Top 10 ERP Selection Criteria (2022)

Top 10 ERP selection criteria to consider when starting the ERP software selection process

Read the Top 10

Top 10 ERP selection criteria to consider when choosing your solution

ERP Selection Process

Selecting new ERP software is no small task. It’s time intensive and involves collaboration internally and externally. If your organization is thinking about an ERP implementation, check out our list below of top 10 ERP selection criteria when considering how to select an ERP system.

ERP Software

Before we dive into the ERP selection process, what is enterprise resource planning software? ERP is business management software (accounting and operations oriented) that enables organizations to use one system to manage business processes. ERP software has become the leading solution of choice for growing businesses that want to maintain and improve their competitive edge.

Top 10 ERP Selection Criteria

  1. The Functional Fit for Your Organization Top 10 ERP Selection Criteria (1)
  2. Industry Experience
  3. Price
  4. ERP Vendor Viability
  5. ERP Implementation Project Considerations
  6. The Technology
  7. Risk (and how to avoid it)
  8. Scalability
  9. References
  10. Post Go Live


1. The Functional Fit for Your Organization

This might seem straight forward, but evaluating how the functionality of ERP software products and services fit with your business is the most important (and time consuming) aspect in the ERP selection process. Finding the best functional fit includes evaluating ERP software, watching ERP demos, and meeting with solution consultants. It also includes internal work. One of the most helpful things you can do during a selection project is facilitate internal discussions to determine your business requirements for ERP and outline the functional areas to address. Key questions that can help shape these discussions are:

  • What is outdated about your current system? Why are you considering a new ERP?
  • What works well with your current business systems?
  • What manual processes could you potentially automate?
  • In what areas of the business are you lacking visibility – or have a hard time with reliable business reporting?
  • What other systems need to be integrated with the ERP?

The end result should be a detailed list of requirements for new ERP software solution. The list should be prioritized, and agreed upon by key leaders within the organization – with buy-in from IT as well as the overall executive team.

2. Industry Experience

Another good question to ask during an ERP selection is: what ERP software is used in your industry? While not necessarily industry-specific, some ERP solutions are optimized to perform best in industries such as manufacturing and distribution. This is an important question that can help narrow the list of the ERP software you evaluate. Industry is a factor to consider not only with your software vendor (Oracle, Microsoft, Infor, NetSuite etc.) but also with your implementation partner. Whether or not the vendor and the implementation partner has had success in your industry is essential.

(Video) Top 5 Intangible Enterprise Software Selection Criteria [ERP, HCM, CRM, WMS, and MES Systems]

3. Price

There are a few areas to consider when it comes to the price of your ERP software and implementation.

Return on Investment

The ROI of a new ERP can be measured in a few ways.

  • Are there are specific areas of the business where cost savings can be achieved through new technology? For example better inventory management, faster financial close, automating manual or time-consuming tasks.

  • Are there technology costs that can be reduced through the new ERP? Cost savings can result from a reduction in hardware or support, new software licensing agreements, or a reduced software footprint.
  • What is the long-term ROI? There is no question that the initial software and implementation cost will be a financial investment for your organization. What does the ROI need to be after year one, year five, and beyond, to make the new technology worth it for your business?
  • What capabilities will new ERP software enable? Faster ship times, better customer service, streamlined business processes, operational efficiency, modern e-commerce, warehouse and inventory management, real-time business reporting. These are a few of the potential new benefits that should be considered during an ERP selection process.

Other areas to consider when it comes to the price of ERP:

(Video) ERP Selection Criteria

Total Cost of Ownership (TCO)

There are direct and indirect costs to be factored in during your ERP selection process. Below are some of the key costs to evaluate:

  • Software licensing (how many users)
  • Software modules and overall footprint (examples of modules includes: manufacturing, financials, distribution, project management, order management, CRM etc.)
  • Hardware (if needed)
  • Cloud hosting
  • Implementation
  • Supporting software (for example warehouse barcoding, or other integrations with the ERP)
  • Maintenance, training, and on-going support

Most ERP software today is offered as a monthly subscription, Software as a Service (SaaS) licensing model.

