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Putting together a successful ERP tender process

THERE WILL BE A variety of business reasons behind a firm’s decision to invest the time, resources and budget into selecting and deploying a new enterprise resource planning (ERP) system. As existing platforms become outdated and obsolete, staying afloat in a fiercely competitive environment may prompt a desire to find more profitable and efficient ways of running day-to-day processes. This often leads to business owners looking for a comprehensive ERP system that will unite the departments across its firm to improve control and boost bottom line growth.

But with so many ERP products on the market, what’s the next step for a professional services firm looking to upgrade its current infrastructure? And how can you make sure you choose the most suitable platform that will deliver positive business outcomes?

Putting it simply, all successful ERP installations start with the same thing: A well thought out ‘request for proposal’ document (RFP) that clearly states your expectations and requirements, giving you maximum benefit and return on investment across your entire business.

But, unfortunately, many RFP’s compromise the end result of an ERP installation because they have been hurried, ill-researched or omit crucial information. The good news is, however, there are ways of approaching the document that will ensure the most favourable outcome for your firm, making its development worth that little extra time and attention.

Essential groundwork

First of all it’s important to identify your project team that will be involved in the system’s deployment from the outset, with the aim of capitalising on the knowledge of employees who have a broad experience of different systems, or perhaps who have recently been involved in a similar project in the past. Your firm is likely to be a hot-bed of specialists across a range of faculties including project and client management, finance, marketing, HR and sales; so dig deep to find the particular individuals who can provide the most value to the project.

Each person in the project team will provide a window into the idiosyncrasies of their roles and departments, giving valuable insight into key business processes such as project administration, resource and employee management, time and expense recording, accounts payable and receivable, cash management and client management.

Use them to find out where data is being duplicated and what systems are currently being used for what purpose. Ask them if a single system could be used to bridge the gaps, identify bottlenecks or areas where the chance of human error is increased. Find out what the employees in each department think about the day-to-day processes, what’s working for them, and what needs improvement.

Canvassing opinion across your organisation in this way – from bottom to top – will get your new system initiative off to a good start and represent the views of key staff. This also involves identifying key senior stakeholders in your organisation and ensuring they are involved with the consultation process, potentially as part of a ‘project board’.

Benchmarking ‘success’

This project board will be integral for establishing the system’s key criteria and shaping an all-important return on investment (ROI). It’s particularly important for the potential vendors to know as much about the anticipated ROI as possible and so quote figures and timescales in the document – including how you intend to benchmark the ROI. This will not only help align your firm to a robust set of objectives and avoid disappointment at a later date, it will help the vendors assess the viability of delivering to your requirements within any given timeframe.

Market research

It’s important to conduct an analysis of the market place before deciding which vendors you will approach to be involved in your procurement process. It doesn’t matter how good your RFP document is, if you don’t go to the right vendors your needs will not be met. Drawing up a short list doesn’t have to be complicated. You can often start by looking at the systems your competitors are using, talking to industry analysts, reading the trade press, and doing the requisite Internet search. A useful preliminary step is to distribute a simple ‘request for information’ document to potential vendors before sending out a detailed RFP with your full set of requirements. It will help you identify the strongest players and exclude any that do not meet the most basic of your requirements or cost expectations.

Creating your RFP

With the internal collaboration and market research complete, the next stage is to create the physical RFP document. Ideally, it should be presented in a way that puts the onus on the supplier to come up with innovative and creative ideas and responses to help you identify improved business outcomes. With this in mind, avoid asking too many ‘closed’ questions, because, after all, ERP suppliers are trained to say ‘yes’. Instead, opt for open-ended questions and statements that demand detail from the supplier about how they would satisfy your firm’s needs.

Use the document to clearly establish the key assessment criteria. The list can include price, timescales, and the level of support on offer or the systems flexibility/suitability. Of course, all of these key criteria are likely to matter to your firm, but be specific. What matters most?

Broader issues

As well as the detail, include information about the reasons behind the systems change. This will also help the potential vendors understand what is driving your firm’s desire to upgrade its system. Tell them about your firm’s strategy, aspirations and future plans. For instance has the investment been prompted by a particular business process that is letting the project cycle down, or have you plans for an acquisition or international expansion that will require greater visibility and control across all operations?

The more they know, the more vendors are able to provide added value by drawing on their own experience and knowledge of your industry, bringing a fresh and valuable viewpoint that may otherwise be missed. Also ask them to illustrate their expertise in your specific market place if this is indeed important for your firm. Remember that your ERP will become part of your core business solution and the tender process warrants selecting a partner to help you drive your business forward. Their role will be far more involved than that of a transactional supplier and so it’s vital to do your research to get the best fit.

Ensuring objectivity

The most effective way of gauging an ERP system’s suitability is to adopt an objective section-by-section marking system, weighting each area and requirement by how important it is to your business. As it’s unlikely that one system is going to tick every box on your functional requirement wish list, marking requirements as either ‘mandatory’ or ‘desirable’ helps vendors focus on the areas and expectations that matter most to your company. It also means you’ll get a faster, more relevant response. Providing adequate space alongside each requirement in which to indicate their system’s capability – and to what level (i.e. with full or partial compliance) will make it simpler to compare responses later on and easier to decide upon the best system for your firm.

Evaluating responses

Once you have issued your RFP, give adequate time for responses. Your primary objective is to select a business partner for many years to come and not to just go with who can respond the fastest. Make sure the aspirations and future roadmaps of your business and potential vendors align. Allow for an open dialogue where your vendors can ask plenty of questions – ideally in a face-to-face environment. This will also give you a valuable chance to evaluate the business rapport and cultural fit between both entities.

Finally, when evaluating the responses, be scientific: Include scenario based testing as part of the evaluation and always follow up on references.

Ask the vendors

Explicit insight into the forces behind a firm’s decision to install an ERP and a level of context will bring the most valuable responses from the vendors; and a strong, detailed and focused document will play a big part in providing you a system that will deliver company-wide business benefits. But if you want to make sure you have included everything you need in your ERP RFP, then why not speak directly to the ERP vendors themselves? With the benefit of their experience, they will be able to reassure you that you have covered all the necessary criteria you need for a future-proof system that absolutely fits the bill.

Fergus Gilmore is managing director of Deltek UK


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