TEC’s mission is to provide expertise on the enterprise software industry through thought leadership, data, and consulting. [TEC] recently invited other industry experts to provide their views on the enterprise resource planning (ERP) software landscape. The goal was to gather a cross-section of insights that will help companies of all sizes make informed decisions on ERP software. Here's some highlights with a link to the complete report.
Top ERP Selection and Implementation Mistakes and How to Avoid Them
Enterprise resource planning (ERP) mistakes make headlines—in fact, famous blunders involving big brand names are legendary across the ERP community. We wanted to find out the most common reasons ERP software projects fall apart—whether at the point of software selection, during implementation, or any other stage—and discover insight on how to succeed.
We first asked our survey respondents to identify the three most common reasons ERP projects run into trouble at the software selection stage.
A considerable 80% of experts identified ensuring the fit of the solution to business needs as a common factor companies overlook when choosing one solution over another. At first this may seem surprising: functional fit ought to be the basis of any shortlist of contenders. But as respondents made clear in their comments—and this aligns with our experience at TEC—two factors often interfere with proper functional assessments: a preoccupation with pricing, and insufficient requirements gathering before assessing software solutions.
While every company must keep its spending on target, it’s not helpful to let pricing concerns overshadow thorough exploration and discovery. Even if a company finds that its dream software is out of reach cost-wise, it will have learned about what fits its needs and may be able to find a similar package for less elsewhere. (See our coverage of ERP budgeting.)
Not going deep enough into requirements gathering before beginning to assess solutions can result in a common outcome: a partial-fit software system. The rush for progress may sacrifice a full understanding of your business processes and miss some of the nitty-gritty functional requirements. Although it may be tedious, it’s essential to thoroughly map your business processes before you finalize your requirements list.
Along similar lines, nearly 70% noted the mistake organizations make of not including users in the final decision on which ERP system is the best fit. Users often know the core business operations better than IT and C-suite staff, so excluding them from requirements-gathering work or software demos, or from otherwise participating in the final decision, is a recipe for trouble.
- ERP Implementation Success: It’s Not About IT
- Change Management and User Involvement: Crucial at Every Stage
- Read More
Software Customization vs. Business Process Adaptation
An important step before beginning the implementation of an enterprise resource planning (ERP) solution is to assess your company’s readiness for the new system.
We asked our respondents to what extent they agreed with the following statement: “Organizations should modify their ERP software to meet their unique needs, rather than significantly adjust their business processes to fit the software.”
Our respondents were split roughly down the middle on this question, but of the half who agreed, most supplied cautionary comments. As Branislav Djurkovic, CEO of Apollo, wrote, “In most cases they don’t really have ‘unique needs’ but rather old habits. Customizations increase costs, slow implementations, and limit the company’s ability to take advantage of product enhancements.”
Ned Lilly, CEO of xTuple, noted,
“It’s easy to fall into the trap of over-customizing, especially with open-source. The most successful implementations work with standard processes and methodologies, and make modifications only where the business need can’t be met otherwise.”
- One of the strategic reasons to implement an ERP system is to take advantage of the best practices it enables, and this can only be achieved by changing the old ways of doing things.
- Read More
Open-Source ERP Solution: Yay or Nay?
We wanted to know whether the experts would recommend an open-source enterprise resource planning (ERP) solution. This question inspired a significant amount of discussion.
Of the responding experts, 59% told us that they might or would definitely recommend an open-source software system, while 41% said they would not, with the more positive group saying they’d be comfortable provided the system was the right fit for the organization’s business needs.
Among the group saying a definitive yes to open-source ERP was Ned Lilly, Founder and CEO of xTuple:
“Not only is the product development process better (higher quality), the positive economics are undeniable. And open-source strongly mitigates against vendor lock-in—an old problem in ERP that is re-emerging in the SaaS [software-as-a-service] age.”
- Whether an ERP solution is open-source should not in itself be a deciding factor. It all depends on the capabilities of the software and the user requirements.
- Read More