The first step in selecting an ERP system is generally to research vendor ERP systems on the market and to identify a short list of vendors who will help to shape business requirements. This process is especially helpful for companies moving from aging legacy systems and technology to current and state-of-the-art technology. A state-of-the-art ERP system purchase will likely mean the replacement of the current hardware and software infrastructure. Identifying and researching all aspects of a vendor package and the platform that the hardware and software runs on will assist companies in determin
ing the total cost of ownership (TeO).
In general, identifying vendors today is not overly difficult. Using current Web search engines is a good starting point. It also helps to know what packages the competition
CHAPTER 6 SOFTWARE AND VENDOR SELECTION
uses. An exhaustive list of vendors, even if you do not research them completely, is impor
tant for a successful implementation. Another strategy is to ask department managers and subject matter experts if they know of vendors that should be considered. It will be said many times, "the process is important," so including end-users will help with change man
agement issues later in the project. It will also help to gain and secure trust for later in the implementation.
The f o l lowing s h o u l d be considered when rese arching vendors and gathering information:
• Other businesses using the vendor
• The vendor's financial position
• The vendor's implementation philosophy and support issues
• The hardware and software infrastructure used to support the ERP
• The vendor's direction and currency of software
• The vendor's release and upgrade strategies
• The vendor's user-base involvement in defining future functional changes
• The vendor's development and maintenance resources
In selecting an ERP be sure to understand the company's overall size and complexity.
Company size is important because some ERP vendor systems (e.g., SAP) are designed for large numbers of users, whereas other systems (e.g., Great Plains) are geared for a small numbers of users. Many ERP vendors have similarly geared their application for a specific industry. For example, PeopleSoft has historically focused on government and educational organizations, whereas SAP has focused on the manufacturing industry. PeopleS oft is also known for Ruman Resource (RR) applications, whereas SAP is well-known for produc
tion and supply chain management (SCM) applications. In recent years these large vendors have tried to diversify their systems by expanding their application modules through acqui
sition of other software companies. PeopleSoft's acquisition of J.D. Edwards and Oracle's acquisition of PeopleS oft is an example of this. Nonetheless, they still focus on certain industries and are known for applications in certain functional areas of business. It is there
fore important for businesses evaluating ERPs to pay close attention to these criteria before selecting the software.
The IT infrastructure criterion is important because a company not having the resources to invest in new infrastructure may want to acquire an ERP application that will work on an existing platform. Some ERP vendors have structured their applications to work on spe
cific platforms with specific database and third-party software. In that case, having the ven
dor install a "sandbox" application for demonstration purposes on the company's existing infrastructure can be very helpful. Finally, the resource question is the most important issue that has to be resolved before moving to the next phase of ERP implementation. Senior management must be involved in making this decision. If they are not committed to the project for the long-run, both in terms of resources and time commitment, the implemen
tation is doomed for disaster. The majority of ERP vendor relationships with organizations are long-term. Vendors are constantly upgrading or releasing new applications requiring a business to remain close to what is happening with the system. This requires long-term resource commitments from the organization.
1 40 CHAPTER 6 SOFTWARE AND VENDOR SELECTION
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Item User base Financial position
Implementation issues and support
HW/SW infrastructure fit and scalability
Vendor direction
Currency of technology
Release strategy
Development and mainte
n ance staff
System update process
ERP System Research Table
Description
How many companies are using the system and for what purposes.
Identify competi tors using the system.
If publicly traded tbis information is fairly straightforward. I f not, the ERP vendor informat ion may not be available un til such time later in the purchase process. I t should in clude sales reven ues, profi ts, growth, research and developmen t , an d any outstanding debl.
This can be accomplished tlu'ough calls to companies using the soft
ware or IT researching companies that survey and collect this type of information on a regular basis. Be sure in formation is curren t . What m a y have happened 3 or 4 years ago m a y n o t be accurate.
ERP vendors usual ly support more than one platform . Identifying and documenting the platforms will provide a better understanding of the scalability of the system and ultimate fit with the company's direction.
