Technology Group International

Software Selection
Lessons Learned

Copyright 2004 Technology Group International

All Rights Reserved

Software Selection Lessons Learned

Introduction
When engaging in a software selection project, it is a good policy to learn from the
mistakes of others. It is one of the easiest ways to prevent potential issues resulting
during the selection process. Whether you confer with seasoned IT professionals, a
trusted CPA, or an outside consultant, the time invested in the research will be well
spent. This practice will not only save the team time, it will help maintain the projects
budget and thus save money. And in addition to the potential time and cost reductions,
it will help alleviate potential frustration and provide a higher level of credibility for the
software selection team.
The old saying an ounce of prevention is worth a pound of cure holds true even in
searching for and purchasing new business software. Although TGI itself has not
undergone the software selection search, we have worked with a large amount of
companies and consultants over the last thirteen years and we have witnessed many
falter as they move forward in the selection process. So much so, that a list of 30
lessons learned is easily compiled and presented in this document.
We encourage you to take a moment to read through the list of lessons learned and
then review the balance of the Software Selection Tool Kit. The collection of documents
and templates are offered to help provide the smoothest selection process possible, and
even more importantly, to help you find the best ERP software package and supplier for
your organization.

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Top Thirty Lessons Learned
1. Understand the significance of the endeavor at hand and set realistic expectations
for the project team.
2. Meet with key decision makers at the onset of the project to ensure the team
understands the corporations strategic plans.
3. Chose an executive champion and utilize the resource wisely.
4. Chose the right project manager to lead the software selection and implementation
team.
5. Chose the best team members for the project.
6. Establish a realistic and obtainable project budget by understanding all of the system
costs.
7. Establish realistic project expectations for the organization and remember that no
software package can cure a decade of corporate problems.
8. Carefully evaluate tangible and intangible project benefits.
return on investment (ROI) based on those deliverables.

Calculate a realistic

9. Prepare a solid business case which is backed by an accurate ROI analysis.

10. Understand your organizations business processes before defining the new
systems requirements.
11. Listen to the everyday system users, regardless of their level in the organization.
12. Go through a solid and complete functional needs analysis.
13. Chose a software supplier for the right reasons.
14. Prepare and force suppliers to follow a demonstration script. Dont be sold! Keep
score of the teams reaction to the demonstrations.
15. Dont buy more than you need, simply because of the vendors name.
16. Perform supplier reference checks.
17. Ensure the software solution is easy to maintain and enhance.
18. Understand the significance of change management to your company.
19. Communicate progress regularly to the whole organization.
20. Understand the true value of integration.

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21. Look for a technical and business partner in the potential software suppliers. Look
beyond the software package and evaluate the whole organization behind the
software.
22. Make a decision.
23. Utilize the software suppliers expertise and resources.
24. Spend money on training.
25. Limit customizations and the projects scope. Use the 80/20 rule.
26. Identify customizations at the right time, which is after training and initial testing.
27. Clean your data prior to migration.
28. Perform a system pilot, regardless of time constraints.
29. Expect a temporary reduction in employee efficiencies.
30. Understand the project is not over at the systems go live date.

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Lessons Learned In Depth
This section will briefly touch on each the thirty software selection lessons learned and
therefore software selection best practices listed in this document. Further information,
instructions, and templates are available in TGIs Software Selection Tool Kit.

Understand the significance of the endeavor at hand and set realistic

expectations for the project team.
A successful project is one that begins with a solid foundation. If the basis for the
software selection project is unobtainable goals, the team and project are doomed for
failure before they even begin. The team and software cannot change the entire
organization overnight. The goal is to improve overall operations through the new
software, not fix every problem in existence.
In conjunction with the preceding statements is the idea that the new ERP system is a
business system designed to run the operations for the entire organization. This is true
even if you are planning on integrating the ERP system with an existing and external
human resources or payroll package. The entire company must be involved at some
level, even if the project manager believes the department or functional area is outside
the scope of the project. At the very least, this functional area (in this case possibly the
human resources department) should be consulted for required interfaces and
requirements with the system.
In summary, it is important to understand the project will touch virtually every aspect of
the organization, although it will not be able to correct every business problem in
existence. Trying to accomplish too much will bog down the team, while not involving
enough individuals will allow critical elements to be overlooked. The project definition
requires balance of the organization.

