not least, in capturing your company situation you should also concentrate on the main object of your transformation undertaking – your IT landscape.

A new ERP system has to be able to communicate with existing solutions or to replace them smoothly. For this, a clear and complete picture of your current IT landscape is essential.

• Create a mapping of your IT architecture in order to visualize connections and the data exchange between the individual systems.
• Actively involve your IT employees and process owners in the capture of the IT landscape. Note the pain points of the current architecture and determine the needs and wishes for the new ERP.
• In addition, involve the management of the company in order to understand, besides the status quo, also the aspired goal of the IT architecture. Which systems should be replaced by the new ERP system, which existing interfaces thus fall away and which additional ones become necessary? The answers to these questions should harmonize with the strategic goals of your organization.

Step 3: Requirements analysis

Now that you've clarified the conditions and captured the status quo of your company in detail, you have a solid basis for your ERP transformation. Because now you're able to formulate clear requirements for the IT solution.

Such a requirements catalog is the most important criterion in selecting a new ERP system. It offers orientation in comparing various providers and records which needs should be fulfilled to which degree.

The following steps help you in elaborating a requirements catalog:

• Based on the results of your status-quo workshops, derive functional and non-functional requirements. Functional requirements describe what the system should be able to do, and non-functional ones how it should do this. Avoid the simple listing of functionalities – think integratively, end-to-end.
• On this basis, hold a further workshop with all process owners. That gives you the opportunity to check already-determined requirements and to take up additional optimization potentials and wishes for the new ERP.
• Orient yourself by the current as-is processes as a guideline and complement the requirements with desired to-be processes. Pay attention, however, that the wishes don't get out of hand and are actually implementable.
• Complement the list with any technical requirements that arise at the affected interfaces. The basis for this is the already-conducted analysis of your existing IT landscape.
• Formulate the various collected requirements clearly understandable and uniformly structured. Involve your process owners in this, so that they can directly counter-check the statements. Furthermore, you should describe the most important aspects with the help of use cases in order to avoid misunderstandings and misinterpretations. We'd like to recommend you forgo tons-heavy requirement specifications.
• Subsequently, ask your process owners to prioritize the compiled requirements by relevance. This way it can be differentiated even better which ERP solution fulfills your criteria.

That's also the starting signal for the fourth and last step of the selection procedure for your new ERP.

Step 4: Evaluation and choice of suitable ERP providers

After all the meticulous preliminary work, you've now arrived at the decisive point of the journey. You know your needs and goals exactly and need a suitable ERP system that does justice to them.

Don't misunderstand: With the three preceding steps of the project course too, you benefit enormously if you let yourself be advised by an objective and independent authority. But at the latest in this phase, such professional accompaniment is indispensable.

Therefore look for experienced experts who can support you with the following tasks:

• Make a preselection of 3 to 5 ERP providers.
• Conduct a fit-gap workshop for each of these providers. That means you look for possible discrepancies between the functionalities of the individual solutions and the criteria of your requirements catalog.
• As soon as a provider comes into the closer selection, you can, after this comparison with your requirements catalog, address them specifically about existing gaps and determine to what extent the provider can offer possible workarounds.
• That's also the perfect moment to request a cost estimate for the new ERP.
• A further indispensable knock-out criterion is the embedding of the solution into your existing IT architecture. Therefore check whether corresponding interface technologies with all relevant systems are available.
• Further possible aspects that can help in the decision-making are, for example, criteria like TCO (Total Cost of Ownership), user-friendliness, support of the provider, scalability, data security, positioning of the solution on the market and much more.
• Pay attention, however, that your requirements don't get out of hand. The more extensive your list of criteria is, the higher the costs turn out and the longer the duration of the selection process becomes.

Once you've carried out all these measures for evaluating suitable ERP providers, the management of your company finally has to make a decision.

Why your new ERP won't be flawless

During all these project phases, always keep one fact in mind: The jack-of-all-trades that does everything doesn't exist.

Therefore don't fixate on the search for THE perfect solution. Small concessions on the requirements catalog are always part of it.

That's why it's all the more important that you know exactly from the start what the main drivers of your transformation undertaking are, and what you want to achieve with the switch of your ERP system.

Without this clarity and the suitable commitment on the part of company management, the choice of a provider quickly transforms into a plaything of the various stakeholders. A scenario in which the hoped-for potentials of the new ERP are minimized or fail to materialize entirely.

With the four steps named above, you can avoid exactly that. And if you want to play it safe, we're happy to stand by your side advising you in the selection process with our years of experience and market expertise.

Simply contact us without obligation, and let's together #formheroes.