Implementation Cost

Your ERP implementation partner will provide you with a detailed statement of work that outlines cost, scope of the project, key deliverables, important milestones, and the client’s business requirements. Implementation consulting is usually billed by the hour, at a rate agreed upon before the project begins.

(Video) How to Choose The Best ERP Software | ERP Software Evaluation and Selection Best Practices


4. ERP Vendor Viability

The viability of an ERP software vendor is crucial to consider as far as ERP selection criteria, including:

  • Product viability: how long has the product been on the market, what is the future software roadmap, what is the research and development investment in the product
  • Size of customer base: how many active customers use the software?
  • Financial status: how solid is the software company?

5. ERP Implementation Project Considerations

Finding the right ERP consulting partner for your business is step one for any successful implementation project and is a necessary aspect of ERP selection criteria. As you select your ERP software, and implementation partner, below are some aspects of the implementation project to consider:

  • Timing for the business. Is it the right time to take on this project? If not, when? This is often a difficult question. In most cases, there’s never the perfect time – however there might be better times than others. For example, after a merger or acquisition might be the right time, or when deciding between a major (expensive) upgrade of your current system versus new software. Otherwise, the right time depends heavily on your team.
  • People and executive support. An ERP implementation needs both executive support and involvement, as well as upper management and other key internal leaders on the project.
  • Methodology and a project plan. To be successful, an ERP implementation methodology is fundamental. Thorough project planning and project communication tools are also keys to success.

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6. The Technology

In addition to software functionality, there are other technology considerations that are important to the ERP selection process. Best-in-class ERP software includes, at a minimum, these technology features:

  • End user reporting tools – easier access to information, no development skills necessary
  • Simplicity in UI and UX
  • Business intelligence
  • Data security
  • Reliable system performance and response time – very limited downtime
  • Ability to integrate with other systems
  • Ability to make necessary customizations

7. Risk

Technology and ERP projects at the enterprise level inherently come with some risk. Selecting an ERP software with functionality that fits your business, along with many of the other criteria on this list (vendor viability, selecting the right partner, project planning, cost, executive support), goes a long way in mitigating risk during an ERP implementation.

Taking the time to create a thorough map of the key business processes that are essential for the operations of your organization, and using that throughout the ERP selection and implementation, will also negate risk. Essential elements to map out include integrations with other systems as well as necessary ERP customizations for your organization.

(Video) Top 10 ERP Systems for 2022

Change management and end-user training are also key areas to plan for in order to avoid risk.

8. Scalability

Managing the initial scope of an ERP software implementation is necessary to avoid risk and ensure success. You will likely have a vision of future enhancements after the initial implementation. When evaluating various ERP vendors, consider how the technology fits with your business strategy both today and down the road. How will the software help facilitate and support future plans for your organization? Whether future plans include growth, new markets, merging with another entity, the new technology you select should mesh with the strategic direction of your organization.

9. References

Both ERP software vendors and implementation partners should have references (i.e. happy clients) they can provide to you. Ask for references within your industry, and with similar business requirements.

10. Post Go Live

What is the on-going support and training plan? How will you handle any issues that arise? Whether it’s building an internal support team, or finding an external partner (often your ERP implementation partner will also offer managed support services) planning beyond go live will set you up for maximum return on your ERP investment.

Related Resources:

  • How to Win at ERP – Implementation Best Practices
  • Comparing Types of ERP Systems for Your Organization
  • What is Enterprise Resource Planning?

Top 3 Things to Consider During the ERP Selection ProcessERP selection and implementation processes are not for the faint of heart. Choosing the right Enterprise Resource Planning system can be complicated, and often there is a lot at stake.Learn More

The Importance of Having the Right People on Your ERP ProjectSoftware is a business tool. By itself, it won’t cause failure – and it won’t ensure success. Implemented by the right people ERP software can be harnessed to help bring your business strategy to life.Learn More

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(Video) Top ERP Systems for 2022-2023 | Best ERP Software | Independent Ranking of Top ERP Vendors

FAQs

What are the most important criteria for ERP selection? ›

The viability of an ERP software vendor is crucial to consider as far as ERP selection criteria, including: Product viability: how long has the product been on the market, what is the future software roadmap, what is the research and development investment in the product.