Meet with key decision makers at the onset of the project to ensure
the team understands the corporations strategic plans.
For the ERP software purchase to result in a successful implementation, it is vital to
start with the executive staff of the organization. This C level of management includes
the decision makers and as such, they need to understand the full scope and size of the
project. These individuals are also the leaders of the company and those individuals
making strategic decisions for future business activities. The new software package
must be able to accommodate the future plans of the executive staff and manage any
resulting business requirements.

Chose an executive champion and utilize the resource wisely.

The larger the organizations size, the greater need for an executive champion to act as
a C level advocate of the software selection project. This individual will serve as a
mentor and sponsor for the group. He or she will also be an invaluable resource in the
event the team struggles with difficult departments or managers.
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Chose the right project manager to lead the software selection project
and implementation team.
Many times a company will default the program manager to the IT manager or director.
Although this individual may be knowledgeable in the systems technical requirements,
he may struggle when it comes to functional requirements. The organization must
decide the best overall individual to lead the team based on a number of factors.
Another problem many companies run into is the longevity of the IT personnel and their
predisposed opinions to new technology. Many new ERP systems involve moving the
organization to a new technology platform. This is very difficult for a seasoned IT
person who has experience with only one technology or programming language. Even
the most open IT person can be hesitant to leave his comfort zone to quickly adapt to
the newest technology or industry buzzwords.
Finally, the project manager must be able to multitask and interact well with people. He
will be forced to interview various department heads, potential suppliers, and conduct
meeting upon meeting. If these tasks are not among the new project managers forte,
possibly the wrong leader was chosen.

Chose the best team members for the project.

The better the project team members, the better the projects results. Having
knowledgeable, team oriented people on the project will be invaluable for success.
Remember the following criteria for selecting team members:
Chose Members Based on Knowledge and not Tenure
Keep the Group Size Between Five and Ten People
Identify Not Only the Team Members, but Departmental Back Up
Representatives
Chose Members That Can Dedicate the Time Required for Project Participation
Chose Members that are Well Liked, Well Known, Considered Knowledgeable,
and Respected within the Organization
Chose Positive Individuals Who Welcome Change

Establish a realistic and obtainable project budget by understanding

all of the system related costs.
To obtain project approval, a business plan is needed. To create a business plan, you
must perform an ROI analysis and an anticipated payback period. A critical element of
these calculations is the IT budget. Thus it is difficult to go very far in the project without
a complete project budget.
The budget must be well prepared and accurate. Most CEOs will consider the project a
failure if the team comes in over budget or fails to obtain the projected ROI. Dont allow
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yourself to rush through this step to get something on paper. Make sure you have all
the elements necessary to select, implement, and run the new software and system.
Take a moment to review the Budget Worksheet in the Software Selection Tool Kit to
ensure your team is capturing all aspects of the IT project.

Establish realistic project expectations for the organization and

remember that no software package can cure a decade of corporate
problems.
All too often, companies view an ERP system as a cure all for an organization. Even
more often, those organizational pains that need curing have taken over a decade to
create. The best ERP system cannot cure all the ailments of an organization overnight.
It doesnt matter how good the package and supplier are, they just cannot accomplish
miracles. If this misconception is the basis for the selection project, the project will be
deemed a failure. It is important to maintain realistic objectives and project these
expectations to the organization prior to the supplier selection, during the
implementation, and into the post-live environment.

