Enterprise resource planning (ERP) software is like the central nervous system of a company. It connects various activities like finance, purchasing, supply chain, inventory management and other functions to deliver a unified and comprehensive overview of the company. From this, mangers can get a 360-degree view of the entire business and this increases operational efficiency and transparency, enabling data-driven decision-making that is vital in today’s competitive business landscape.
It is little surprise, therefore, that the ERP market is growing at a fast clip. According to Allied Market Research (AMI), the global ERP software market is expected to be worth US$78.4 billion by 2026, which translates into a compound annual growth rate (CAGR) of 10.2 percent from 2019 to 2026.
While an ERP system is a must for all companies – irrespective of size, it is especially beneficial for small and medium-sized enterprises (SMEs). An ERP for small businesses acts as a force multiplier by providing management tools that, until recently, were only available to large global enterprises.
It is therefore easy for the c-suite to make a case for the purchase of an ERP system, preferably cloud-based, to their board of directors. What is harder is charting out a clear pathway for its implementation within the company with minimum business disruption. ERP modules are not just pieces of software that can be purchased and plugged into a company’s IT systems. It is a significant investment and can take several months to properly integrate within the IT network. ROI (return on investment) depends on flawless implementation and there are many horror stories of ERP systems not working to their full potential, thereby resulting in investment losses for companies.
The problem is very few companies have the in-house IT skillsets required to do the implementation themselves. While the software modules can be purchased directly from enterprise software vendors like SAP, partners are required to help with customisation and integration.
The challenge is to identify the correct implementation partner. They could range from a systems integrator (SI), independent software vendor (ISV) or value-added reseller (VAR). The right partner should have full domain knowledge about the ERP software and the technical ability to understand the peculiar needs of the company that would ensure success. The ideal partner should not only ensure successful implementation, but also have the ability and willingness to go above and beyond implementation.
Choosing the Right ERP Implementation Partner
Making a deep and thorough technical analysis of a partner’s capabilities is often beyond the ability of many companies, especially SMEs. There are, however, some relatively simple things that can be done to understand if a potential partner is an ideal fit.
It is important to realise that at the start of the process; all implementation partners are equal. Each has its own fair share of strengths and weaknesses. Starting with this premise, the next step is to look for a partner with the right set of skills to not only execute a flawless ERP implementation, but also one that displays the willingness to develop a long-term relationship that would include supporting on future upgrades and troubleshooting.
While there is no fixed playbook, several things need to be considered. These range from the partner’s track record and experience all the way to market share and reputation. The due diligence exercise needs to look beyond brochures and testimonials published on websites and delve into things like market reputation over the past five years and an analysis of technical abilities.
Reviewing the track record of the partner and, if possible, talking to former and current customers is a good way to move forward. The feedback will provide a clear picture on whether the claims and testimonials of the partner matches the experience of former customers.
Another important thing to look out for is the level of experience that the partner has, as it pertains to working with companies with similar requirements. Ideally, an implementation partner should not only have a good idea of how the ERP system works, but also understand the requirements of the customer’s business processes. Only such a thorough understanding will allow for the customisations that are needed for an ERP system to work to its full potential and deliver ROI.
Questions to Ask Your Prospective ERP Implementation Partner
In summary, here are some action items that could help determine if a particular ERP implementation vendor is the correct fit for your company’s ERP implementation:
- Has the vendor undertaken similar projects in the same industry? What, in their view, were the major issues that needed to be overcome during the ERP implementation? The response can provide a good idea of the level of understanding that the vendor has of the special requirements of your industry. Information must also be collected about their experience in dealing with companies that are of similar size. Implementation experience with large enterprises, as an example, may not count for much when it is applied to the requirements of an SME that has its own set of problems and issues.
- Information should be collected on the total number of ERP implementations the vendor has – across different industries and company sizes. The higher the number, the greater the likelihood of the vendor possessing a repository of in-house knowledge and intellectual property (IP). A high degree of in-house experience will ensure that the partner would be able to port in some of the best practices from other industries during the implementation phase.
- Along with the above, it is also useful to ask about the ERP implementation vendor’s experience with projects that did not go according to plan. Information on what went wrong, how the problem was fixed and what kind of learnings the vendor derived from the experience can provide valuable insight on the level of maturity of the consultants who work for the vendor.
- Who from the vendor is doing the actual ERP implementation? While initial discussions would likely be with the vendor’s top management, the actual work may be handed over to less experienced consultants once the contract is signed. For this reason, the technicians and engineers who would be doing the actual ERP implementation for you must be brought into the discussion right at the start of the negotiation process. This also helps to develop a rapport between the vendor’s team and the company’s in-house experts, which could in turn smoothen out future challenges during the implementation phase.
- The kind of channel partner certifications the ERP implementation vendor has. Channel partner certifications from enterprise software vendors bring accountability and credibility to the selection process. Such certifications prove that the implementation vendor has the ability to meet the manufacturer’s standards. Most original equipment manufacturers (OEMs) have robust channel partner training programmes and these are usually multi-layered or multi-tiered processes. Channel partners that go through this process and have the necessary certifications can be expected to have the competence required for a proper implementation of the OEM’s ERP software.
In summary, the ideal ERP consultant should have a genuine interest in helping the client’s business grow and succeed. Consultants should have the willingness to consider and question implementation goals and even ideas of success that the customer brings to the discussion. They should be able to point out better options if they are available. The best consultants are those who have well-rounded experience implementing solutions from a variety of enterprise software vendors.
A Perfect Implementation is Impossible, But the Perfect Partner is Needed
An ERP implementation is often a long and arduous process. There are multiple things that can go wrong. Open channels of communication between the ERP implementation vendor’s consultants and the company’s own team of experts is a must. For this reason, a good cultural fit is important and is something that needs to be in focus during preliminary discussions.
The ideal partner will be one who not only strives for successful implementation but is also looking for a long-term relationship. This ensures that the partner has a stake in the growth and success of the company and can lead to a fruitful collaboration based on mutual trust.
It bears repeating that choosing the right implementation partner is almost as important as choosing the right ERP system. Companies that get both selections right are more assured of long-term success.