Abstract

Why do I keep on discussing accounting and ERP software selection? It’s really quite simple. Accounting software selection (small to mid-sized firms) or ERP software selection (larger and/or more complex firms) projects are difficult, time consuming and frustrating at the best of times. Compound that with a less than effective selection plan (or a poorly executed selection plan) and you can almost guarantee failure; either failure to achieve many of your objectives or failure altogether. While I could spend the next ten pages discussing every task that should be included in your software selection project, let’s just highlight some of my top concerns.

Start at the Bottom

I have mentioned this several times and it bears repeating. Most ERP software selection methodologies stress the active involvement of senior management as a critical first step, I would beg to differ. Senior management must approve and actively support such projects, but it is far more important that the “users” of the system participate in every step of the ERP software selection project.

How can you determine what the organization needs if you don’t ask people what they need to do their jobs more efficiently and effectively? People are a firm’s most important asset. They have to want to succeed and be given the tools to do so before the firm as a whole will ever achieve excellence.

Define Where you Want to Be

You are not going to achieve success if you focus on today’s issues rather than tomorrow’s opportunities. While there is no doubt that correcting current issues is one of the drivers of change, you cannot just focus on what needs to be corrected. Improvements might give you a bit of a positive bump in performance, but they are dealing only with where you are today, not where you need to be tomorrow. The leaders of truly successful firms spend a lot of time “thinking”, trusting today’s issues to others. Operational managers are a bit more rooted in today, making sure things get done. That’s what they get paid to do. However, even operational people should be devoting some of their precious time to developing a picture of where they need to be to meet tomorrow’s challenges and opportunities.

ERP Software Selection is a Learning Opportunity

Ignorance is possibly one of the most critical contributors to failure. How can you build a better tomorrow if you don’t know what’s possible? Although this is certainly a significant issue for smaller firms launching an accounting software selection project, it can and does affect larger firms that are more used to ERP software functionality. The leaders of smaller firms may have very little experience with the rich functional and reporting options available in today’s accounting products and to be honest it’s difficult to secure such knowledge without talking to a reseller. Unfortunately reseller’s tend to want to sell software, not teach people and that’s the dilemma.

Having said that, maybe you can combine your learning experience with your later detailed product evaluation. You are certainly not ready to make a purchase decision, but you do need information to understand the possibilities that can be found in a modern accounting system. Maybe the best course of action is to find a reseller that is willing to teach you. The fact that they are willing to do so is probably a very good indicator of the level of service you will receive if you were to purchase their product.

Better Reporting Leads to Better Decisions

Accounting and ERP systems should not make decisions. Their role should be presenting relevant information in a timely manner that will allow people to make better business decisions. In the past accounting and ERP systems generated lengthy static reports that presented a picture of some aspect of the firm at a single point in time. In today’s interactive world, static reports contribute nothing to the decision making process. Let’s face it; you cannot make a decision unless you have all three elements that contribute to the decision making process:

• Where have we been?
• Where do we seem to be going?
• Where should we be?

As I have said several times in the past (it’s one of my favorite soapboxes), you cannot make effective decisions unless you have a time-phased picture of your actual results (past, present and projected future) as well as a picture of where you believe you need to be. Now you have all of the information you need in a single graphical presentation. Since time-phased graphs lend themselves to analysis, you can even take this information and create a system that presents only the information that needs your attention. If the actual results are within specified parameters, you don’t need to spend any time reviewing that which does not need to be reviewed.

Before we continue, let me jump up on one more soapbox. One of the best examples of scrapping static reports is the trusted Aging Report. In this case you do need to know when customer’s are not paying you in a timely manner and you need to know which invoices are overdue, but the process of collecting overdue accounts doesn’t have to be manual as it is for many companies. Manual business processes are time-consuming (expensive) and ineffective. The collections management process is a poster child for such waste.

If you think about it for a moment, the process of collecting overdue accounts is really a form of contact management and that’s what should be employed to reduce your AR. After all, a modest 3 day reduction in AR for a $10 million firm will generate a cash flow of $85,000. Eliminate the waste. Improve your cash flow. All you have to do is ask your vendor if they or a third party have created an application that is no more than a highly specialized contact manager and one that will help you change your customers’ payment pattern.

