[Part Two: Evaluation & Selection Process - Software Selection Project

This is the second article of a three-part series, in which Dr. Davis outlines the activities recommended for selecting an ERP system. In the first part of the series, the Requirements Definition, Dr. Davis outlined the steps completing the Requirements Definition document and its corresponding activities.

In Part Two, Dr. Davis provides the framework for the second phase of a System Selection Project – Evaluation & Selection Process.

You did it! You finally got the management team to define what is needed in a new software system AND you were able to actually get them to agree and approve the Requirements Definition document—your contract with the organization. Congratulations, this is no small feat. Now it is time to take your project “on the road” and see what software solutions are out there. What is the best way to get started? Research, research, research.

The remaining portion of the Selection Project is the most challenging, primarily due to having to manage not only your internal resources, now you must manage the software vendors also. This is no small feat. In fact, as there has been consolidation in the industry and the economy has slowed—okay, stalled; the software companies (developers and resellers) have become more aggressive. As with most sales processes, sales personnel focus on managing relationships. This will interfere with your project—stay away from it—no free lunches, no promo shirts/hats, pens—nothing, until the contract has been signed. Otherwise this will cloud your perspective and make your job more difficult.

Primary Considerations for Software Packages
There are two primary considerations when researching software solutions. First, is the size of your company in terms of annual sales dollars. Second, is the industry in which your organization operates.

In regards to the size of your company, software companies operate in three primary tiers-Tier 1 being the highest level of annual sales (over $150 million) and Tier III being the lowest (under $10 million) This is due to the design of the software packages. The software that is suited for very large enterprises will be a burden for a smaller company. Likewise, the software company that operates well for smaller companies will lack the necessary functionality for larger organizations. As a result, software developers target their functionality to one or two of the tiers. Although many salespeople will tell you they are a solution for all sizes of enterprises, the reality is they cannot possibly be.

The industry within which your organization operates is a critical factor in selecting software. Often the roots of the software development began in a particular industry. Over time, the software has evolved to incorporate additional functionality that now makes it more marketable to other industries. However, the expertise in that industry will always be better due to the developer’s knowledge of the business requirements for that industry.

There are different sources for evaluating software against these two primary considerations. In finding your sources, keep in mind whether the information is provided by the software company or if an independent evaluation has been done of the software. One source I use quite frequently is APICS (The Association for Operations Management). Annually, they will publish a Software Scorecard that evaluates the packages by these two criteria. There are many tools and research that can be done on the internet, just be mindful of how it was developed and for what benefit—your organization’s benefit or the promotion of the software industry.

Requirements Definition
Once you have identified the potential software candidates, it is time to review the software functionality against your approved Requirements Definition Document (see Part I of this series). There is research that can be done with scorecards and tools on the internet but I recommend talking with the software companies/resellers directly at this point. Your definition of a requirement may be materially different than the software company’s. Save time and get clarity by talking directly to the sources. Scale down your search to include not more than 10 software packages (aka – the Long List), otherwise you will be in a perpetual state of research and not get the job done.

It is best to conduct this portion of the research using the Webex function over the internet. In this manner, the software company can demonstrate exactly how the software functions per your requirements. Caution: Do NOT let them give you a “Dog and Pony Show” on the Webex. Instruct them that you only want to see the software perform to the pre-defined requirements. Limit their time to no more than 1 ½ hours or you will lose focus.

During the demonstration, be sure and score how the software performs to each of the requirements. By the time you have finished your last software demonstration, it will be relatively easy for you to look at the scores and decide which are the top contenders for further evaluation (aka – the Short List).

Once you have selected the top contenders (ideally 2 and nor more than 3 software packages), you will be ready to start the formal Software Demonstration Process. This will require the software vendor to perform an in-house demonstration of the software to your requirements for your management team. This is a very important and time consuming process that must be tightly managed until a decision is made. If you think buying a car from a Used Car Salesman is difficult, wait until you embark on this process. This will be covered in detail in my next article “Managing Software Vendors During the Selection Process – How to Manage the Unmanageable” - coming soon.

In summary, by managing the first part of the software evaluation process, you will establishing a solid approach for handling the remaining steps in the Evaluation and Selection Process. It is important to ensure the software vendors understand you are in the “driver’s seat” and that you understand what is required to accomplish your organization’s goals.