Wednesday, June 22, 2011

10 Questions for Buyers of an ERP system.

10 Questions for Buyers of an ERP system.

1)      Financials. How well does the software handle General Ledger (GL), Accounts Payable, Accounts Receivables (AR) and financial reporting.  Are these modules tightly integrated with the rest of the system or is a separate reporting system.

2)      Drill-down capabilities. Do you have the option “see” the data behind summary reporting.  Summary reporting is great to get a quick overview of your financial position, but what steps are needed to see the detail behind the summary.

3)      Sales and order entry. How straight forward are customer sales entered and tracked in the system?

4)      Inventory Control and Warehouse Management. How well is inventory tracked? Does your organization need to manage multiple locations?  What tools does customer service have to manage the relationship between inventory and customers?  Are you including Warehouse Management (WMS) in your solution?  Inventory is basically what you have on the shelf.  WMS is the tracking and management of the movement of inventory, from receipt to shipment.

5)      Integration. The whole purpose of investing in an ERP system is to take advantage of a central repository of information and the efficiency that drives in an organization to reduce operating costs and increase revenue.  Third party solutions often give greater functionality in specific areas like Electronic Data Interchange (EDI), Payroll/HR, Business Intelligence (BI) reporting.  Before investing make sure you understand how the solution addresses your requirements and make sure the entire system integration is seamless and does not create new silos of disconnected information.

6)      Procurement. How well does the purchasing integrate with the rest of the system.  How well does historical demand drive forecasting?  What tools will you have to manage supplier relationships?

7)      Customer Relationship Management. Does the proposed solution include an integrated Customer/Contact Relationship Management (CRM) module?  In reviewing a new solution, you need integration, not separate systems.  Ask the ERP provider how are prospects and leads tracked, managed and converted into customers. How can you utilize this module to proactively market to your customers and prospects.

8)      Dashboards. Just like in the Financials modules, the other modules of an ERP system need summary information with the ability to drill down to the detail.  How easy is it to find key information that you and your managers need to manage your business?

9)      Solution Fit. How well does the software fit with your current infrastructure and business culture? Is there a clear growth path to follow as your business grows?  You do not want to invest the time and energy to upgrade only to find out that you need to repeat the process again in five years.  What changes will be needed to make the change to implement the new solution?

10)   Return on Investment, Return on Value. Before you can calculate any return you need the proper metrics to measure the effectiveness of your current operations.  Know where you are now and where you want to be in a few years.  Evaluating how the proposed solution meets the challenges becomes easier and provides the basis on calculating Return on Investment (ROI).  A more important metric may be to calculate the Total Cost of Ownership (TCO) and Return on Value (ROV).  How much more productive and engaged will your staff be when they understand that they are in control and not just merely keying data into a black hole?

Dolvin Consulting works with their partners VAI and IBM to deliver the right solution.  Contact us by clicking here for a no-pressure consultation.

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