What are the main 3 factors would you set to choose an ERP system? ›

3 Key Factors to Consider When Selecting an Enterprise Resource Planning (ERP) System
  • It needs to be flexible enough to grow with your company. ...
  • It must be able to adapt to your business goals and processes. ...
  • It allows for seamless integration across all your applications.
14 Jul 2022

Which of the following is most critical factor for selecting ERP? ›

Vendor's ERP's Features & Capabilities

One of the biggest and most critical factor in selecting a vendor is knowing what the software can actually do and what are its limitations.

What should be the essential selection criteria for selecting an ERP Mcq? ›

Response: To qualify as a true ERP solution the system must be flexible, modular and open, and extend beyond the company.

How do you evaluate ERP systems? ›

Evaluation process considerations
  1. Determine system requirements. ...
  2. Ensure the support of senior management. ...
  3. Establish a project roadmap. ...
  4. Consider the total cost of ownership (TCO). ...
  5. Consider peer references. ...
  6. Establish a relationship with the vendor. ...
  7. Evaluate deployment flexibility.

Why is the ERP selection process important? ›

Selecting and implementing an ERP software solution helps you work smarter, improving efficiency and visibility across your business processes, which includes everything from purchasing and sourcing, manufacturing, and inventory control to sales and marketing, distribution and customer relationship management.

How would you select ERP for SME describe the steps? ›

You'll want to start by reviewing your current systems to determine whether you can make do with them.
...
Once, you've determined your company really does need an ERP system, there are three steps to follow for a successful project.
  1. List your requirements. ...
  2. Evaluate systems. ...
  3. Select your system.

Which is the most important aspect of a successful ERP system? ›

Data management or data migration is one of the most important aspects of a successful ERP project to ensure that the data in the new ERP system is accurate and complete.

Which is the most critical phase in ERP implementation? ›

As with most projects, the first phase—planning—is the most critical time.

Which is one of the objective when selecting a ERP package? ›

Knowing real time information about business field strategies is one of the core objectives of ERP. ERP software package, which is a blend of software modules helps in integrating data and real time information. It helps in better planning and management of resources as per the requirements of company.

On what factors does the appropriate selection of an ERP solution depend? ›

You can use these criteria throughout all stages of the selection process to help determine if a solution is right for you.
  • Functionality and Ease of Use. ...
  • Vendor Viability. ...
  • Technology. ...
  • Cost. ...
  • Support and Training. ...
  • Industry Expertise. ...
  • Implementation.
19 Sept 2022

What is at the heart of an ERP system? ›

Integrated information is at the heart of any ERP system. Through the ERP system, information will include from different actions including project management, accounting, and procurement.

What are the benefits of ERP implementation? ›

Benefits Of ERP
  • Enhanced Business Reporting: Better reporting tools with real-time information. ...
  • Better customer service: Better access to customer information. ...
  • Improved Inventory Costs: ...
  • Boosted Cash Flow: ...
  • Cost Savings: ...
  • Better Data & Cloud Security: ...
  • Business Process Improvements: ...
  • Supply Chain Management:
16 Mar 2022

What is an ERP assessment? ›

An ERP assessment can allow you to evaluate your existing ERP system (if you have one), assess your business requirements to determine feasibility for a successful implementation, and provide you with a ballpark estimate on how much the implementation or upgrade will cost.

How will you select ERP vendor? ›

Research what an ERP system is, the benefits for the organization or company, and what modules are in it. Once you understand the ERP system in detail, find out if your business needs it. Identify the challenges of your business by engaging your entire team and then figure out the solutions your business needs.

What is the ERP life cycle? ›

The process of its implementation to automate business processes is referred to as ERP implementation life cycle. It involves several steps and stages right from the start, planning for project implementation, analysis, design, implementation, transition, and operations.

