How to choose an ERP system – A field report

If you are currently in the process of selecting an ERP system, I would like to provide you with a guiding thread for orientation in the following article, always drawing on our practical experience. The experience report is not intended to be exhaustive, but rather to highlight the points that I would like to point out to you as being particularly important.

But now to the content. The structure of this article roughly follows the general phases of project management from initiation and planning through implementation and control to project completion.

Overview:

1. Preparation of the selection process
2. The crux of the matter with the specifications
3. Overview of requirements engineering and business analysis methods
4. Completion of the selection – evaluation and decision
5. Outlook: The system introduction

1. preparation of the selection process

Careful planning of the selection process and subsequent implementation is one of the success factors that must be mentioned in connection with ERP implementations.

Before collecting requirements and modeling processes, you should consider the following tasks, among others.

Document management requirements

What expectations are associated with changing the ERP system? There are numerous legitimate reasons for changing ERP systems. These are often mentioned:

• Replacement of self-developed solutions with industry standards
• Increasing competitiveness (e.g. through greater transparency and the collection of process data)
• Support for future topics such as robotic process automation (RPA) or the Internet of Things (IoT)
• Improving data integrity
• Reduction of maintenance costs through convergence with standards

It is important to create and document a common understanding of these management requirements and objectives. As a stakeholder, management must understand the necessity of the project and make its implementation a priority.

Define project team

The selection of suitable specialists to support the project is essential. The right mix of experience in existing working methods, which the so-called business experts bring with them, and the will to improve the status quo is essential. At the latest during the training sessions before the go-live, all those involved come into contact with the solution. The employees involved in the selection process therefore also play an important role with regard to the change process; they are the mouthpiece in the organization, the so-called evangelists.

In addition to the internal team, external support is often called in. The selection and introduction of new business software is a groundbreaking decision that will shape and accompany your company for years to come. Rothbaum regularly supports clients in the selection of business software and is therefore experienced in the implementation and moderation of the selection process. At the same time, we bring process expertise and knowledge from various industries, which means that the focus in the selection process is always on the value-adding processes of your company.

Consider project marketing and communication

A change of ERP system has a direct impact on the way your employees will work together in the future. In order to do justice to this aspect of change, proactive communication right from the start is expedient. Later on, for example, consultation hours with project members or an in-house information event/fair are also conceivable. The aim is to shape the change in such a way that your specialists support the changes and become stakeholders. To this end, it is important that they are not (only) told in the coffee kitchen what the changes should look like.

Managing expectations

According to a study by Fraunhofer IAIS, the introduction of a new ERP system takes an average of one to two years, with a quarter of the companies surveyed taking longer than two years. If you add to this the time it takes to select a system, it becomes clear that the project will keep you busy for a longer period of time.

The selection should be seen as a milestone; your organization must have enough strength for the marathon. It is important that everyone involved has a similar idea of the time horizon to avoid disappointment.

2. the crux of the specification sheet

Often, the need for a new ERP system is not only identified today. Certain specialists are entrusted with the creation of a specification sheet, the document grows over the years – yes, years – and at the same time it is never completed because the day-to-day business does not pause, there are no contacts with system houses or there is a lack of specialist expertise.

In my experience, a specification sheet in the classic sense is not always necessary. Low customizing, or to put it positively, a high proportion of standardization, is cited by the bank as an important success factor for ERP implementations. How should a system provider answer a requirement specification that sets framework conditions based on the legacy system that make the standard impossible without considering it? A classic specification sheet is at odds with the desire for a standard solution.

Nevertheless, requirements must be recorded and communicated. No decision can be made unless the providers are comparable. More on determining requirements in the next section.

3. requirements engineering and business analysis methods at a glance

In order to initiate a supplier selection process, we regularly prepare tender documents for consulting projects. The document has various uses: It serves as documentation of the requirements for the new system, while at the same time providing a framework for comparing providers. The following section highlights some of the business analysis methods that we use to create the individual contents of the tender document. If you are subsequently interested in business analysis methods in more detail, I recommend the BABOK v3 business analysis guide or an ibo seminar.

Creating an overview using scope modeling

Is a particular business process or actor part of the new system or should it not be included? The scoping provides the framework for the system replacement. A scope mapping makes it possible to create technical or organizational interfaces. Other findings from scoping are “no-go areas”, i.e. system areas that should not be affected by the new system.

Detailed insight via system landscape

Scope modeling can be further refined with regard to the interaction of different systems. A system landscape shows which systems interact and which information flows. A dynamic view from the actual state to the target state also makes it transparent which data sources are being replaced. In the end, it is important that there is a common understanding of which areas will be replaced and to which systems the new system offers technical or organizational interfaces.