Demo Evaluation

At some point you need to actually touch, feel and evaluate accounting or ERP systems. First and foremost you need confirm that the product does what you need it to do and does so following processes that make sense to you. Demos are not just about confirming functionality. You have to evaluate whether the product makes sense to those people who are going to have to use it.

As products reach into the ERP space, they become more robust, but that degree of comprehensiveness may increase the time it takes to enter transactions. That’s why it’s so important that you evaluate your ability to run your business processes on a daily basis. Does the system support your business processes and to what extent does it impose business processes on you that you really do not want?

You also need to evaluate your ability to make decisions based on information that will be in the product’s database. How easy is it to extract critically required information? Does more detailed reporting require additional fields? To what degree will this slow down transactional efficiency?

Let me jump back in time a bit. As I indicated earlier, your learning process might be enhanced significantly if you were to talk to vendors or resellers. After all, your knowledge of what’s possible in terms of functionality and reporting may be lacking. I think it’s OK to contact vendors and resellers to schedule some learning time. While it’s too early in the sales cycle to think in terms of purchase decisions, you can learn a great deal about possibilities by looking at today’s products. Just make sure the vendor or reseller knows that you are not actively “shopping” right now. At the same time remember that their time is as precious as your time. Use it wisely. Learn what you need to learn. If the vendor or more particularly reseller is interested in mentoring you, they may later on become a trusted business partner.

RFI or RFP

As you are moving through your software selection project, you are going to need to evaluate functionality and you certainly are going to need to know what this system is going to cost. Just make sure you do it at the right time. RFIs (Request for Information) should be designed to help you compare your functionality requirements against possible semi-finalists. Once you have confirmed via an RFI and subsequent demo that a product does what you want it to do, you can then take the final step to create what will become a legal document. This RFP (Request for Proposal) will establish the cost of the project (software, data conversion, implementation, training, etc.) as well as the project’s terms and conditions.

Both of these steps are required, but I do have one significant concern. As a user keep in mind the fact that these two activities are very time consuming for vendors and resellers. You need to do your homework first. If you have spent enough time with a vendor and/or reseller, your RFI should really deal with just your most important requirements. If you have reached the RFP stage, a listing of required functionality is important as it requires that a product do what you need it to do. You should already do know this via your research, the RFI and demos, but it’s a good thing to confirm everything.

The real problem is unsolicited RFIs and RFPs. How can you possibly ask a vendor or reseller to answer detailed questions about functionality and project costs when they have spent no time with you? This is a complete waste of time and you accomplish nothing. The vendor or reseller doesn’t know you and you certainly don’t know them or their product. How can you possibly form a business relationship if you are strangers?

Conclusion

The process of selecting a new accounting system or ERP system is one of the most difficult projects any firm will undertake. Failure isn’t an option, but it seems as though many firms challenge failure simply because they don’t understand how to organize such a project. It’s not just about doing some web searches or reading reviews. Accounting software selection must be approached from a step-by-step basis. You have to do your homework. You have to understand not just where you are, but where you want to be. You need to find that one product that does what you need it to do and you need to find that one vendor or reseller with whom you can form a lasting and truly beneficial relationship.

Abstract

Why do so many accounting and ERP software selection projects fail to achieve their objectives or fail altogether? Absence of executive buy-in? Implementation failure? Ineffective communication. All of these are legitimate, but maybe there’s a fundamental problem that isn’t addressed adequately. The process of selecting a new accounting and ERP system isn’t just about features and functions. Maybe firms just don’t create a strong enough foundation for success. Maybe they forget that individual people drive a firm’s success. Maybe they forget that the new accounting and ERP system has to help these people do their jobs better and make better business decisions. Maybe they forget these people and their needs and therefore doom a software selection project from the get-go.

Basic Research

Before you launch into your analysis, you might want to spend some time on research or background knowledge accumulation. The more time you spend educating yourself about software selection, the industry and specific products, the better prepared you and others will be when you begin your analysis.

From the point of view of individual people within your organization, how can they know what they need to be successful if they don’t know what’s possible? Rather than one or a very few number of people researching product and functionality options, extend this investigative process to as many people as practical. Rather than building your requirements document from the top down (only including project leaders and departmental manager), build it from the bottom up as well. This might actually give you a more accurate picture of what you need as a firm.

