6 Common Mistakes Businesses Make When Selecting ERP Software

6 Common Mistakes Businesses

Make When Selecting ERP Software

A Guide to Selecting the Right ERP Software for Business Executives

6 Common Mistakes Businesses Make When Selecting ERP Software Page 2 of 13

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Table of Contents

Introduction ........................................................................................................... 3

Overview................................................................................................................ 4

#1 Dont Assume Its Going to be Business as Usual. ............................................. 5

#2 Dont Avoid Proper Planning. ............................................................................ 6

#3 Dont Choose the Wrong Technology Partner. .................................................. 7

#4 Dont Underestimate Implementation Time or Resources. ............................... 8

#5 Dont Exclude Employees from Implementation Decisions. .............................. 9

#6 Dont Neglect Maintenance & Upgrades. ........................................................ 10

Conclusion ........................................................................................................... 11

About e2b teknologies ......................................................................................... 12

Sources ................................................................................................................ 13



If youre reading this white paper, then chances are your ERP

selection will be a success. Not because of the valuable

information in here it is valuable but because youve made an

effort to make educated decisions about your selection and

implementation. Your desire to learn how to take the right course

of action is evidence in itself that you will do it right. As you will

come to learn, not many business leaders do what youre doing.

Many jump into the selection process without doing research and

come out with a system they have to eventually abandon. So

congratulations! Youre off to a great start.



Overview Software selection and implementation can be one of the most costly and time consuming projects that

your company embarks on. Thats why its imperative your ERP selection process is done right. You need

to plan for every step of this process and have complete understanding of things like your budget, time

required, people involved, and resources required. Failure to evaluate these important factors could

mean ditching your final ERP selection and starting the process all over again after just a few years. You

need to find a system thats strong enough to handle your business for many years, while also dynamic

enough to grow as your company grows.

It doesnt matter if youre a multi-billion dollar organization with locations spread out globally, or if

youre a smaller company with only a handful of employees, your ERP system needs to provide

functionality for all of your business processes from financials and HR to distribution and your supply

chain. A good ERP system should streamline all of these processes and more from one single database.

But be careful, because many solutions that call themselves ERP, really arent.

Since ERP systems entered the marketplace around 1990, there have been myriad software providers.

Some create powerful, full-scale ERP systems, but others bill their solution as an ERP when, in reality,

theyre only a small part or extension of a full system. For a business going through the ERP selection

process, this can make things very complicated. And even when you do find a system with full ERP

functionality, it still might not be the right fit for your industry or your company. This is why so many

implementations end up being disastrous because quick and uninformed decisions were made during

the selection phase.

How many ERP implementations blow up in failure? Well, in 2001, Robbins-Gioia did a survey [] of 232

companies in multiple industries about the perceptions of their ERP implementation. What they found

was that 51% viewed their implementations as unsuccessful. One decade later, Panorama Consulting

Solutions did a similar report []. But what they found was that 72% of ERP system implementations fail.

So, what happened in 10 years that brought the failure rate from 51% to 72%? This could depend on

several factors, but what it really boils down to is the growing need for ERP systems in businesses and a

lack of qualified experts helping these companies throughout their selection and implementation

processes.

Success, 49%Failure,

51%

2001 ERP Implementations

Success, 28%

Failure, 72%

2010 ERP Implemantations



When it comes to ERP comparison and implementation, the same mistakes get repeated over and over.

This white paper will aid in your ERP selection process, and shed light on some of the fatal mistakes that

could undermine not only your final decision, but possibly your entire company. This white paper will

walk you through six of the biggest mistakes you can make in your ERP decision process and show you

how you can avert them.

#1 Dont Assume Its Going to be Business as Usual. No matter what organization or industry you work in, your business processes and environment will

change if not a conscious transformation, then unwilled and unexpected. Its much better to create

your own change in your business, rather than have unexpected change create your business for you.

The best time to re-evaluate your business processes is when youre about to implement a new business

system. Especially a system as multifaceted as ERP.

Many businesses get stuck in the thats the way weve always done it mind-trap. They refuse to give

up their old tactics. This compromises the ability of a new business system to really bolster your

company. In reality, businesses should be using their ERP implementation to reassess operating

processes, and address how a new system can best work with their needs. In most cases, business

software is only effective if its backed by a strong business model. Use your ERP selection to learn what

is and isnt working at your company, because its much easier to make these changes now than it is

when you already have a system in place.