Business understanding through process modeling

Processes are at the heart of every ERP system selection. Another blog article deals in detail with best practices in process modeling: Process management: Our experience with tools, standards and training.

In general, it should be checked which processes can be transferred to a standard process. The aim should be to work with standard modules in indirect processes, such as accounting.

However, the complexity of value-adding processes, e.g. in manufacturing, should be taken into account through a detailed description. Only through the resulting triad of product, process and system capabilities can value creation be optimized and remain competitive.

Recently, process mining has established itself as a data-supported method for modeling processes and supporting ERP transformation.

Use cases and user stories for modeling requirements

Use cases and user stories are two methods of agile business analysis. We use an adapted version of use cases to describe problems and business transactions that are particularly relevant to the client. The scenarios to be considered usually become more concrete in the course of the requirements elicitation. By answering the use cases as part of the vendor presentation, the project team gets a good impression of how critical requirements could be mapped in the new system.

In addition to the methods presented, the document consists of other components. A realistic schedule that is not met is quickly a knock-out criterion when selecting the integrator. The further procedure should also be described, e.g. in what form should the tender document be answered?

We end this section with a tender document that can be sent to the providers. But which providers are actually eligible?

4. completion of the selection – evaluation and decision

Before the article goes into detail about the evaluation and decision-making process, a few words about identifying potential providers of the new ERP system.

Identification of suitable providers

Identifying suitable providers is always an industry-specific task. In glass processing, for example, there are specialized industry solutions from A+W, Fenetech, Hegla-Hanic and Lisec. Industry solutions generally impress with well thought-out systems and tend to be quicker and more cost-effective to introduce. They are also often implemented directly by the provider. Alternatively, cross-industry solutions such as proALPHA or SAP are also conceivable. Implementation is usually carried out by an implementation partner.

You can find out which providers are suitable for you, for example, through contacts within the industry, industry trade fairs or from external partners. After an initial longlist of candidates has been drawn up, we usually hold discussions with the individual providers to find out whether the provider is a good fit for the client based on KO criteria (schedule, company size, etc.). This should result in a shortlist of 3-5 providers for the further selection process.

Communication with the providers during the preparation of the tender documents

It makes sense to seek contact with the providers while the tender documents are being prepared. It is always necessary to specifically check what information is relevant for the providers in the context of an ERP implementation. In this phase, we see ourselves as a neutral moderator who ensures that all parties involved receive the information they need.

Presentation of the providers to the project team

Once the tender document has been answered, the first evaluation is carried out. The fulfillment of individual requirements enables an initial comparison of the providers. Prioritizing individual requirements (e.g. using MoSCoW) or defining KO criteria by the project team has proven to be a good way of doing this.

In addition to responding to the tender documents, the presentation of the providers is also important. A live demo in the potential new system gives the project team the opportunity to become more familiar with the improvements made by the new ERP system using the use cases prepared as relevant practical examples.

The evaluation is then carried out on the basis of a wide range of criteria: In addition to functional criteria, cost-effectiveness must also be given. At the same time, the provider or implementer and client must communicate on the same wavelength. The selection of an ERP system is ultimately a long-term partnership.

5 Outlook: The system introduction

Before you start with the provider selection and system implementation, I would like to share some experiences with you. You should keep these points in mind, as they are also success factors and project risks.

Management support for the project is essential

Your management must support the ERP implementation and make it a priority. There is no question that the implementation will be strenuous. The resources required for the project must be made available and resistance must be addressed through active project marketing and change management.

Think about training documents and training courses in good time

In another blog article, my colleague Dr. Clemens Wolf has already dealt extensively with the topic of process management with regard to an ERP implementation and the training aspect.

Don’t let the ERP implementation become a global change project

Some topics regularly cause friction in ERP implementation projects. These are organizational issues that lie dormant beneath the surface and come to light during process workshops, for example. Want an example? Returns processes. Time management.

Undefined processes and organizational issues inflate the ERP project dangerously. Project managers must draw clear boundaries here. It is not the project’s job to develop a consistent methodology for determining target times, etc. These project risks must be identified in good time and dealt with by the project lead or management.

Summary

I have enjoyed sharing my experiences with you. I hope that this article has given you a more comprehensive insight into the challenge of selecting a provider for an ERP system or comparable business software.

Are you at the beginning of the selection process or having difficulties at a certain point? Feel free to contact me with your questions or comments on the topic.