The basic aspiration of ERP software is comprehensive support of all business management processes and data in a single system of record. So here’s a question: That being the case, does it really make sense to isolate the evaluation and selection of an ERP system to just an individual or two from finance and IT?
I’d say no—and I’d wager most management professionals would agree—in principle. But theory and practice are two different things; and very often ERP selections are made via ad-hoc processes and without significant input from departmental leaders.
In order to understand the benefits of a more structured ERP selection approach, I connected with ERP expert Alexis Leon for his take on ERP steering committee best practices. Alexis is a prolific technology author and has written multiple books on ERP, including ERP Demystified and Enterprise Resource Planning—both of which have seen recent republications of new editions. Alexis’s blog and books can both be found at AlexisLeon.com.
What size companies should utilize the approach of an ERP selection team?
Alexis: Any company, irrespective of the size, that has decided to implement an ERP system or mover from an old system to a new one should use the ‘selection team’ approach. ERP systems need the support and expertise of people from different fields—from the top management to the end-user. Only a system that these stakeholders have chosen will be successful. So irrespective of the size of the organization, a selection committee comprised of the representatives of the stakeholders is a must for ERP package selection.
Who should be involved in the selection team?
Alexis: This committee should include the ERP implementation project manager, top management representative (preferably the CIO, CTO, or COO), people from the various departments (the functional experts), and consultants (package experts).
Ideally the committee should also include the various representatives of the user community. It can include managers, supervisors, clerical staff, QA people, technical leaders and project managers. All can provide perspective and ensure that their needs are addressed, while providing their own experiences, skill set, and processes to address the three important areas apart from functionality requirements: usability, performance and scalability requirements.
By including the representatives from all the above groups, the selection committee can become very large and decision making can become difficult. This is where the project manager comes in. He is the one who will be interacting with the stakeholders before, during and after the ERP implementation. The ERP PM can discuss the requirements with each group of stakeholders and can voice the suggestions, concerns and recommendations at the selection committee meetings. So he will be acting as a representative of all the groups who are not directly represented in the selection committee.
The ideal size of the selection committee should be between 6 and 8. Including representatives of all the groups will result in a jumbo committee which will not be very effective in making decisions. The ERP PM should get the inputs from whichever group that is not directly represented and discuss with them in detail to find the requirements, suggestions, opinions, concerns, etc. and give them feedback about the decisions made giving them assurance that their interests are also protected. This will ensure their support for the system that is selected.
What is the most important trait of an effective ERP selection team leader: Project management skills? Understanding business objectives? Financial management acumen? IT fluency?
Alexis: Usually the top management representative is the head of the selection committee. He should have all the above mentioned skills but most important is that he should have the power to make decisions. He also should be good at people management as the ERP package selection should be made through consensus rather than by a majority vote. So he should be a good mediator who will give all members an opportunity to voice their views and finally collate those ideas, opinions, suggestions and concerns into information required to make a selection decision. So all skills like PM skills, knowledge of business processes, IT fluency, etc. are good, but the most important things are power to make decisions and excellent people skills.
How can ERP selection teams avoid gridlock?
Alexis: ERP package selection should be done through consensus or it should be a unanimous decision of the selection committee. If it is not, then the people who were overruled will have a grudge about the new package and that is a recipe for disaster. So whenever there is a stalemate, stop and go back to the previous step, discuss more, ask the consultants (package experts) to explain the problem areas and then reach a solution. Discuss the problems that are causing the gridlock and find solutions through discussions, demonstrations and even visits to other organizations to see how they have overcome similar problems and them come back, discuss and resolve the issue. Move forward only after all the members are in agreement and the decision is unanimous.