According to the report by Lakelet Advisory Group [], the top reason that ERP implementations fail is

due to the inability to change processes:

36%

24%

17%

11%

9%

3%

ERP Implementations Fail Because

Inability to changeprocess

Senior Management

Customization

Training

The implementation wasIT based

Wrong solution selected



#2 Dont Avoid Proper Planning. Planning should be one of the most important steps in your ERP selection process. ERP is a very costly

investment, and it takes time to implement successfully. Planning properly from the start can ensure

that youre spending less money and time on your project. More importantly, a strong plan will make

sure your final ERP selection is the right fit for your business. Some factors to consider in your planning

stage include:

Establishing your budget and your ability to afford the investment. If the investment amount comes

out higher than you feel comfortable with, the software provider may offer a Software as a Service

(SaaS) solution that allows you to essentially "rent" access to the software in the cloud, usually on a

month to month basis, decreasing your need for up-front cash.

Assigning the selection team and who will be working on this project. Be sure to identify the executive

sponsor and all critical stakeholders.

Classifying the areas of your business you want to improve. Also note areas in which you already do

well, so the solution provider can address your most important needs.

Identifying your staff's critical business

issues and needs. The list doesnt need to be

a 200-page document with 10,000

requirements. Even a checklist can help keep

your team focused on solving the problems

that are important to you.

Defining selection criteria (Request for

Proposal, or RFP) for the solution and the

provider partnership. Criteria such as long-

term financial stability, in-depth knowledge

of your industry, investment in research and

development, implementation process, and

technology vision are all important factors to

consider.

As part of your planning phase, make sure to develop a timeframe in which you want specific tasks

completed. Its useful to document all of the evaluation activities you plan on completing during this

phase, such as discovery sessions, demos, site visits, meetings, and so forth. Then, set a tentative date

for the completion of each task. Planning during your ERP selection process is no different than planning

for any large decision; you need to establish what your goals are and then lay a blueprint for how each

goal is going to get accomplished.



#3 Dont Choose the Wrong Technology Partner. Would you undergo neurosurgery from a dentist? Of course not. Much like your body, a business is like

a living, breathing organism composed of several individual parts that work together. A change of ERP

system can be much like neurosurgery, because your ERP is the brain of your organization, managing

intelligence over all of the processes that make your business function.

If you have a problem or inefficiency within your company, software can act as the cure. In this sense, a

technology partner is much like a doctor. If you choose a technology partner that doesnt understand

your industry, they wont be able to properly understand what your needs are, and they certainly wont

understand how to fit an ERP system to your business.

You need to ask several questions of your technology partner to make sure youre getting the treatment

you require; questions such as:

How many of their other customers are in your industry?

How long has the company been serving industries like yours?

Who are the key people who will implement your software system and what is their

background?

What are their customers saying about them?

How many of their customers have had sustaining success with their ERP software after their

implementation

Make a list that defines specific attributes that are important to your company and you feel should be

represented by your technology partner. This list should highlight values that will illustrate your

partners competence working with your industry, your company size, your organizational structure,

your corporate culture, and so forth.



#4 Dont Underestimate Implementation Time or Resources. Most companies will far underestimate the amount of time and resources that are required for

implementing a new ERP system. Often, they believe their technology partner can just do the whole

thing easily, without much assistance needed on the customers end. This is a dangerous misconception,

because without the proper planning, your implementation can tie up your processes far longer than is

necessary.

In order to estimate the time involved in your implementation there is a simple formula:

Divide the total cost of your ERP software by 100. For instance, if your ERP software costs $25,000, then

you can expect to take about 250 man-hours or a little over six weeks to implement; assuming youre

using a certified consultant. If you plan to self-implement, which is not recommended, you can expect to

double that time.

To ensure the implementation goes as smoothly and as timely as possible you need to plan your time

accordingly. Its highly recommended that you assign a dedicated project manager to your

implementation. This project manager should be in charge of mapping out the implementation from

start to finish, taking into account such things as budget, time required, and people involved and key

contacts.



#5 Dont Exclude Employees from Implementation Decisions. Todays world is driven by technology. The decisions surrounding what technologies your company will

embrace are choices that will directly impact its success. For this reason, its imperative that the right

people at your company are involved when deciding which ERP system to implement. You need people

that are technically competent enough to understand the infrastructure of the system, people that will

know what functionality is required of the system, and high level executives that have a clear vision of

the companys future.

Since ERP takes part in almost every division of your organization, its important to involve the head

managers and decision makers from each division in the selection process. Even if your ERP is providing

executive oversights to only a few top employees, many more employees will be impacted by the

system, and including people such as line managers is very important to the selection process.

Depending on the size of your organization, it might be difficult to include every manager or decision

maker, but whats important is including those who have the most influence over particular business

processes. Here are some key people you would want to include in your ERP selection:

Executives

A CEO, Owner, Chief Financial

Officer, and other executives

provide long-range vision of the

company.

