10 Steps To Successful Enterprise Software Selection

10 Steps to 10 Steps to Successful Successful

Enterprise Software Enterprise Software

Package SelectionPackage Selection

millenniumconsulting.co.uk

10 steps to successfully selecting a new10 steps to successfully selecting a new

Enterprise Software systemEnterprise Software system

Organisations decide to select new Enterprise Software packages for a variety of reasons.

Business growth may lead to the need for a more robust solution with wider functionality and

the ability to deal with multi-site, multi-country operations. Legacy systems may be regarded

as old fashioned and lacking in up to date functionality. Corporate acquisition may lead to the

need for systems harmonisation across a group and a new group-wide strategy may be called

for resulting in the need for a new system.

Once the decision has been made to proceed, then the selection process should aim to

identify a product that will provide easy to use functionality, efficient business processes, will

have management approval, user acceptance and a positive return on investment for

shareholders/stakeholders. In today’s challenging economic environment, investment in a

new system can help an organisation move ahead of the competition and although the

implementation process may prove costly in terms of time and resources, the long term

productivity and efficiency gains for the business can be significant.

Package selection is never risk freePackage selection is never risk free

Selecting a new Enterprise Software system can be difficult and time-consuming. Due to the

large number of Enterprise Software products available in spite of recent vendor consolidation

it is not unusual for organisations to select a system that may not completely meet their

needs. This may result in a more costly and lengthy implementation and extra post-

implementation costs. It is estimated that almost 90% of Enterprise Software

implementations run over time and budget, usually due to poor planning and the

underestimation of time and resources required for specific tasks such as data migration.

Project milestones can be overly ambitious, aimed at satisfying the needs of senior

management who will have high, not always realistic expectations. It pays to be cautious and

realistic with these goals during the planning phase to avoid the risk of having to explain later

why deadlines have not been achieved and the system is not immediately able to provide the

expected benefits.

Software implementation projects have great potential for error but once the process has

been started it is advisable to allow them to run their course despite any problems

encountered. It is not uncommon during a selection process for senior management to delay

decision-making or the implementation, as during the process it will quickly become evident

how much time will be required and how much the project will cost. This may make senior

staff reluctant to proceed even if a clear business case has been established. Cost-benefit

analysis can be carried out during the decision making process to establish the savings to be

gained from the new system and the longer an implementation is delayed the greater the loss

to the business in terms of the savings which would be made by using the new system.

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With the right team in place and the correct deployment strategy, the organisation can

ensure they make the correct choice for long term business and user benefit and ensure that

the new system is implemented efficiently, on time and to budget. Selecting the right

software is the first step in a lengthy process and will help prevent implementation problems,

surprise costs and should mean that teething problems are reduced once the system is

operational and should lead to high levels of user satisfaction.

The following 10 step guide outlines the process required to successfully select a new system

and if followed will ensure the organisation selects the Enterprise Software product they need

to meet their specific business requirements.

1. 1. The selection teamThe selection team

First-class project management is the key to success for any major Enterprise Software

change project and the participation of experienced, appropriately qualified change

consultants with he appropriate mix of technical and soft skills and ability to work effectively

with users and the business is a pre-requisite. A team should be assembled to conduct the

project once the business case has been established and the decision made to select a new

system.

The selection team should be familiar with the process including gathering user requirements,

identifying potential vendors, liaising with vendors, attending product demonstrations and

obtaining customer references. The team should include an influential sponsor from the

organisation’s executive management team who will ideally report directly to the CEO and will

have support from fellow Senior Directors and other top managers in the affected business

areas.

The Project Manager should

co-ordinate the internal needs

assessment for the business,

draw together a team from the

business to assist with the

selection process, liaise with

software vendors and manage the

evaluation process. Changing

Enterprise Software is a business

decision and not purely about

technology. The selection Project

Manager will often be the Finance

Systems Manager or a member of

the Finance team, however some

organisations hire externally for

this role so the selection process

is carried out impartially. A

Consultant with a broad range of systems and selection experience may also be engaged to

provide specific product advice. If a third party is used to run the selection process an

in-house Project Manager will still be required to oversee progress and ensure the needs of all

parts of the business are addressed during the selection process. Although using this

approach is less disruptive in terms of the use of internal time and resources, many

organisations prefer to keep selection in house and oversee the process themselves. It is

important to ensure that the external party is completely impartial and has no connection

with the software vendors and it is advisable to seek references.

