IT & ERP Supplier Selection: Reducing Risk Throughout The Selection Process

Choosing a new IT or ERP system can be a very daunting process. The main problem lies in the definition of the task itself: Choosing a new ERP system. The fact is that there are likely to be a number of ERP systems that are capable of meeting your requirements. So, how do you then choose a supplier? What process should you go through to make this understandably anxious decision? Here are some top tips to help reduce risk and angst throughout your selection process.

Focus On The Partner and The Software

As mentioned there are likely to be a number of potential IT or ERP systems out there that are capable of meeting your core requirements.

Clearly, it’s not only about choosing the right technology: The really important choice is finding a partner with whom you feel you can develop a close working relationship over the many years to come.

Getting the balance between the right ERP system and the right partner is a sure-fire combination that can bring not only a successful implementation, but a profitable on-going relationship for your business.

 

Create a Project Strategy & Agree Priorities

So, how should you go about the business of choosing a new system and software provider?

Your core system is an integral part of your business. No decision you make – should ever be taken lightly. So, first things first - treat the acquisition as a project. Ensure you pull together a project team comprising of both operational and management personnel. If at all possible, include the CEO, (as the choice you make will have a major impact on your company).

It’s important you have a team of people who have sound knowledge of both the operations and management of your business. Be it store sales, marketing, warehouse, finance, customer service, and so on. If you’re looking to change your back office / ERP / OMS system then this will impact your eCommerce / mCommerce, stores, Kiosks etc.

It’s vital to get buy in from each part of the business that’ll be affected by the new system/s. Holding a project planning meeting, gets everyone in the same room, at which point you may want to discuss the following:

      1. A broad description of the system you require (e.g. an integrated Financial/ Order Management and eCommerce solution)
      2. The business benefits being sought, the business objectives and the project objectives:
        • Growth is the most common reason for a systems change – either you’ve outgrown your current system or your system can’t handle the direction/s you want to take your business – be it introducing new channels to market or expanding your existing channels.
        • Flexibility to achieve your full potential e.g. it may be difficult to develop new brands, support new customer service initiatives or expand internationally with multi-language and multi-currency sales.
        • Multichannel Capability is one of the common drivers for a systems change in today’s connected world. Today’s consumers want and expect multichannel. They want to be able to research online, reserve for click-and-collect, and they expect to be able to track a delivery online, even when the purchase was made over the phone. They also expect to have visibility of their loyalty points across all channels. Research shows that customers that use more than one channel typically spend more money, and that customers that experience consistent, multichannel service will come back for more. This alone can be reason enough to consider a system change.
      3. Agree the scope of the project: Discuss what is in scope and, just as important, what is not in scope. Take a step back, and consider your business now and where you want it to go. Discussing these issues with every stakeholder will put you in the strongest position to make the right decision for both your short and long-term goals.
      4. Create and agree a weighting in terms of priority for 3 core project variables: Time, Cost & Functionality.
      5. Analyse potential risks and agree a risk management plan
      6. Outline the project strategy: Discuss how to select a short-list? How to evaluate the solution & the vendor? It may be worth considering the functional and non-functional requirements:
        • Agree your absolute “must-haves” in terms of functionality.
        • The desired cultural fit
        • Agree ideal track record of the partner
        • Agree your absolute “must-haves” in terms of non-functional requirements, for example:
          •  i.      The partner must have successfully implemented a project in a similar market.
          •  ii.      The partner must have at least 10 years’ experience in multichannel etc.
          • iii.      The software must be used by at least X companies in the UK.
      7. Are there any project constraints?
      8. Discuss the initial effort needed, assign tasks and schedule estimates for the partner acquisition process.

 

Create an RFI

You may want to consider creating an RFI from the project planning sessions. However, if you select a range of vendors who specialise in your market, this may not always be necessary. The RFI usually outlines around 20 questions and includes a request for indicative pricing.

The supplier’s answers (or lack thereof), along with your defined project strategy should help you determine which supplier or short-list of suppliers you choose to take on to the next stage.  

*The RFI should be sent to no more than 5 or 6 potential suppliers, so some initial research may need to be carried out to determine this list.

Take a "Step Back" and Evaluate Your Vendors

The next step will be to arrange meetings with your list of potential vendors so you can get an overview of their solutions, experience within the market and judge whether their cultural fit aligns with yours.

After meeting with a handful potential partners, you will have established what solutions are available that meet your needs, and which companies provide implementation support and other services as part of their overall solution.

There’s no doubt that your team has many tough decisions ahead. Be ruthless in your application of the “must-haves” (knock-out) requirements, so that you can establish a final shortlist of 2-4 suppliers.

Now’s the time to arrange a more detailed solution demonstration, this will give you the opportunity to evaluate their offering against your requirements. From here you can identify any shortcomings where additional work may be required or where, in the end, they just aren’t a suitable fit.

You have decided on your strategy for selection throughout the planning sessions. By this point, you may have a stand-out preferred solution partner, or you may have a close call between 2 potential vendors.

Whatever your approach, remember to put as much weight on the choice of supplier as on the choice of software. The key thing to remember is that you’re choosing a business partner you may well be working with for the next decade: how you feel about them is just as important as what their product can do. 

This approach maximises the effectiveness of the time you spend, while increasing the chances of success and of a long and profitable relationship with your software partner.

 

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