This information should be tracked through the vendor history of change and upgrades to the system along with a statement of direc
tion from each vendor. The ability to implemen t a stated direction is importan t; hence, knowing the history is critical to understanding the hype verses the reality.
Like legacy systems, a vendor's software is often written in older tech
n ology.ln some sense every vendor goes through this because tech
n ology is changing rapidly, but the ability to migrate to new technology must be understood and documented during the research process.
How often are there releases to the system an d what is included in releases? Are fixes timely and minor upgrades included periodi
cally? Wha t is the timing for major releases and are there defined upgrade paths? Are there vendor costs related to upgrades?
This is an area that sometimes requires some exploration. It is di ffi
cult to compare apples to apples because t he "size" of the ERP vendor system will have an effect on the development and main te
nance staff. One should really look for a dispropor tionate number within an ERP vendor and across ERP ven dors.
This is a key area. It helps to understand how much your company's direction and long-term needs will be met by the vendor. A com
pany's involvement in further defining the functional direction of an ERP system is important to understand and documen t in the vendor research process.
BOX 6-2
SHORT LIST OF ERP VENDORS
SAP - Founded in 1972, SAP is the recognized leader among E RP vendors, curren tly claiming the largest market share. Its solutions are for all types of industries an d for every major market.
H eadquartered in Walldorf, Germany, wi t h 12 million users, 88,700 installations, and m ore than 1,500 partners, SAP employs more than 32,000 people in more t h an 50 countries. I ts products
CHAPTER 6 SOFTWARE AND VENDOR SELEalON 1 41
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include mySAP Business Suite, SAP NetWeaver, and solutions f or small and midsize companies (e.g., SAP Business One and SAP All-in-One).
(www.sap.com)
Oracie/PeopleSoft -Oracle technology can be found in nearly every industry arou nd the world and in the offices of 98 of the Fortune 100 companies. Oracle is the first software company to develop and deploy 100 percent I nternet-enabled enterprise software across i ts entire product line:
databases, business applications, and application development and decision su pport tools. Oracle provides solutions divided by industry category.
The company promises long-term support for cus
tomers of PeopleSoft, which it acqu ired in 2004.
They have 40,000 professionals, working in more than 100 cou ntries arou nd the worl d . Th eir t hree principles are: Simplify, Standardize, and Au tomate. Oracle is headquartered in Redwood Shores, California. (www.oracle.com)
Lawson-Founded in 1 975, L awson provides industry tailored software solu t ions. Lawson's solutions include: enterprise performance man
agement, distribution, financials, human resources, procurement, retail operations, and service process optimization. Headquartered in St. Paul, Minnesota, Lawson has offices and affiliates serv
ing North and Sou t h America, Europe, Asia, Africa, and Australia. (www.lawson.com)
SSA Global- By acquiring B aan in 2004, SSA Global effectively dou bled the company's size. They claim to offer solutions that accomplish specific goals in shorter time frames and that they are more efficient with time. Headquartered in Chicago, IlJinois, SSA also has offices all over the worl d . (www.ssagt.com)
Great Plains-Great Plains offers integrated capabilities for financial m anagement, distribu
tion, manufacturing, project accounting, HR man
agement, field service management, and business analytics. Part of the Microsoft Business Solu tions grou p of products, its solutions can be tailored according to business needs. (www.
microsof t.comJbusinesssolutionsJgreatplainsJ) Epicor- Epicor focuses on enterprise soft
ware solu tions for midmarket companies around the world. The company claims to have solutions to a variety of needs, whether a customer is look
ing for a complete end-to-end enterprise software solution or a specific application. It provides solu
tions for a limited number of specific industries including nonprofit, distribution, manufacturing, and hospitality. Epicor is headquartered in Irvine, Calif ornia. (www.epicoLcom)
Other successful large vendors include: 12, Intentia International, QAD, IFS, Sage, Glovia, Syspro, Macola, Solomon Software, Visibility, and Flexi among others.