The ERP Evaluation Process: A Detailed 10-Step Guide

Step 1: Understand your business needs

Before diving into the ERP evaluation process, take a step back and assess your current situation. What challenges is your business facing? What processes need improvement? Are your employees spending too much time on manual tasks? Answering these questions will clarify why you need an ERP system.

For instance, a growing business may need better inventory management, while another may require robust financial reporting. List your pain points and long-term goals. This foundational understanding will guide the rest of the evaluation process.

Step 2: Form an ERP selection team

An ERP system impacts multiple departments, so involving stakeholders from various areas of your business is essential. Form a cross-functional selection team that includes representatives from finance, operations, IT, sales, HR, and other key departments.

The team’s role is to:

• Identify department-specific needs
• Provide insights into daily operations
• Evaluate ERP options from multiple perspectives

Having a team ensures that the ERP system you choose benefits everyone and aligns with the organization’s overall strategy.

Step 3: Define your budget

ERP systems come in a wide price range, from affordable small-business solutions to expensive enterprise-level systems. On average, the cost per user of an ERP project is $9,000, with 26% of employees typically using the system.

Before researching options, determine how much you are willing to spend. When setting your budget, consider:

• Licensing fees
• Customization and integration costs
• Training expenses
• Ongoing maintenance and support fees

Remember, the cheapest option may not meet your needs, and the most expensive one might offer unnecessary features. Aim for a balance between cost and functionality.

Step 4: Identify must-have features

Once you understand your business needs, identify the specific features you require in an ERP system. These features should address the pain points you outlined earlier. Common ERP features include:

• Financial management and accounting
• Inventory tracking and warehouse management
• CRM (Customer Relationship Management)
• Human resource management
• Real-time analytics and reporting

Categorize these features into “must-have,” “nice-to-have,” and “not necessary” to prioritize your requirements. This will help you focus on solutions that align with your needs.

Step 5: Research ERP vendors

With your list of requirements in hand, start researching ERP vendors. Look for companies that have experience working with businesses in your industry. Vendors with industry-specific expertise often provide solutions tailored to your unique challenges.

Read online reviews, case studies, and testimonials to understand how these vendors perform. Then, create a shortlist of 3-5 vendors who align with your needs and budget.

Step 6: Request demos and ask questions

Demos are a critical part of the ERP evaluation process. Once you have your shortlist, request product demonstrations from the vendors. During the demo:

• Focus on how the system handles your specific business processes
• Test its user-friendliness
• Explore customization options
• Ask about integration with your existing software

Prepare a list of questions in advance, such as:

• Can the system scale as your business grows?
• How often does the vendor provide updates?
• What is the average implementation timeline?

Taking notes during the demo will help you compare options later.

Step 7: Evaluate compatibility with current systems

Your new ERP system must integrate seamlessly with the tools you already use. For example:

• Can it sync with your accounting software like QuickBooks or Xero?
• Will it integrate with your e-commerce platform?
• Can it pull data from your current CRM system?

Poor integration can lead to data silos, inefficiencies, and unexpected costs. If integration is a concern, ask vendors about potential solutions or additional tools that may be required.

Step 8: Check vendor support and reputation

A 2023 survey found that 66% of organizations reported that their ERP systems have improved operational efficiency, highlighting the importance of selecting a vendor for effective support and system performance.

An ERP system is a long-term investment, so choosing a vendor with a strong reputation for customer support is essential. Investigate:

• Training options: Does the vendor offer hands-on training, user manuals, or online tutorials?
• Support availability: Is customer support available 24/7? What is their average response time?
• Customer feedback: Look for reviews and testimonials from other businesses in your industry.

A supportive vendor can make a significant difference during implementation and beyond.

Step 9: Test the system with a trial

Most ERP vendors offer a trial version or sandbox environment to test their software. Use this opportunity to see how the system works in your day-to-day operations. Include team members who frequently use the ERP system to gather feedback.

Ask them:

• Is the system intuitive and easy to use?
• Does it meet their functional needs?
• Are there any performance issues?

A trial run can reveal potential problems that may not be evident in demos.

Conclusion

The ERP evaluation process is a journey that requires careful planning, collaboration, and research. Following this 10-step guide, you can select an ERP system that fits your business needs, budget, and growth plans.

Remember, choosing the right ERP system isn’t just about improving processes today—it’s about preparing your business for the challenges and opportunities of tomorrow. Take your time, involve the right people, and prioritize your goals to make the best decision.

Ready to take the next step in your ERP journey? Contact Praxis Info Solutions today and let our experts guide you toward the perfect solution for your business.