Summary Session 11-12

Software and Vendor Selection (Session 11-12)

Preview

-          Selection of a vendor that best meets the needs and long-term direction of the company is a critical first step in a successful implementation

-          In selecting a vendor, a well-understood selection process will need to be utilized

-          The company may want to hire a specialized consulting firm to assist in the selection process.

-          The steps involved in selecting a vendor generally are based on best fit of an ERP to business functions and the overall ERP vendor’s product performance in the market.

High Level ERP Purchase Process

1.      Vendor research and information gathering

2.      High-level vendor demonstrations and evaluation

3.      Needs and requirements assessment

4.      Development of request for bid or proposal

5.      Release request for bid to vendors

6.      Analysis and selection- Evaluation of bids, Functional evaluation, Technical evaluation, Vendor-detailed demonstrations, Contact references, Develop a total cost of ownership

7.      Vendor negotiation,

a.          Contract review and change,

b.         Pricing- software, maintenance, and consulting, support

8.      Purchase system

Vendor Research

-          First step is to identify a short list of vendors who will help to shape business requirements

-          Identifying and researching all aspects of a vendor package will assist companies in determining the total cost of ownership.

-          An exhaustive list of vendors is important for a successful implementation using current web search engines

What need to be consider during vendor selection:

-          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

Short List of ERP Vendors

-          SAP

-          Oracle/PeopleSoft

-          Lawson

-          SSA Global

-          Great Plains

-          Epicor

-          Infor Visual

-          Plex Online

Matching User Requirements to Features

-          Identification of user and system requirements can be done by documenting current legacy system functionality or by using business process re-engineering (BPR)

-          Two major documents are often a result: Data and functional flow of departmental & description of functions in each department and the level of importance of each function

Request for Bids (RFB)/Request for Proposals (RFP)

-          Expensive and time-consuming process for both company and vendor, but it can yield significant software savings when done right

-          RFB should include the type of ERP system the company wants (with specific functionality), specified hardware and software infrastructure, training requirements, and any specific contract issues (required by the company)

Vendor Analysis and Elimination

-          Office staff will need to evaluate functionality.

-          IT staff will evaluate the technology requirements.

-          Contract staff will need to evaluate the contract and pricing of the system.

-          No vendor will be able to meet all requirements so the company should focus on the best fit

-          Develop and analyze the total cost of ownership (TCO).

Contract Management and License Agreements

-          Talk should center on the products (including purchase, maintenance terms, and contract lifecycle management)

-          Services for implementation can be included or bid separately

-          Things every ERP contract should have: All deliverables clearly identified with delivery dates associated, ensure have acceptance authority as customer, and identify who has the authority to changes the contract

-          Quality manager/contract monitor responsible for making sure both sides abide by the terms and conditions of the contract

-          Changes should only be made when necessary due to unforeseen circumstances, mutually beneficial reasons, or unintended mistakes

-          Communicating progress keeps all involved and will also help to maintain momentum.

Implications for Management

-          Management must play a role in choosing the right system that will meet the company’s needs and requirents

-          Management must allocate enough time to evaluate the system, observe a complete and comprehensive demonstration, and communicate to references and others using the system.

-          Discussions with the vendor about future improvements and direction must be scheduled.

-          Negotiating with two vendors is time-consuming, but it will yield a better purchase price.