How to Evaluate an ERP

Why ERP’s are hard to evaluate.

We’ve seen the confusion our clients have with evaluating their ERP’s. There are time and resource-intensive technologies out there and ERP’s more often top of that list. An ERP acts as a central hub for all your company data. Primarily financially based, but they require reporting and integration from all most all company applications. Much like any technology, things are constantly changing feature sets capabilities and integrations. And in a matter of years, the ERP that you just deployed could use an upgrade, could be reevaluated, or may no longer apply to your business. Due to how intensive ERP selections can be, we don’t recommend replacing one until you have to. But it is essential to review your ERP and see if it’s still meeting your organization’s needs as your organization before you need to make a change. It is a thoughtful approach that plans instead of acting ad hoc and potentially working with something that causes pain to your organization while you wait to implement something that creates value. We intend this article to describe what’s involved in the ERP review process and identify the impact of moving through it.

What gets reviewed in an ERP analysis?

In an ERP review, you want to discover if the technology still meets your business’s needs. The way we evaluate is through two phases, qualitative analysis and quantitative analysis. In the qualitative research, we ask questions such as the overall business goals and needs associated with using and or implementing a new ERP. We find it helpful to ask about the last time a significant technology project was implemented that required organizational change and how it went. We want to know these things so we can create a robust framework for evaluating the ERP. It truly starts with what overall business goals are. And to understand how change management is accepted throughout your organization. In the first phase, we need to understand what ERP system is being used and basic information like if it’s on-premise or cloud. In this phase, we need to know what core processes are being handled by the ERP and what core processes aren’t. For the core process that the ERP is not managing, we need to understand what applications are being used. For example, most finance processes are handled in the ERP, but we commonly see sales processes or CRMs not being managed by them as examples.

For the core processes taken by other applications, we want to understand if they’re being integrated with ERP; this will identify which processes or completely siloed outside of the, and of course, we want to know why. We also want to review what’s working well and what challenges exist in the current state environment. We want to identify how these challenges affect profit, time or impact business opportunities. Finally, we want to start turning the subject responses into something we can measure. In the second phase, we detail all the standard feature sets of ERP. We want to mark which ones exist in your current ERP, which ones do not, and which ones you need. This develops a gap analysis of what you have, what you need, and what’s possible. The gaps are reviewed and prioritized.

What can you expect to know from an ERP Analysis.

The impact of going through a review like this can identify the risks associated with the current state ERP. We get a sense of how the ERP is working, and with this objective analysis of its use, we identify what risk it’s associated with. When looking at the challenges and asking what the impact is, we want to make sure that we can put a dollar value to it when possible. The feature set review will identify any gaps, any required features that do not exist with the current ERP. Going through an ERP assessment does not always mean a recommendation to replace. Unless an ERP shows massive risk, we often recommend not replacing or at least not rushing to replace.  Recommendations to fill gaps include reviewing available APIs,  creative ways to use the database efficiently, or advanced analytics visualized with Power BI. Ensuring you’re reviewing your business requirements, increasing your awareness will reduce the unknown; you can then plan to address any risk identified.

The solut vCIO team is your strategic advantage. They complete assessments of all kinds, including ERP reviews. If you have questions about how your ERP meets your business requirements, we are more than willing to help.