Efficiency and Effectiveness

Efficiency and effectiveness are two key business success elements. From an operational point of view, you want to minimize the cost of doing business per dollar of revenue. However, efficiency isn’t the only answer. People will want to purchase from you because the perceived and actual benefits (other than cost) of doing business with you far outweigh the benefits of purchasing from your competition. In other words, customer service is just as important as price. The way to maximize your customer service is to maximize the effect of what you do. People must work effectively as well as efficiently. Maybe one of your fundamental areas for improvement has nothing to do with software. Maybe it has more to do with customer service and the way you interact with customers.

Identify Requirements, Constraints, Strengths and Weaknesses

Organizing the software selection process is certainly a critical step. Having formed your selection committee, one of your first steps is giving people the ability to critique their own jobs as well as the organization as a whole. Give people the ability to describe their job objectives as they see them, critique the information that flows into them from other sources, critique their portion of the accounting system, and put into their own words what they believe the organization should do well and doesn’t do well.

While you want to launch this software selection process by meeting with most of the people who will be participating in the process, it will not be possible to meet with them personally to discuss requirements. Instead, create what I refer to as a Preliminary Needs Definition document and then let everyone fill it out. The format is open-ended text responses to specific questions as listed below. I have used the term “we” because individuals don’t feel very comfortable talking it terms that refer to them directly.

• What do we do now?
• What works and doesn’t work?
• What can we do individually to improve business process efficiency?
• What can we do to improve customer service?
• What should we be doing that we are not doing right now?
• What changes should be made in the business management system to help us work more effectively?
• What can other people do to help us do better?
• Are these goals or changes reasonable?
• Where is the organization today?
• Where should it be in the future?

If you consider the questions above, you will see that most have very little to do with specific functional requirements. The questions you pose here are designed to build a picture of the type of organization you want to be in the future. Improve the organization first. If you don’t look inward first, how can you possibly define how the accounting or ERP system should assist you from a functional or reporting point of view?

As you move this process forward, you are going to start to build a picture of where you need to be in the future. You may also identify opportunities for improvement (problems are no more than opportunities for improvement). Deal with these issues first as any flaws within the organization can negatively affect the effectiveness of the new accounting/ERP system.

As you move forward, please keep in mind the following suggestions.

• Build a sense of teamwork by giving each person, not just the right to participate, but the right to be heard and taken seriously.
• Begin to build a consensus of what needs to be done by holding open-ended meetings with all groups that will eventually participate.
• Start collecting improvement / requirements information from individuals and workgroups.
• Identify the most important factors affecting your success as a unique business, whether they have anything to do with the accounting or ERP system or not.
• Determine what your customers want.
• Critique current system (software and business processes).
• Determine if specific business processes will require substantial improvement.
• Build a picture of the most important functional requirements.
• Build a picture of the most important reporting requirements, keeping in mind the fact that the reports found in most accounting/ERP systems are static pictures of the firm at a single point in time. What you really need is an effective set of business metrics that help you determine where you are and where you are possibly going.
• Keep in mind the fact that your new accounting/ERP system can produce so much information that it may become difficult to identify where you need to spend you time. Consider supplementing your reporting/metrics system with some form of exception management or alerts.
• Consolidate software requirements into a high-level needs definition document that can be used to review potential candidates.

Commitment to the Process

Now you have reached the point where you must dedicate yourself, your employees and your company to the process of selecting a new accounting / ERP system. I’m not suggest­ing this is anything like a holy crusade, but the commitment is similar. This project will consume a great deal of time and ultimately money to bring to fruition. There will be a tendency on the part of some to lose interest. Their participation and input is critical. They and you must support the project until it has been completed. This is the only way to insure the product you select meets your needs, and will be accepted completely by the people who will have to use it.

Summary

This first step toward selecting a new accounting or ERP system sets the stage for everything that will follow. If you don’t give people the ability to contribute toward the critique of your current system and even the organization itself, you may not receive suggestions that could otherwise prove to be quite valuable, and you run the risk of being seen as imposing a solution on people who have not been included in this process. These people may support your final purchase decision, but they could also resist any changes you might make or resist the new system. That you do not want. Create an inclusive software selection process that will generate enthusiasm. If you ask people how you can help them, they will respond accordingly.

Abstract

There are any number of articles that have been written regarding Accounting and ERP Software selection, including several that I have written myself. While the techniques suggested may differ, the success of any accounting and ERP software selection initiative is dependent on the support given to these projects by each of the various groups of people that comprise the organization itself. These stakeholders have the ability to drive an ERP software selection project to a successful conclusion or they can drag a project to failure. If these people possess this level of power or control, what then can we do to motivate them to positively impact this project?