The selection team should include individuals from all functional areas of the business

affected by the proposed software change. They should be positive about the process and

have a clear understanding of the needs of their specific functional area. These individuals

should be champions of the new system, have good relationships with departmental

colleagues and be able to gather information effectively to help the process and pass on

knowledge to colleagues and keep them informed about the selection process. Employee

input is critical in any large system change project, as employees who will use the new


system daily will play a vital part in identifying current processes that are inefficient or

ineffective and will be able to suggest functionality that will benefit their day to day working

lives. Securing user buy-in for the change process and ensuring they are receptive to the new

system is essential. People are naturally conservative and suspicious of change and may

reject it if the process is not handled well, therefore ensuring user involvement in the process

from the start means that they will be more likely to be supportive and helpful throughout,

will wish to participate in the change process and be positive about the new system once

operational.

It must however be remembered that users involved in the selection and subsequent

implementation process will need a reduced “day job” workload during this period and

additional resources may be required to cover some day to day activities otherwise multiple

demands may have a detrimental affect on the change program and may result in bad feeling

which can put the project at risk.

2. 2. Needs analysis/requirements gatheringNeeds analysis/requirements gathering

It is important to define early-on what the business aims to achieve by introducing a new

system as critical success factors will not only help determine business needs, but will help

keep the project on track and focussed on the most crucial business objectives. If the

business does not know exactly what it wishes to achieve in terms of cost saving, time

saving, streamlined processes, additional functionality and improved reporting processes then

it is unlikely to select the most appropriate system. It can be hard to identify all the features

and functions required from a new system, so it is normally advisable to review current

system functionality, what is used, what isn’t and discuss with users their likes and where

improvements can be made. It is also important to look at the organisation’s future plans to

ensure that the new system is appropriate for these needs.

It is possible to obtain a list of key features provided by software vendors, however at this

stage it is more important to

focus on business process

rather than be distracted by

features which may not be

relevant to the business.

Situations where users spend

most time or have the most

difficulty searching for or

adjusting data are typically the

areas of functionality which

require an overhaul and will

need further investigation. The

business must also ensure that

these requirements are totally

unambiguous and not open to

misinterpretation as vendors

respond to requirements in the

same way and can be compared

‘like-for-like’ without further

need for information requests. It is important also to establish which success factors really

are critical for the project and which are simply ‘nice to have’ if costs and functionality allow,

and these factors should be listed in order of priority. Essential functions such as ease of

integration with current systems which will be maintained or the ability of the software to run

on current hardware (if the business is unable to replace it) should be looked at first as these

factors can instantly disqualify certain vendors. Differentiating standard or basic functionality

available in all software packages from requirements that are unique to the business is also

important as this will separate one vendor from another. Introducing new software should

provide the opportunity to overhaul and improve business processes rather than simply

provide new software to replicate previous processes. Rather than simply introducing a new

system running legacy processes, the business should look to make improvements across all

relevant areas so the new system can take advantage of streamlined, more efficient working


practices. Finally, the software chosen should offer value for money and a positive return on

investment so that in the long term the change will positive effect the bottom line and will not

be so expensive that it creates significant short term problems for the business.

3. Long list of possible software products3. Long list of possible software products

There are various ways to obtain the initial long list of potential vendors and most finance

systems professionals will be aware of the established software vendors and are likely to

have worked with a number of systems themselves previously. But however knowledgeable

the Project Manager, it is important to conduct a proper market review prior to selection to

ensure every option is considered and none are discounted for evaluation. The selection

team may be surprised by the service and functionality offered by the smaller or less

well-known vendors and should not automatically opt for the more established well known

brands. At this stage it is also important not to discount software resellers who may offer

their own in-house developed functionality and workarounds, more competitive pricing

structures and perhaps a more personal approach to account management and support.

Sources of vendors and resellers available can be found using internet search, industry

publications, colleagues, consultants, other industry contacts, conferences and seminars.

Remember that at this and every stage of the process people are vital and communication

should be as open as possible to obtain information from as many sources as is feasible.

44. Contacting potential vendors with requests for proposal (RFP). Contacting potential vendors with requests for proposal (RFP)

Once a long list of resellers and vendors

has been identified and system

requirements defined and prioritised, these

requirements should be clearly

communicated to the vendors in order to

allow them to decide whether their

software offerings meet the requirements.

A Request for Proposal (RFP) should be

sent to each potential vendor asking them

to respond if their software is able to meet

the needs of the business. Vendors should

be challenged with questions related to the

defined critical success factors such as

cost, functionality, customisation potential,

technology, implementation, support and

licensing. It is important that questions are

clear and unambiguous in order to get a

consistent response. Where possible

vendors should respond to each

requirement with a number relating to its availability and this can be used to give each

vendor a score based on the ‘fit’ of their software to the business, although of course this will

not always be possible with all responses. It may also be beneficial at this stage to send an

RFP to the businesses current software vendor for comparison, and it should not be

discounted as by adding some additional modules, functionality or an upgrade it may be the

case that the current software product may be the best fit for the business saving an

expensive and lengthy implementation process. Evaluating the responses to a number of

RFP’s can be a very time-consuming and in-depth process, if the long list is too long, it may

be more practical initially to send out a shorter list of key questions to vendors generally

referred to as a Request for Information (RFI) covering only essential features and major

requirements, to reduce numbers prior to sending out full RFP’s.

