The ERP Initiative
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We receive Requests for Proposals (RFP) from companies that are in the market for ERP systems. Usually the ERP RFP has many questions to be answered, some so broad that it could be answered in a several different ways, some very technical and some so vague that the answer doesn’t matter anyway.
Why do companies want a new ERP? Multiple reasons for sure. Here are a few typical ones:
- Outgrown a small package, want to move from away from spreadsheets
- Consolidation after acquisition or new system required after divestment
- Reduction of inventory valuation or improvement of other financial indicators
- Need better visibility and to reduce time spent on month end processing
- Reporting consolidation
- Bad or no support from the current provider
and so on.
There are two reasons why a new product is successful. Either it solves a problem or it reduces costs. In case the product presented by the innovator was neither, he would soon be extinct.
A key aspect of investing in an ERP is to define what problem(s) we want to solve. Once this is identified with clarity, (this is a very tedious task by the way..), the search for an ERP is much easier. The core issues to be resolved are usually fewand teh issues are relevant to different sets of stakeholders. If you come up with dozens or hundreds of issues, a further analysis may be required to separate the problems that are core from the ones that have a minor impact to the business.
It is important for the head honcho to identify during this process, the right team, who can support and participate in the ERP building process from the buysers side. Zero participation will surely doom the ERP project!
The next step would be to ask the vendors to demonstrate how they can solve your core problems, provide some proof points through visiting reference sites, and walk you through the new processes in detail to ensure that the solution provides the promised added value.
Using the above approach will set you on the right path to successfully choose the right solution for your business. It will maintain the focus of all stakeholders on the real issues, cut useless sales pitches and rhetoric’s, and save you a fortune by avoiding the many so-called experts that want to help you select the right system (usually they won’t be around once they are paid).
The focus on core issues should be the starting point to discuss with your ERP vendors. It should then be complemented by a more detailed process, ensuring that the solution is a good fit, and the vendor, a good longstanding partner for your business.
So before sending a list of multiple questions or more to your ERP vendors, we would recommend starting with the core problems, requesting a detailed response on how the vendors you’ve preselected can solve them.
Kicking off the engagement with clear objectives saves a lot of time and money later!