The document outlines 10 steps for successfully selecting an enterprise software package: 1. Form a selection team including representatives from key business areas and an executive sponsor. 2. Conduct a needs analysis and requirements gathering process to define what the business needs from the new system. 3. Develop a long list of potential software products. 4. Contact vendors with a Request for Proposal (RFP) to evaluate how well their software meets requirements. 5. Evaluate RFP responses to shortlist the top 4-5 vendors. 6. Attend software demonstrations and call customer references to evaluate vendors further. 7. Calculate the total cost of ownership for each shortlisted software. 8. Consider prototy

1. 10 Steps to Successful
Enterprise Software
Package Selection
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2. 10 steps to successfully selecting a new
Enterprise 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 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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3. 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. The 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
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4. 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. Needs 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
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5. 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 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.
4. 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 SAP
communicated to the vendors in order to
allow them to decide whether their
software offerings meet the requirements.
Oracle
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 short-listing
short-
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-
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6. 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
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 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
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7. 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 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
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
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8. 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 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.
Summary
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).
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9. 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.
Going the extra mile
Millennium Consulting
1 Heathcock Court, 415 Strand, London WC2R 0NS, United Kingdom
+44 (0) 845 604 4262 millenniumconsulting.co.uk