Evaluating Accelerators for ERP deployment

Ever felt the need for evaluating tools that do not come as part of the ERP package you are implementing but can add significant value to your deployment? Are you left wondering what to choose, how to choose and when to choose? Wondered whether there is a methodology for choosing these tools?

These tools are called Accelerators as they enhance the richness and adoption of an ERP product by offering complimentary features and functionalities and thereby influence some or all of the following: 1) increasing deployment speed, 2) reducing cost, 3) reducing the deployment risk.

If you have worked in an ERP Project, you would have seen a plethora of choices when it comes to selecting an Accelerator. The challenges are principally related to understanding what the vendor has to offer, how the product will add value to the deployment and of course the dreaded question - how to calculate the ROI and justify a buying decision. On paper there will be promises of tools offering substantial savings but substantiating these claims with real numbers requires some effort and experience. For when you lift the hood and start going through the details to understand how the ROI can be calculated and a buying decision made you start wondering whether there is a methodology available to help you make the right selection.

The issue is compounded when you have to select multiple tools i.e. create a toolset. Also there is a necessity to use a consistent strategy and a common methodology for evaluation of the tools. It is important to see whether there are pre built use cases/business case recommendation for specific usage. Lastly to establish a governance model to oversee deployment and usage of these tools once the tool selection has been made.

But those are decisions for the later. First obviously is the tool evaluation and selection which is where the below methodology comes into play:

 Data Collection - -> Tool Evaluation --> Tool Finalization

Step 1 - Data Collection

Initial step is to use material provided by Vendors, gather public information available from Vendor websites and have web conference calls with Vendors for a demo which also gives an opportunity to ask questions and get clarifications. Most importantly it gives an idea of what is available vs. what is in the works to be made available on a future date.

The next step in the data collection exercise is to determine the Key Performance Indicators (KPIs) of the tool:

• Can the Vendor provide references where the Product has been used successfully and can you speak to those references?
• Is the tool approved by ERP vendor as a compatible add on and not infringing the base product?
• Stability of the vendor : how many years the tool is in the market, how strong is company financials, etc.?- This is important to ensure there would be sustainable support for product issues during and after deployment

• What is the market saying about the tool - are there positive user experiences/reviews you can count upon? Are the savings real?

You should have a fair idea coming out of this step whether you would like to go to the next stage which is Tool Evaluation.

Step 2 - Tool Evaluation

This probably is the most important step in the entire process. What you need here is really a business case to evaluate and quantify the savings resulting from ERP deployment. The key is to decompose the ERP deployment into measurable elements like phases, activities, parameters and configuration items where the tool is expected to bring savings. For each of these elements the savings can then be calculated by the difference of (a) no. of hours spent not using the tool and (b) no. of hours spent using the tool i.e. (a-b) and multiplying the difference by the labor rate. While (b) can be determined from internal experience the challenge is in determining (a). Besides the nos. provided by the vendor, the best way to determine savings is to use the product in a Pilot and measure the results - this will be discussed in more detail in the next Step.

The evaluation process is relatively straightforward when it comes to hard dollar savings. What makes the process complicated though is when the tool does not provide any quantifiable benefits but only offers soft benefits e.g. risk reduction (legal/compliance risk) or security protection against external threats. It is best in these cases to quantify the risks e.g. additional effort required to fix the issue, loss of time, penalties imposed and calculate the savings for containing those risks.

After the savings have been calculated it is easy to find out the RoI and select the tool (s) that have positive business case. By now you should have a few tools that meet the criteria you are looking for.

Step 3 - Tool Finalization

Now you are in a comfortable situation having evaluated the tools, you should be able to finalize the tool (s) for your deployment.

Critical things to look out for will be

• License price - obviously scores at the top of the list, do you get discounts if you buy for long term/is there any incentive for bundled offering.
• Is there a trial period offered for the product with no commitment to buy at the end of the period?
• Ts & Cs - are the terms and conditions favorable? Are there clauses which need more explanation or legal interpretation?
• How easy is to install and run the product?
• Are there security issues that need to be considered?
• How are ongoing updates maintained? Is there a downtime necessary for updates?

Once these questions are answered choose a few pilot scenarios and deploy the product to see whether actual savings are close to perceived savings. This is where the rubber meets the road - so be careful in choosing your pilot as a close representation of the actual scenario. Do multiple iterations if necessary before you are happy with the results and outcome. Have ongoing discussions with the Vendor to make sure issues are resolved - and get a commitment when they will be resolved if they are not fixed immediately.

Remember you are making an investment for the future so an open dialogue with Vendor will help you not just make the decision now but create a strong partnership model for the future. They will be more than happy to provide insights that can help you create a positive business case and justify a buying decision.

Good luck with evaluation, and drop me a line if you have specific experience to share - I will appreciate that!