Carefully evaluate tangible and intangible project benefits. Calculate

a realistic return on investment (ROI) based on those deliverables.
Once expectations are in order, anticipated project benefits can be defined and
evaluated. These benefits will be both tangible (monetary) and intangible (subjective),
although only the tangible benefits easily fit into an ROI calculation.
Be careful not to underestimate or overestimate the possible benefits derived from the
new package. If you are unfamiliar with realistic improvement rates, ask your potential
suppliers what they have experienced with similar clients in the past. A good supplier
will know this information and have it available for discussion. Take a moment to review
the ROI Calculation Worksheet in the Software Selection Tool Kit to help your team
calculation your potential ROI.

Prepare a solid business case which is backed by an accurate ROI

analysis.
A business case is required to communicate the projects direction, provide high level
information such as the projects objectives and deliverables, as well as communicate
the projects budget requirements and potential ROI. It is the primary means of
obtaining executive support and funding.

Listen to the everyday system users, regardless of their level in the

organization.
Frequently a project manager will meet with the department head to determine the
systems functional requirements. Although this is a good start, it is not the end of this
discovery stage of the project. The best manager will never know every minuet task his
individual employees perform throughout the day. If he has surrounded himself with
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good employees, he really doesnt need to know all of their daily tasks. For this reason,
the department head is incapable of providing all requirements for his functional area.
Time and thus formal interviews must take place with the lowest level employees to gain
insight on their day to day activities. A super user for each department should be able
to provide an overall view of critical must have features in the software, as well as, a
wish list of desired features for operation improvements.

Complete a thorough functional needs analysis and create a hot

button check list of must have requirements.
The requirements definition portion of the selection process is crucial to successfully
purchasing, implementing, and utilizing the new software. Supplier demonstrations can
only be effectively reviewed if the team understands the requirements going into the
demonstration and literally sees the supplier demonstrate those requirements within the
potential software package.
Many companies enter into software selection projects, without fully knowing the true
needs of the organizations users. These companies will inevitably fail, because the
projects goals were never clearly or properly defined.
TGI offers a 1,100 plus Functional Requirements Template within the Software
Selection Took Kit to help define and communicate they requirements to your potential
suppliers.

Understand your organizations business processes before defining

the new systems requirements.
Before the project team can document the requirements analysis, it must have a basic
understanding of how the varying departments interact and how the basic business
operations flow. Without fully grasping the depth of the companys processes, the team
is certain to skip critical and must have requirements. By taking the time to review the
overall business operations, the team will also have an opportunity to evaluate and
define needed operational changes for ongoing process improvement.

Chose a software supplier for the right reasons.

Choosing the best software supplier and package is a career making decision for many
project managers. The due diligence involved in it must outweigh everything else in the
process. A savvy project manager will not be misled by a software suppliers name
recognition, smooth sales representative, or glitzy sales presentation. A knowledge
project manager will compile a list of deliverables for the suppliers and objectively weigh
the suppliers individual scores to select the top supplier and package for the
organizations needs.

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Prepare and force suppliers to follow a demonstration script, so the
team can score each suppliers presentation.
Dont be sold! You can only be sold if you allow the supplier to run the demonstration
their way. If the supplier presentation follows a concise demonstration script,
evaluating the suppliers should prove relatively easy. The team will be able to review
the supplied script and judge how well the supplier addressed each key element of the
script. At the end of each on-site demonstration, have the individual team members
review the suppliers handling of the demonstration script by answering a list of critical
questions.
To assist in this state of the process, TGI offers a Demonstration Script and Scoring
Sheet in the Software Selection Tool Kit.

Dont buy more than you need, simply because of the vendors name.
As more and more top level ERP supplier venture down to the small business market,
small business owners are reaping the benefits. Okay they reap the benefits for a brief
moment.
These larger software suppliers are reducing their software license fees to make their
product offering more reachable for small businesses. The downside to this policy is
the purchaser is forced to endure long implementations and pay exorbitant fees for
services they really dont need. This is because the packages are bundled with much
more functionality that is needed and because the package itself is not meant for the
small business environment. This may appear like an opinion, but it is certainly a
general opinion in the marketplace. Surf the internet for a few minutes and you will find
story after story of companies over buying with software and overpaying for
implementations.