Which is not a criteria for selecting the ERP software? ›

If your desired customization can be worked around easily using an existing ERP, that customization is not a selection criterion.

What are the main steps in a system selection process? ›

Five Steps to a Best Practice System Selection
  1. Step 1: Requirements Development. ...
  2. Step 2: Software Vendor Research and Request for Information. ...
  3. System Demonstrations. ...
  4. Step 4: RFP & Vendor Selection. ...
  5. Step 5: SOW and Contract.
22 Jul 2020

Why is pre selection screening important in ERP? ›

Hence, the company should do a pre-evaluation screening to limit the number of packages that are to be evaluated by the committee. Not all packages are equal – each has its own strengths and weakness. The pre evaluation process should eliminate those packages that are not suitable for the company's business processes.

How do you select compare and evaluate ERP vendors? ›

Assess ERP Vendors — 30 Questions to Ask ERP Vendors
  1. Business Requirements. ...
  2. ERP Features. ...
  3. Total Cost of Ownership. ...
  4. System Integration. ...
  5. Support and Training. ...
  6. Implementation. ...
  7. Vendor Industry Expertise. ...
  8. Technology.
28 Feb 2022

What are the 4 major phases of ERP implementation? ›

4 ERP Implementation Strategies
  • Big bang. In this approach, also referred to as the “single-step method,” all users move to the new system at the same time. ...
  • Phased rollout. ...
  • Parallel adoption. ...
  • Hybrid.
7 Oct 2020

What are the 7 steps for successful ERP implementation? ›

7 Steps to Successful ERP Implementation
  • Communicate a clear vision. ...
  • Keep everyone involved. ...
  • Choose a champion and an implementation team. ...
  • Document your processes. ...
  • Be flexible. ...
  • Solicit input from all user groups. ...
  • Manage organizational change.
12 Aug 2019

What are the three key issues which determine the success of ERP implementation? ›

The key success factors are: Project Strategy and Start Up. Management Commitment. Project Scope.

Who is the head in ERP implementation team? ›

Project Manager

This person is responsible for the overall organization of the ERP demonstrations and implementation. The project manager will work with the project owner to identify the key team members in the organization that will develop the requirements and goals for an ERP solution, along with a budget.

What are the reasons of failure of ERP? ›

The causes of ERP failure include
  • Poor software fit /inaccurate requirements.
  • Business leadership is not committed to the implementation.
  • Insufficient team resources.
  • Lack of accountability to make timely, high quality decisions.
  • Lack of investment in change management.
  • Insufficient training/support.
  • Insufficient funding.
22 Jul 2022

How long does ERP implementation take? ›

Generally, implementing an ERP project takes anywhere from 6 months to 2 years. It can vary widely, however, depending on the following factors: Size of the company. Complexity of the system being installed, including ISV add-ons and required customizations.

What should management do to assess the potential benefits from implementing an ERP? ›

Following are five tips:
  1. Develop a Data Migration Strategy. Many companies focus on simply migrating old data from their legacy systems to the new ERP system. ...
  2. Understand What Insights Different Stakeholders Need. ...
  3. Focus on Business Process Reengineering. ...
  4. Focus on Change Management (Again) ...
  5. Carefully Evaluate ERP Vendors.
16 Aug 2020

What is ERP business? ›

Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance.

What are the two main objectives of ERP? ›

Enhance Competitiveness. Modernize Business Processes and Systems.

What are the factors being considered in configuring an ERP system? ›

Here are some things to consider:
  • Cloud or on-premise. One of the factors that determine the price of ERP software is its implementation model. ...
  • License. ...
  • Number of users. ...
  • Requirements. ...
  • Infrastructures. ...
  • Integration and third-party devices. ...
  • ERP Implementation with Customization. ...
  • Training.
3 Sept 2022

What is the key word in ERP? ›

Answer and Explanation: ERP refers to a centralized information technology (IT) system that connects all of the departments and functions of an organization. Therefore, the keyword in enterprise resource system is ''enterprise,'' since the system coordinates the activities for the entire organization at every level.

