IT Best Practices for Financial Managers

Chapter 2. ERP Software Selection

Johannes Raedeker

Enterprise resource planning (ERP) software offers comprehensive functionality that encompasses virtually all aspects of an organization's operations. Understanding this pervasive coverage is important to realize the full potential of the software and its impact on the success of the organization. This requires a complete and informed decision process that should help identify the best-suited ERP software as well as an effective implementation approach. It also necessitates a significant investment in time and resources involving all parts of the organization to position the organization to best achieve targeted results. And it is not just the final result that matters, but the process through which the organization derives the answer to the selection, as it manifests organizational understanding of and buy-in to the benefits and changes associated with the new application. Conversely, not understanding the importance of this process can pose a significant risk to the organization, as has been demonstrated through many failed implementations, often with devastating financial impacts.

ERP software selection should be a structured process in which a wide field of vendor offerings is systematically narrowed down to a few options through a process of elimination. As shown in Figure 2.1, this is usually accomplished in a formalized approach encompassing five phases. It is critical for financial executives to be involved in all phases ...