What is a Stakeholder?

Stakeholders are individuals or groups of people within an organization who have a vested interest in a project’s outcome and/or whose support is required to launch an ERP software selection project, drive it forward to a successful conclusion and ensure that the product selected is utilized to its fullest extent.

Short term support for or giving lip service participation in an ERP software selection project is insufficient. Avoiding responsibility for the outcome of a project invites failure. Stakeholders have the power to drive a project to failure just as much as they have the power to drive a project to success.

Who are the Stakeholders and what are their responsibilities?

Depending on the size and complexity of an organization, the number of stakeholders can vary. The question we must address is the role these people play in an accounting or ERP software selection project.

CEO/Owner

Every organization has but one true leader. That person sets strategic objectives and as such requires information generated by the financial management system that helps them measure how well these strategic objectives are being met.

While the CEO/Owner is a stakeholder by virtue of the fact that they need information (and therefore must take an active role in defining exactly what information they require), their role as leader is far more important. Accounting and ERP software selection projects are complex beasts that can seem to drag on forever, particularly if snags develop (and they will!). Even if the CEO/Owner may not be involved in the intricacies of a project, they unwavering enthusiasm and support is required to make sure that other stakeholders understand the importance of the project and participate to their fullest extent.

Software Selection Project Manager

You might question why I didn’t list the CFO/Chief Accountant as the next most important person. While I might believe that the CFO/Chief Accountant is responsible for initiating the decision to switch accounting or ERP systems, the Project Manager is responsible for guiding the firm through the project. They make sure that all of the detailed tasks are identified, that each task is assigned to the correct individual and that these tasks are completed on-time, on-budget and with the correct level of detail,

One critical fact needs to be accepted by every single person involved in the project. The Project Manager has the full support of the CEO/Owner and has the authority to direct the actions of each person participating in the project. I think that one of the most significant reasons why ERP software selection projects fail is that the participants do not respect the Project Manager. One effective method by which this potential for failure can be avoided is assigning a senior manager as the Project Manager’s report-to. This senior manager has the clout necessary to keep the project on track. Hopefully it will not be necessary to use this “powerful ally” to move the project forward, but to ignore the potential for foot-dragging invites failure.

CFO/Chief Accountant

Obviously the CFO/Chief Accountant is a key stakeholder. In most cases they are responsible for initiating discussions that lead to the decision to invest in a new accounting or ERP system. The CFO/Chief Accountant may also be the Project Manager in a small firm. Much like the CEO/Owner they have to be the primary enthusiast, getting people to acknowledge that change is necessary and that the outcome is worth the effort.

While the CFO/Chief Accountant may be a critical stakeholder, there is a potential knowledge deficit danger that needs to be avoided. The production of financial management statements represents only about 10% of a modern accounting or ERP system’s capabilities. Business Process Management, Business Intelligence and Customer Relationship Management represent the other 90%. The CFO/Chief Accountant may be very knowledgeable regarding their current systems, but do they know what’s possible in terms of today’s software capabilities?

While the Project Manager may be responsible for the day-to-day software selection tasks once a project has been launched, the CFO/Chief Accountant must be responsible for educating each person, including themselves. How can you become more effective and efficient (and therefore more profitable) if you don’t know what’s possible?

Of course this may lead to another form of knowledge conflict. While modern business management systems can give firms software driven capabilities they did not have in the past, this doesn’t mean that more capabilities are the best solution. It’s a bit like a kid in a candy store. Too many software capabilities may lead to a monumental stomach ache. In some cases it’s not possible to turn these capabilities off and users become overwhelmed. The CFO/Chief Accountant has to educate all system users with respect to software capabilities while guarding against the selection of these capabilities simply because they exist.

CIO/System Manager

The CIO/System Manager is a stakeholder by virtue of the fact that they are responsible for the system itself and the network that connects users to the system. I am not a big fan of ERP software selection projects that are driven by the CIO/System Manager. While it is true that they will have to “make the system work”, that’s a technical requirement. The CIO/System Manager may have even more of a knowledge deficit than the CFO/Chief Accountant. Certainly their knowledge with respect to the hardware/software infrastructure decision is critical, but they may not possess sufficient knowledge regarding the business management needs of the organization.