Managers

Line managers from each

discipline should confirm

proper functionality.

IT Staff

IT Staff, such as your CIO, can

ensure you have the best

technology infrastructure.



#6 Dont Neglect Maintenance & Upgrades. Selecting and implementing your ERP system is just the first step in a larger process. After you have the

system up and running, its obvious that you will eventually have to undergo upgrades and maintenance.

When it comes to ERP, maintenance is much more than just doing repairs to the system when

something goes wrong; its also preventative. According to a study done by the National Institute of

Statistical Sciences, only about 21% of software maintenance goes toward bug fixes [4]. The other 79% of

software maintenance goes mostly toward product enhancements.

Maintenance must be able to stay informed on key issues and security alerts, be able to cost-effectively

troubleshoot bugs, provide migration support, and keep up-to-date with global upgrades and changes

made to the system by the developer. Do you know who will be able to handle these responsibilities?

Usually, the software reseller or original

publisher assists with the maintenance of your

ERP. Some companies even outsource the

maintenance of their software to independent

support consultants. It is rare that the IT staff or

other direct employees at your company would

perform the upgrades and maintenance of an

enterprise business system. You will need to

have a maintenance strategy in place before

going forward with your ERP implementation.

This way, you will know who to rely on when

changes to the system need to be made.

In addition to having a strong maintenance strategy for your ERP system, you should also make sure this

strategy is cost-effective in the long run. According to SSi Consulting, companies typically spend around

15-20% of their software license fees on maintenance and support every year [5]. This makes choosing

your maintenance provider almost as important as choosing your software provider. When selecting

your technology partner, its best to pick a candidate that can provide a full 360 degree range of ERP

services. By selecting a candidate that can deliver the whole package, you can greatly reduce cost and

confusion, while also making sure they are fully invested with your business and ERP system.

Bug Fixes

Enhancements

and other

Maintenance



Conclusion Selecting and implementing an ERP system is no small effort. It involves plenty of time, energy, and

participation from several divisions and employees at your business. Often, the time to complete the

initial planning right through to the final implementation can take several months sometimes years.

But dont let that discourage you. A properly utilized ERP system can provide a return on investment

that will exceed your highest expectations.

This white paper should be just the start of your research into ERP selection methodology. The more you

educate yourself, the better your chances of a successful implementation. Although internet research

and white papers alone can only go so far. Eventually, you will need to lean on a technology partner or

industry expert to provide you with answers to the many questions you will have along the way. Picking

this partner is just as important as picking the solution itself, because your partner will guide you to

ultimately make your final ERP decision.

If done correctly, a properly implemented ERP system can greatly improve your company from every

angle from efficiency, to productivity, to revenue increases. Start planning right from the start, and

you will have no trouble finding an ERP system that maximizes your business.



About e2b teknologies e2b teknologies (www.e2btek.com) sells, supports, and implements Epicor 9, Sage 500 ERP, and Intacct

Financials enterprise resources planning (ERP) accounting software for distribution, manufacturing and

service companies. e2b also resells, develops and implements SugarCRM, the fastest growing CRM on

the market. Learn about our Sage ERP X3 consulting, Sage 500 ERP consultant, Sage 100 ERP consulting,

and Epicor consulting and development services.

Industry solutions are available for automotive, HVAC & plumbing, food and beverage, high technology,

and professional services organizations. ERP solutions include integrated systems for Supply Chain

Management (SCM), Enterprise Content Management (ECM), Customer Relationship Management

(CRM), Human Resources Management Systems, (HRMS), Warehouse Management Systems (WMS),

and more.

Customers have access to senior-level engineers and consultants and are supported through an online

customer portal and dedicated team of knowledgeable support analysts.



Sources 1. "Statistics over IT Failure Rate." Statistics over IT Failure Rate. Robbins-Gioia, 2001. Web. 17

June 2013. .

2. Kimberling, Eric. "One Key Reason Why 72% of ERP System Implementations Fail."Panorama

Consulting Solutions. Panorama Consulting Solutions, 9 Mar. 2010. Web. 17 June 2013.

3. "Reimplementation of ERP/CRM....." Lakelet Advisory Group, LLC. N.p., 21 Jan. 2013. Web. 15

June 2013.

4. Eick, S., Graves, T., Karr, A., Marron, J., and Mockus, A. 2001. Does Code Decay? Assessing

Evidence from Change Management Data. IEEE Transactions on Software Engineering. 27(1) 1-

12.

5. Riordan, Karen. "Advantages of Staying Current on ERP Maintenance." ERP Software Blog. SSi

Consulting, 14 June 2010. Web. 21 June 2013.

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