5. Initial evaluation and short5. Initial evaluation and short--listinglisting

The responses obtained from the RFP’s can be used to score vendors on the suitability of their

products and how closely they fit the business requirements and this should help reduce the

list of potential vendors to no more than 4 which can go forward for further evaluation. RFP’s

should be assessed quantitatively with a grading system weighted towards the most critical

business requirements and scoring algorithms can be used for assessment. The scoring and

weighting system and any criteria used in the initial selection should be pre-determined dur-


Oracle

SAP

ing the requirements gathering phase so that evaluation is objective and avoids any bias. The

lack of basic features such as critical functionality, the ability of a system that interfaces with

legacy systems or databases may mean that some systems are instantly discounted; other

evaluation processes may be more complex.

6. Attending software demonstrations and call references 6. Attending software demonstrations and call references

Inviting about 4 or 5 vendors to provide an initial pre-sales demonstration is a good start to

the selection process. Vendors will want to spend as much time with prospective clients as

possible at this stage as they wish to establish a relationship but it is probably best to limit

these initial sales demonstrations to no more than 2 hours and ensure that vendors focus on

the most important business issues and do not simply focus on demonstrating the features of

the product they wish to sell. It is advisable to ensure that focus concentrates on the most

business critical requirements and unique customisations or functionality. It may reduce time

to look at initial demonstrations over the internet rather than visiting the vendor or inviting

the vendor on site, although this may not be as sufficiently customised to specific business

needs and there may be less opportunity to ask questions.

Although attending software demonstrations is critical to the process more can be learnt from

companies who have already implemented the system than from software vendor sales

demonstrations trying to gain buy-in. Vendors should be asked for relevant reference

contacts so the selection team can discuss the process they went through and the difficulties

they encountered during the implementation process and they can provide feedback on post

go-live system performance. Preparation is essential when speaking with references and a list

of critical questions should be produced although one should be aware that these

organisations are vendor ‘success stories’ who can be expected to provide a positive

response. It is essential to ask difficult questions about any challenges they faced, any issues

they had with the vendor and any outstanding system problems. Contact should also be made

with similar companies that use the software being considered and it is worth obtaining

informal “off the record” references as these will not

have been selected by the vendor. It is also important

to ensure that references are obtained from

organistions in the same or a similar industry to the

business who will have similar business processes,

numbers of system users and transaction volumes.

7. Total cost of system ownership7. Total cost of system ownership

It is essential that before a final selection is made the

total cost of ownership of the system is fully

understood. Licence fees, implementation and support

costs can be obtained from the vendor or reseller, but

it should be borne in mind that there may be less

costly alternatives for implementation, training and

support including independent Consultancies, new

in-house staff already familiar with the proposed

system or by using the existing in-house team. Other

considerations when calculating total cost are man hours, networking, hardware costs and

communications and these should also be considered when calculating the budget. Often the

hardware used to support the existing system will need to be replaced or upgraded, the

extent to which this will be needed should be investigated and added to the cost as it can

require significant investment that is frequently overlooked. All direct and indirect costs

need to be investigated in great detail, it is poor practice to be surprised part way through an

implementation project and software implementation projects are notorious for exceeding

initial budgets. Internal as well as external costs should be considered including the time

spent by internal staff on the project, distracting them from their usual daily responsibilities is

often disregarded but additional resources may be required to maintain basic business

functions during busy project periods. It is also important to look at the cost of typical

product upgrades post implementation. Most vendors issue regular service packs bug fixes to

add minor functional improvements which may not incur additional cost but if in the long-

term the company can expect regular upgrades then this may lead to additional costs in


terms of licensing, plus time and resources. Companies may choose

not to accept all available upgrades immediately but the business

needs to ensure that they will not be penalised in terms of missing functionality and support.

Future running costs need to be carefully reviewed together with the immediate

implementation and licensing cost as systems which are initially cheap to install may require

higher running costs in the long term. Additional licence costs may also need to be considered

if headcount is expected to increase and pricing structures for different concurrent user

numbers can vary significantly.

8. Prototyping, testing and visiting reference sites8. Prototyping, testing and visiting reference sites

It is important to ensure that any necessary customisation will operate effectively and

creating a prototype or boardroom pilot for testing is a worthwhile way of firstly ensuring that

they work and secondly deciding whether all customisation is required. Workarounds may be

adequate in certain instances and the less customised a system, the easier it will be to

troubleshoot problems and train staff. It is also simpler to upgrade a standard vanilla system

as customisation will not need to be repeated. Vendors will need to be paid for their

prototyping activity but it is a valuable investment as many companies have discovered at

this stage that the software which was previously top of the selection list does not effectively

meet their requirements or do not stand up to rigorous testing. This is also the time to view

more in-depth demonstrations from a more limited number of vendors, inviting them on-site

for as much as a day so that they properly go through all aspects of the system tailored to

requirements. This also gives the business an opportunity to spend more time with the

vendor and establish whether their company outlook and practices fits with the business.