Which activities do human resource components perform? ›

Which activities do human resources components perform? Track employee information including payroll, benefits, compensation, and performance assessment, and assume compliance with the legal requirements of multiple jurisdictions and tax authorities.

What is one of the key resources of every Organisation? ›

The types of Key Resources include Human resources, Financial resources, Physical resources, and Intellectual resources.

On what factors does the appropriate selection of an ERP solution depend? ›

You can use these criteria throughout all stages of the selection process to help determine if a solution is right for you.
  • Functionality and Ease of Use. ...
  • Vendor Viability. ...
  • Technology. ...
  • Cost. ...
  • Support and Training. ...
  • Industry Expertise. ...
  • Implementation.
19 Sept 2022

How do you select compare and evaluate ERP vendors? ›

Assess ERP Vendors — 30 Questions to Ask ERP Vendors
  1. Business Requirements. ...
  2. ERP Features. ...
  3. Total Cost of Ownership. ...
  4. System Integration. ...
  5. Support and Training. ...
  6. Implementation. ...
  7. Vendor Industry Expertise. ...
  8. Technology.
28 Feb 2022

Why evaluation and selection of ERP packages are critical to an organization or business? ›

Quality of selection will have a long term impact on the processes of the organization. It is also not easy to switch to another product with concomitant scale of investment and complexities. In the selection process, ERP packages that are not suitable they are eliminated.

Which is not a criteria for selecting the ERP software? ›

If your desired customization can be worked around easily using an existing ERP, that customization is not a selection criterion.

How do I choose an ERP vendor? ›

Questions to ask during ERP vendor evaluation:
  1. How long has the vendor company been in business?
  2. What experience do they have in my industry?
  3. Are they the developers of the product, or resellers?
  4. How does their pricing and billing model work?
  5. What deployment and hosting options do they provide?

What is GAP analysis in ERP? ›

A gap analysis is the process of reviewing your current state and determining what you need to do to move into your future state. In an ERP implementation, this means taking a close look at the software you're using or plan to use.

What are the 4 major phases of ERP implementation? ›

4 ERP Implementation Strategies
  • Big bang. In this approach, also referred to as the “single-step method,” all users move to the new system at the same time. ...
  • Phased rollout. ...
  • Parallel adoption. ...
  • Hybrid.
7 Oct 2020

What are the general four phases of an ERP implementation? ›

There are 6 phases that make up any ERP implementation project: Discovery and Planning, Design, Development, Testing, Deployment, and Ongoing Support.

Which is one of the most critical steps in ERP implementation? ›

As with most projects, the first phase—planning—is the most critical time.

What is the ERP life cycle? ›

The process of its implementation to automate business processes is referred to as ERP implementation life cycle. It involves several steps and stages right from the start, planning for project implementation, analysis, design, implementation, transition, and operations.

What are the primary reasons for evaluating an ERP project? ›

Contrarily, a strong and successful ERP evaluation process that leads to the implementation of an adequate ERP system gives businesses a strong foundation to:
  • Streamline workflow processes.
  • Improve operational efficiencies.
  • Develop robust integrated systems.
  • Improve work collaboration.
  • Enhance customer experience.

How is ERP helpful for vendor development and vendor management? ›

An ERP system enables sharing data with suppliers to improve supply arrangements and monitor performance. It reduces the need for emails and documentations. Using your ERP you can respond quickly to a supplier request of information.

Is one of the objectives when selecting a ERP package? ›

Knowing real time information about business field strategies is one of the core objectives of ERP. ERP software package, which is a blend of software modules helps in integrating data and real time information. It helps in better planning and management of resources as per the requirements of company.

Which phase is most difficult phase in ERP implementation? ›

Which is the most difficult phase in an ERP implementation? That depends on many factors, including how easy it is to implement your chosen system, but often the planning and discovery phase is particularly challenging.

What is the one common mistake that companies resort when selecting an ERP system? ›

The most common mistake organizations make in their ERP system selection is not having the right team in place to evaluate, make decisions, set realistic expectations, and achieve milestones during the implementation process.

Videos

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