There is one additional critical factor that the CIO/System Manager needs to address and of course that is deployment. In the past the decision was easy. Create a network infrastructure that supports the on-premise software application. While that’s certainly one alternative today, there are several other options: hosting and the Cloud. The Cloud is becoming an attraction to many firms, but it may not be appropriate in all circumstances. Maybe some form of hosting might be the most effective alternative. Actually accessing a hosted solution via the Internet is just one variation of Cloud computing. The real question that needs to be answered here is whether deployment method is going to drive product selection or is it going to become an important decision alternative once several products have been identified as best suited.

Sales and Marketing

Sales and Marketing used to be somewhat of an island unto itself, but most firms now are very aware of the potential benefits of an integrated Customer Relationship Management (CRM) system. The real question when it comes to ERP software selection is balancing the needs of the Sales and Marketing department vs. the business management needs of the rest of the organization. Sales and Marketing must support the software selection process, but it cannot drive the process.

System Users

The process of selecting a new accounting or ERP system must proceed from two different directions: top down and bottom up. The strategic needs of the organization and its executive managers must be defined and usually translated into Business Intelligence requirements. That’s the top down approach. On the other hand people need to “do the work” and that translates into Business Process Management requirements. That’s the bottom up approach. Sitting in the middle of these two approaches is our friend Customer Relationship Management.

System Users don’t need information per se. They need to process business transactions (purchase order, sales orders, etc.) and do so efficiently. They also need to be able to easily track business processes that are not being completed on time (track and resolve overdue purchase orders, sales orders, and overdue invoices). If this critical group of people (usually a majority of the total number of people interacting with the ERP system) are not included in the software selection process, two outcomes are possible. It may cost a lot more to process transactions or worse still significant resistance to the new system will be generated.

You cannot force a system on people who have not been consulted in its design or selection. These people and their needs are just as important as executives and managers who utilize the output of the ERP system.

As organizations grow in terms of size or revenue, the complexity of their business processes tends to grow as well. One of the most significant issues many System Users have to face when upgrading to a more powerful or comprehensive ERP system is that the vendor may have created a set of software driven business processes that differ significantly from the firm’s current business processes. Now what do you do? If the Business Intelligence and Customer Relationship Management needs of the firm can be met by the new ERP system, but it imposes a completely different set of businesses processes on System Users, what do you do? You certainly don’t want to ignore System Users for to do so invites resistance that can literally drag down the new system. There is no easy resolution, but awareness of this potential issue and inclusion of System Users in the software selection process is a required first step.

Summary

In the end every person who has any connection with an organization’s accounting or ERP system is a stakeholder. As such they all have the potential to significantly impact the software selection process as well as the utilization of the system selected.

• Every stakeholder must participate in the decision to replace their current business management system and support the project through to a successful conclusion. Any form of negativity endangers the project and the system selected.
• Every significant managerial or operational person is jointly responsible for creating a vision of the future. The software selection project plan then becomes a road map that describes where the firm is today; where the firm needs to be tomorrow; and finally how the firm can most effectively move to this future vision.
• The software selection process must be directional: top down to set strategic requirements and bottom up to set operational requirements.
• The CEO/Owner is the firm’s leader and as such is also the de facto leader of the software selection project. While the CEO may not participate in the project with hands on, they must approve the project, support the project 100% and make sure every other stakeholder participates in the project fully.
• The Project Manager is the project’s administrative manager. Their most important responsibility is the development of an understanding of how a software selection project should be organized for success. Their most critical potential weakness is letting other stakeholders oppose or resist the project. To combat this weakness Project Managers must have some higher level report to person who has the authority to make people do what they should be doing.
• The CFO/Chief Accountant is responsible for the financial management system (not the operational side of the system). Their most important responsibility is developing an understanding of what’s possible in terms of software driven functionality. Without this vision of future potentials, how can you possibly move to a more profitable tomorrow?
• The CIO/System Manager is responsible for evaluating deployment alternatives. They should not run the software selection process. That’s the responsibility of the CFO/Chief Accountant and the selection committee.
• Sales and Marketing is responsible for defining how the firm is going to connect with its prospects and customers. While the selection of an appropriate CRM system is critical to a firm’s success, every effort should be made to select a CRM system that integrates fully with the new business management system.
• System Users make the new system run. They must be included in the software selection process and must feel as though their input matters. Given the fact that the new system might impose a different set of business processes, every effort should be made to evaluate the impact this might have on System Users. A system that seems to be overly complex or demanding will become a self fulfilling prophecy unless the issue is addressed and precautions taken.

