ERP

Selection of ERP
ERP procurement & successful implementation are very costly affairs Implementation involves risk, risk is due to changes, benefits are not immediate Investment ? Is a strategic decision- long term decision, difficult to get reversed

Difficulty in selecting ERP

Selection is difficult by an internal, better to approach the external consultants ERP package may be cheaper, but may not fulfill the requirement Some take a lot of time in implementation Validated information on the vendor Objective of the organization may not be clear

Approach of ERP selection

ERP package should involve careful evaluation of existing alternatives & the need profile of the enterprise. Proof of Concept- POC Request for Proposal-RFP

The Request for Proposal Approach

Stage 1: Analysis Stage Launching and planning the ERP project Collecting & reviewing related background material Understanding the interests, needs & expectations of all those who are affected by ERP decision Reviewing the ideas of stakeholders & prioritizing their preferences Development of the RFP

Output of stage 1:

a) Detailed project plan for the activities related to the selection process
b) List of potential ERP vendors

Stage 2: Requirement Analysis

Conduct workshops on joint requirement planning Analyze results of workshop List the functional requirements Document & confirm business requirements

Output of Stage 2: a) Complete document of business & functional requirements

Stage 3: Request for Information

Make a high level look at the situation Gather general information in different ERP solutions which may be available Eliminate considering those ERP packages which are totally irrelevant, inadequate or inappropriate

Follow up of stage 3: a) The RFP is developed & released to be selected list of 3 to 4 vendors, whose packages best support the business requirements b) Respond to the enquiries of the vendors after they receive RFP c) Evaluate vendors response onRFP

Output of stage 3:

a) A short list ( possibly 3-4) of ERP vendors to whom the RFP would be sent b) RFP documents

Stage 4: Selection of the system a) Organize a demonstration model with each vendors, selected in stage 3 b) Deliberate on selecting the one, best vendor. This is at the level of in-house ERP implementation team, consultants who are hired , expert friends and other industries already using these packages c) Send the report to senior management d) Evaluation & recommendation by top management

Output of Stage 4:

Final selection of ERP package

Limitations of RFP approach

That many unrealistic requirements may get listed in the ERP- Lavish Wish List
Lies in the inadequate real time experience in the implementation & adoption

Proof of concept (POC)- Approach

Is much comprehensive & real time selection approach Stage1: preparation of project & constitution of ERP team a)Understand the project objectives Confirm the objectives Use review of documentation Use opportunities to interview stakeholders

b) Identify persons for the ERP- team. Define the role c) Identify the organizational resources needed for the ERP implementation d) Assess the risks involved in the project e)Develop a plan to address the risk and capacity of the project f) Launch the project through an effective internal commn campaign, involve all

Output of stage1: A plan which would prepare the task force in particular & organization in general for the next stage of POC activity Stage 2: Analysis of key (business) requirements unlike RFP approach, where the analysis of functional requirement is done, in the POC approach, analysis of key requirements is done. This is followed by development of a process model for achieving the benefits of the ERP project

a) Conduct seminars/workshops/presentation to plan the joint requirements b) Develop a comprehensive process model. Test with sample transactions & pin-point areas of process- improvements O/P of Stage 2: a)List of business requirements b) A process Model

Stage 3: Selection of system: Potential alternatives of the ERP vendors are narrowed down to one a) Identity resources- persons who are experienced in the software and are willing to advise these experts must have exposure of potential alternatives of ERP packages. The needs of the organization must be known to them otherwise, it is the duty of the task force to fully acquaint them about the organization needs

b) Identity resource- persons who are involved in the implementation of different ERP project. Take their advice on the choice c) Deliberate on the outcomes of the expert advise and task force view d) Make a firm choice on the ERP solution. Inform the concerned vendor Output of stage3Freezing the choice for ERP vendor

Stage 4: Reaching team agreement on product to prototype Is a product confirmation stage, may continue from few weeks to few months as per the agreement with the vendor Prepare the test system with a process model Undertake a gap analysis, identify the items which indicate major difference between software capability and business need

Output of stage 4: a) Decision regarding whether to go for project or not b) Understanding of the business model. Processes and technology involved in the business & ERP implementation
Application Of POC Approach- A considerable confidence is required

Comparison of RFP & POC The time consumed in both approaches are nearly the same RFP & POC both involves understanding the transactions of ERP product RFP provides only a general data of how the new processes will affect the business POC approach provides a much better understanding of the new processes & reengineered business model.