Enterprise resource planning (ERP) systems are described as large and complete packaged systems that are targeted at the integration of business functions and processes. The ERP system is an evolution from the manufacturing resource planning systems and material requirement planning (MRP). These systems cover the typical purposes of the business in organizations, including sales, finance, accounting, human resource, as well as procurement. Companies use the ERP system to effectively and efficiently utilize and manage resources by providing an integrated and complete solution for the information processing needs of an organization (Haddara, 2014). The systems support process-oriented business view and the standardization of business processes across the enterprise. One of the most important characteristics of the ERP is its capacity to incorporate and automate data of an organization and business processes across the whole business in a real-time setting. ERP systems come as a package solution with extended complex interconnected code with standard processes (Haddara, 2014). The pieces of code are usually adapted and improved over a long period of years. Usually, organizations have their competitive advantage processes in place. Nevertheless, several businesses alter their non-standard processes to be in line with the software to take advantage of future updates, gain from the best processes practice, and avoid expensive irretrievable mistakes. Successful adoption of ERP program entails the selection of the right ERP system and an expert vendor (Haddara, 2014). Nevertheless, a wrong selection of the vendor or the system would either fail the project or slow the system and hurdles the performance of the firm. Consequently, the selection of the right vendor is critical for an effective and efficient ERP system project.
Problems when selecting the right vendor
Normally when a business chooses to implement a new software solution, it usually evaluates its internal processes, defines its needs and requests for information, and ultimately asks for proposals for the shortlisting of vendors. The selected vendors are usually invited to show their solutions before bids are placed and the right vendor selected. Regrettably, throughout the entire process, the teams conducting the selection face several difficulties in the projects. That can be due to the great increase in the functionality of the product technical requirements, some criteria that can determine the ultimate success or the new system’s failure are left out (Pelphrey, 2015). For instance, the long term strategy of the vendor, support, and serviceability, financial viability, qualitative and cost measures with regards to market feedback, ease-of-use, process fit, vendor diligence, and flexibility of the product are critical. The explanation of letting go some of them is that they are hard to measure.
Another issue is because of the use of spreadsheets, the most used instrument in grading criteria and the assessing of the functionality of the product. Spreadsheets are well-known for their flexibility and ease-of-use. Nevertheless, they do not have the integrity of data, and are infamous for spreading calculation errors: hidden cells are resulting in errors after moving cells or fields are unintentionally typed over. Disconnected links between sheets can nullify results. Simple errors, like copying or rewriting a formula to a different cell, are common. Consequently, the use of spreadsheets becomes risky.
Another reason is that because of impartial information, reduced access to quality, the methodologies of evaluation are laden with critical mistakes from the beginning. Consequently, at times, it is difficult, if not impossible, to justify the inspiration behind choosing a solution by a particular vendor. Most of the decision makers depend on intuition executive directives or annoying compilation of spreadsheet that do not recognize the finest solutions. Thus most of the business technology assessment run into overtime and accrue costs over the estimated budget in the beginning. When selected in the end, most of these software implementations do not meet the expected purpose, with low ROI.
The accurate check of vendors’ reference
Checking the ERP customer reference of the vendor is the initial chance to make sure that the claims by the vendor are substantiated and not simply advertising. Selecting a fresh ERP solution is among the key decisions a business makes (Pitic, Popescu & Pitic, 2014). It has the greatest potentials for the improvement of business performances. It is appropriate at this stage to conduct a risk assessment, and checking of references is part of exhaustive risk analysis (Pitic, Popescu & Pitic, 2014). Selecting a software according to the inadequate knowledge of implementation track of a vendor may cause a high-risk outcome. Moreover, since the implementation is so critical for the success of an ERP investment, checking of reference should not be taken simply as a formality. There is no doubt that all vendors evaluated will generate a list of good references. However, what distinguishes the good from the bad is the extent to which implementation claims have been evaluated and proven. A well designed and implemented methodology is among the key elements that will help in the effectiveness of the project. The execution timeframe, effectiveness, and cost are of most importance. Some research suggests that more than 90% of ERP programs are not accomplished within the expected timeframe (Hurbean, 2006). Research has also rated the consulting profession as the weakest connection in an IT implementation. There is frequent citation of cost overruns as the reason behind dissatisfaction. Learning from the experiences of other enterprises, where more than 50% of ERP implementations do not meet the expectations, means evidence of effectively implemented solutions should be sought (Hurbean, 2006). Most ERP evaluation “professionals” usually ignore mentioning the need to understand the success rate of implementation of the vendor in the recommendations on how references are checked, which is an unrefined omission.
Looking at the reference of the future ERP partner has to involve considering well below standard level and the typical list of questions. The comparison of function-function identifies a few variations. Great testimonies on the quality and usability of an ERP capability of the system are not adequate. Questions asked during the evaluation phase have also to be implementation-oriented of the track record of the vendor, and his real abilities are to be rated effectively (Hurbean, 2006). There no standards for such a line of questions, but it should have questions like:
• At what relationship phase was the implementation process begun? Was it started in the software assessment and selection process for compatibility testing?
• How well did the vendor comprehend, record, and propose improvements to the current complexities and process of the business.?
• How well did the vendor perform in regards to developing, recording, monitoring, and management of the scope of the project plan?
• What was the level of professional experience, knowledge, and quality of project managers and consultants?
• Which industry specialization did the consultant of the vendors present for the implementation?