Abstract

There are literally millions of small business firms. Many remain small in terms of revenue and complexity. Some grow over time and a very few become large firms with many employees in many locations. While the vast majority of these firms use what I would call an accounting system, the firms that grow significantly might need more functionality than that offered by any small to mid-sized business accounting system. The question these firms need to answer is when should they invest in an ERP business management system?

Accounting vs. ERP

Let’s start by defining what we might consider to be a small to mid-sized accounting system. In general accounting systems process and record business transactions such as paying bills, paying employees, generating and recording sales invoices and recording customer payments. All of these records get posted to General Ledger where income statements and balance sheets can be generated. All of these transactions are relatively simple. Actually all of these transactions can be found in an ERP system.

If that’s the case, what separates accounting from ERP? The difference can be found in the term ERP (Enterprise Resource Planning). “Enterprise” implies that there is more than a single location. While the underlying objective is still the generation of Income Statements and Balance Sheets, the information generated needs to be associated with various physical locations and lines of business. Small business accounting systems can segregate information into categories, but not necessarily with the depth that larger firms require.

“Resource Planning” implies that the system itself supports the decision making process, and that is where small business systems start to falter. If you consider a small distributor or even a small manufacturer, managers are front line planners, using their years of experience and seat-of-the-pants industry expertise to balance supply and demand. The accounting system might give them some information regarding workloads and stock levels, but the day-to-day decisions are based primarily on experience, not data.

As companies grow, workloads increase to the point where individuals do not have the ability to “see” everything at the same time. Their experience is still critical, but the sheer volume and complexity of business processes makes the decision making process overwhelming. That’s where the ERP system steps in to supplement the decision making process. Notice that I have used the term “supplement” not “replace” and maybe that’s where many ERP systems fail.

ERP systems can process vast quantities of data very quickly and that’s what is required. We would like to think that they can be programmed to make business decisions, but this is a slippery slope. We can design robotic cars, but they never seem to reach their destination without wandering off course several times. The same holds true for ERP systems. We can write code that will make decisions, but we have to be careful. Business processes do not lend themselves to straight line logic. Most of the time the process can be relatively straight forward, but Murphy’s Law (that which can go wrong will go wrong) is always lurking. Complex business processes are not always linear in nature and we need to make sure that our ERP system is “supplemented” by human experience and expertise.

Making the leap to ERP

OK. Let’s come back to a starting point. You are a small business that is beginning to grow beyond the capabilities of your current accounting system. At what point should you leap on the ERP bandwagon and if you do so, how high should you jump?

Rather than going into great detail, let’s just raise some questions that should be asked and answered.

• Don’t assume your current system can no longer serve your needs. Many small business products can be supplemented by fairly sophisticated report writers, third party applications and of course customization. Actually your first step should be making sure that your current system is operating on the latest release. Sit down with your local reseller and evaluate your future requirements. If you decide that your current system does in fact need to be replaced, make that decision only after you have evaluated all possible alternatives.
• Anticipate the future. Rather than waiting for an information and functionality crisis, look into your future. While forecasting in this challenging economy is fraught with uncertainty, you need to be proactive when it comes to the information and functionality you “might” need in the future.
• Adopt a learning posture. Although it’s certainly important to listen to what people in your organization say they need, learn as much as you can regarding what’s possible in terms of information and functionality. Most firms tend to be myopic when it comes to functionality. Learn from others in your industry (including your competition). Maybe they know what you could be doing. This doesn’t mean you should blindly follow what others are advocating or doing. Your firm is unique if for no other reason than each person is unique.
• Don’t assume you have to be the best of the best. The fact that your firm is growing and your current business management system might need to be replaced in the not too distant future doesn’t require that you spend $250,000 or $500,000 or more to acquire a top of the line ERP system. Maybe you don’t need all of the bells and whistles. Maybe a top of the line ERP system may be too complex. You need a system that fits within your budget, meets your reasonable functional requirements and does not exceed the capabilities of the people who will be asked to use the system.
• Evaluate middle market solutions. This is a follow on to the previous suggestion. If you are using a small business accounting system, make sure you at least look at products that are more comprehensive than your current system, but less comprehensive that top end ERP systems. This doesn’t mean you should not move to the top end, but do so only after you have determined that middle market solutions are not appropriate. You might be surprised at the power middle market can bring to the table.