When implementing a new software system it is not simply a question of buying a new

system but also establishing a partnership with the software vendor and a good working

relationship is vital for success. As well as obtaining references it is important to visit at least

one company currently using the systems being considered for selection, this provides

visibility of system operation in a live environment. Talking with the finance systems team

about their experiences with the vendor during implementation and post go-live and most

importantly speaking to the users operating the system on a daily basis, many of whom will

have gone through extensive training and had to adjust to new working practices. Although

reference sites are likely to be the vendors most satisfied customers this should provide the

opportunity to talk frankly about the software, its benefits and drawbacks.

9. Product selection 9. Product selection

The choice of vendor should have become clear during the selection process as perhaps some

vendors were simply unable to fulfil specific business needs or back-up their sales

demonstrations with live sites and client references. If a single vendor at this stage has not

become an obvious choice there are many factors to consider in the final decision, such as the

vendors reputation and track record, functionality, customisation of the software to satisfy

unique requirements, total cost of implementation and ownership, ease and timescales of

implementation, ability to keep up with technology changes and support services available.

The final decisions may in the end come down to the relationship built up with the vendor

during the selection process, if other factors such as functionality and cost are roughly

equivalent. Not every vendor is equally attentive during the sales process and long term it will

not be the sales

team which

manages the

account and

provides support,

however the way

the vendor’s sales

team behaves and

their willingness

and openness to

provide client

references and

information is

likely to be a good


indication of their service levels moving forward. At this stage it is also important to consider

all factors and remember not just to automatically go for the ‘safe’ option, the phrase “no-one

has ever been fired for implementing SAP” is one often heard in the market, despite the

complexity of these projects meaning that they frequently over-run and go over budget. It

may not be the best decision to choose the largest or most well known vendor over one that

may provide a better business fit and service levels at a lower cost. It is important that the

team contributes to the final selection to avoid bias from individuals who may have a

preference towards a certain system due to company reputation, previous experience, or their

own desire to work with a particular product. The final decision should involve all members of

the team in particular those who will be implementing the system and using it post go-live. It

is advisable to consider the organisations future plans for growth and development so that if

the organisation has significant growth plans then these should be factored into the decision

so that the chosen product is scalable, able to accommodate this growth and it won’t lead to

any unplanned additional cost. If the organisation is acquisitive it needs to be determined

how easily new companies can be assimilated using the new product. Flexibility of the

solution is also important so that if the organisation changes then the new system should be

able to adapt or there may be a need to change the system once more to accommodate new

working practices.

10. Evaluation, end user feedback and possible modifications10. Evaluation, end user feedback and possible modifications

When the new system has been selected and fully implemented it is advisable to review the

selection and implementation process as there will always be room for improvement and it is

important to learn from past mistakes. Rarely will everything operate completely as planned

following a software implementation and teething problems are to be expected. It is

important to obtain feedback from users regarding system

performance and it is likely that some changes will be

needed. If the most appropriate product and software

vendor has been selected then the organisation should

receive effective support to resolve any initial teething

problems and the expected business benefits should soon

become apparent.

SummarySummary

By following the 10 step procedure shown above, the

organisation will be well placed to successfully select an

appropriate Enterprise Software system to meet their

current and future needs. Having selected the right system,

the next activity will be to successfully implement it and

that creates a whole new set of challenges. Further

information about how to successfully deploy a new system

is available from Millennium Consulting

(www.millenniumconsulting.co.uk).


Going the extra mile

Millennium Consulting

We are a long established (1995) professional Change

Management Consultancy that helps clients gain competitive

advantage by deploying and re-engineering Enterprise

Software. We establish relations at Board level working with

Project Sponsors, understanding their needs and providing

bespoke resourcing solutions to ensure project success. Our

team are hand picked, experienced, quality-assured Project

Managers and Consultants many of whom have been software

vendor/Big 4 trained.

Our consultants combine deep applications knowledge, well-

honed consulting skills and the ability to work effectively with

clients to introduce change and ensure buy-in. We are delivery

focussed and provide a valuable, cost-effective contribution to

any Enterprise Software deployment or re-engineering

programme.

Millennium Consulting

1 Heathcock Court, 415 Strand, London WC2R 0NS, United Kingdom

+44 (0) 845 604 4262 millenniumconsulting.co.uk

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10 Steps To Successful Enterprise Software Selection