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ERP Software Selection: Evaluating Software Functionality and the ERP Vendor

Thursday, November 26th, 2009 by Alex Smith

When evaluating various ERP software solutions, scope of software functionality is an obvious priority for selecting the best functional fit for the manufacturing or distribution organization. Software selection teams should evaluate demonstrated software packages in a quantitative manner to determine the ERP system that best meets the organization’s specific software requirements. That being said, evaluating the software vendor, in addition to software functionality, is often overlooked in the ERP selection process.

It is important to analyze the ERP vendor as a company, not just the software the vendor is selling, as choosing an ERP software solution and vendor is a long-term commitment for the organization; in fact, the typical usage for an ERP software package (including future upgrades) can be anywhere between 10 and 15 years. Software selection teams should analyze the vendor’s approach to ERP implementation (Are implementation services delivered by the software vendor directly, or are they outsourced?), customer support (Are support calls answered by the software vendor directly, or are support calls outsourced to a third-party support provider?), ongoing maintenance, software upgrades, etc.  Please note that if you are acquiring an ERP software solution through a vendor’s value-added reseller (VAR) rather than directly from the ERP software vendor themselves, you should be asking these same questions of the VAR.

On a broader level, ERP selection teams should assess the software vendor’s long-term viability as an organization. A good question to ask potential software vendors is if their proposed software solution was developed by the vendor or if it was developed by a different company that the vendor acquired. In addition, selection teams should ask the vendor to provide the company’s revenue-per-employee ratio. In the ERP industry, once a software vendor’s revenue-per-employee ratio drops below a certain level, the vendor is likely to be acquired, resulting in potentially higher maintenance fees for existing customers. For more information on revenue-per-employee ratios and what they mean in terms of software supplier longevity, please click here. Furthermore, selection teams should ask software vendors if they provide a software acceptance period to validate that the selected solution meets the organization’s requirements that were set forth during the ERP selection process.

While these are just a few of the questions to ask potential software vendors, they are critical to selecting an ERP vendor who can deliver superior software functionality and serve as a technology partner for the organization in the many years following software selection and implementation. For additional information, please visit The TGI Difference.