Conclusion

As firms grow and become more complex and diversified, the decision making process becomes more difficult. While experience is still critically important, there is just too much going on for one person to assimilate. At the same time the business processes themselves become more complex. Pure accounting systems really don’t “do” business processes and to some extent don’t give manager the level of insight they need. At some point changes might need to be made to move from pure accounting to business management. While the conclusion that something needs to be done may seem to be evident to most managers, the real question is where do you go from where you are today to where you need to be tomorrow.

There are any number of excellent business management or ERP systems available. The real question is what type of system should be purchased (if one needs to be purchased at all). This short article cannot answer the “What product should we purchase?” question. All we can do is ask people to stop and think. Sometimes it doesn’t pay to jump as high as you can. Maybe that’s too high.

Abstract

Given the fact that many ERP software selection and implementation projects fail to achieve their objectives or worse still fail altogether, it’s critical that firms organize the process effectively. One element that needs special attention is the selection of the project leader. Since this person will be responsible for driving the project forward, who should be chosen and what should be their responsibilities and powers?

Introduction

Let’s assume you have decided to replace your current ERP system. Let’s also assume you have justified the decision to purchase a new ERP system. Finally, let’s assume you have secured the critical buy-in from all stakeholders (executive sponsor, accounting/finance, IT, operations, sales and finally day-to-day users). Although each of these individuals and groups will participate to varying degrees, one person needs to be the chief project organizer.

Mutual Responsibility

OK! Maybe that was a bit of a trick question. No one person should be responsible for an ERP selection project. Every person should be responsible for the final outcome and therefore each person must make the “selection”. The only way this project is going to stand a chance of succeeding is for each person to participate equally in the final decision. The key concept here is mutual responsibility.

Each stakeholder or participant has their own exclusive point of view. The IT manager is primarily interested in infrastructure strategy, but they may know nothing about accounting, sales, operations or corporate strategy. The CFO knows accounting, credit management and other finance related issues, but they may not be knowledgeable regarding operations and/or manufacturing. The CEO is interested only in a system’s ability to support strategic planning.

Each person or workgroup will have their own particular point of view and therefore the needs of each of these people must be taken into consideration when making a purchase decision. Please don’t forget each of the many people who will be using the ERP system on a daily basis. They are the ones who have to input data and process transactions. Their needs in terms of system efficiency and effectiveness are vitally important.

The decision to purchase a specific ERP system must be a joint decision, not one made by a single person. No one person has the knowledge required to make this decision. The final purchase decision must be a collaborative effort of all participants, each of whom has the same objective which is the best possible business management system that will help people become more efficient and effective.

Chief Project Organizer

While the Chief Project Organizer will participate in the final purchase decision, their primary function is serving as the focal point for all activities related to needs definition, needs analysis, product demos, vendor discussions, and the final purchase contract negotiations. In essence they are a super scribe.

All information regarding the needs and wants of each constituency (sales, finance, operations, etc.) must be gathered and presented to the selection committee. The Chief Project Organizer needs to collect this information (not to mention making sure that the information is collected in a timely manner), study it, extract the critical requirements information, circulate it to other participants, schedule project meetings, moderate the meeting and help the group schedule next tasks.

While the Chief Project Organizer isn’t the sole decision maker, every other stakeholder needs to accept the fact that the Chief Project Organizer is calling the shots when it comes to driving the ERP selection project forward. Even though the Chief Project Organizer may not be on the same executive level as corporate executives or the CFO and other members of the selection committee, each stakeholder must accept the fact that the Chief Project Organizer has the absolute right to tell them what they need to do and by when.

Summary

The selection of any ERP software product is fraught with danger. The process itself must follow a path that has been previously agreed upon by all members of the organization. The CEO and other executive stakeholders must actively support the project. Each business unit manager must make sure that they create an accurate (and reasonable) picture of where they want to be in the future in terms of features and functions. Each stakeholder must participate in the process, support the process and take full responsibility for the outcome of this ERP software selection project. The Chief Project Organizer is just that; an organizer. They make sure that each business unit has defined their requirements in detail. They collect information and create a complete picture of where the organization needs to be. They keep the project moving forward and they make sure that each person has the information they need to make a sound purchase decision.