ERP Software Selection: Beyond How Much It Will Cost

Selecting the right Enterprise Solution takes preparation, time, and resources—this is especially true when it comes to selecting the right Enterprise Resource Planning (ERP) solution for your company. We’ve already written a great deal about ERP Readiness; now we’ll turn our attention to ERP Software Selection. How are the two related?

In an ideal world, you’d determine your organizational readiness for ERP prior to the selection process. The reality is that readiness and selection often happen with a high degree of simultaneity—both phases closing prior to implementation.

As we’ve written about in our posts on readiness, any successful ERP selection process requires four things for success:

• Commitment from the top,
• Reasonable expectations for cost, timeline, and resources,
• A committed, energized, and empowered selection team, and
• Critical business requirements understood and prioritized.

With these four components in place, we can proceed to answer the question: how much will ERP selection cost, how long will it take, and what resources will I have to devote to the process?

Cost

The cost of software selection for most small-to-medium sized businesses is between $20,000 to $40,000. This table summarizes the cost of ERP selection along with the typical costs of the solution itself and the cost of implementation charged by solution’s partner services.

Time

How long the process of selecting software takes depends on the experience of the selection team. If you’ve got someone on the team who has some experience with software selection, the following timeline holds true.

However, if no one on the selection team has gone through an enterprise software selection process before, you can multiply the timeline above by a factor of 1.5 or 2. A lack of experience on the selection team coincides with a greater risk of selecting the wrong solution.

Resources

It bears reminding: software selection not only takes money and time, it takes resources in the form of human effort and focus. People in your company will have to devote their time and energy to ensuring that the selection process is a success. We address this more fully in our article, “The Core Team Is Assembled, Now What?” But you should expect the members of your ERP core team to spend between 50-75% of their time on ERP selection and implementation. Not budgeting adequate money, time, and resources can lead to project delays and cost overruns as we’ve seen most recently in Florida.

Some questions to ask yourself as you get ready for software selection are:

• Are there people on the selection team who have gone through the software selection process before?
• If so, how recent is their experience?
• Do they have the time to commit to following the process?

Everyone on the team will have to commit time to the selection process and still do their “day job.” The degree to which you free people up to focus on the selection process is the degree to which they will execute the process in a timely fashion and within budget.

Are you poised to take on a software selection process? Not sure where to start? Contact us, and we’ll talk through it together.