Perform supplier reference checks.

Although it is difficult to view everything you would like to see in one day, an on-site
reference check will be worth the time spent. In the end it should either validate the
teams decision or provide enough questionable information to force the team to rethink
its top supplier choice. Regardless, the on-site reference check is invaluable and
should be utilized in calculating the suppliers overall score.

Ensure the software solution is easy to maintain and enhance.

Not only must the software be functional, your IT department must be able to maintain
the software and manage future upgrades. As companies venture into new technology,
a comfort ability factor becomes very important for the IT staff. Purchasing a large
system that is unmanageable for the IT department will quickly introduce a chaotic office
environment. When choosing the new software package, the IT staff needs a minimum
level of comfort with the system and technology. If the technology is new, the existing
IT staff needs to be able to obtain training on the newly purchased technology. The
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systems architecture must be supported by a widely used programming language. A
common programming language will allow the IT department to easily obtain continued
education and training outside the software suppliers service offering.
If you chose to outsource the system maintenance, you need to ensure the general
management team is comfortable with the software developer or VAR. Remember that
these individuals will be the ones you will turn to for modifications, upgrades, or
emergency assistance should disaster strike. You need to be comfortable with both the
product and the people behind the product.

Understand the significance of change management to your

company.
Moving forward with new software without recognizing the major organizational changes
which must occur will certainly result in an unsuccessful project. Implementing a new
ERP system represents a huge change for the organization. Forgetting to manage this
change is the downfall of many well intentioned project managers.
How can you manage the change effectively? By building a solid business case,
obtaining executive support, engaging middle management, instilling middle
managements ownership in the process, and communicating the projects goals and
process to the organization.

Communicate progress regularly to the whole organization.

As mentioned earlier, communication is an important element in gaining organizational
support and backing for the project. Employees can only engage in the project if they
know what the project entails, how the project will affect them personally, and at what
status the project resides. Communication can be effective in as simple of forum as a
corporate e-mail. What is important is that the organization receives informative and
positive communication throughout the process.

Understand the true value of integration.

ERP systems are about integration. Achieving the most bang for your buck in an ERP
project requires a focus on maintaining integration throughout the companys
operational processes. This is true even for offline business processes that are many
times overlooked or ignored. If the business process is an ongoing procedure that will
continue to go on in the future, it is worth considering integration.
Many ignore integration as a cost savings in the project. Unfortunately, the errors that
result due to human intervention tend to more costing than the cost to integrate.

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Look for a technical and business partner in potential software
suppliers.
As the project manager, you need to look beyond the software package and evaluate
the whole organization behind the software. Do you like the management team? Are
you comfortable with their implementation plan? Do you feel the supplier possess the
knowledge to help your organization reengineer bad business processes? Do you feel
comfortable with the suppliers maintenance and upgrade policy? Are you comfortable
with the organizations future technology plans?
The software supplier will be a long-term business partner and needs to be evaluated
as such prior to selecting a software package. Look past the fancy sales presentations
to look at the people and how they fit with your organizations environment.

Make a decision.
There are a small number of companies who spend a great deal of time and money
reviewing potential software packages, only to decide to do nothing. A few years pass
and these same companies perform the same process over again with the same result.
They chose to do absolutely nothing.
Sometimes these companies even fall under the disbelief that they can internally write
(code) the same functionality the major packages offer and do so for much less money.
It cannot happen. Major ERP packages have millions upon millions of lines of code and
been developed over a number of years by multiple, highly skilled programmers. It
cannot be duplicated internally for less money and with less strain on the organization.
What is even more unfortunate is these same companies are significantly behind their
competition technically speaking and fail to recognize it.

Utilize the software suppliers expertise and resources.

When purchasing software you are spending thousands of dollars to purchase another
companys expertise. Do not fall into the trap of assuming you know more than the
supplier 100% of the time. It is not the case. If the software supplier is good, the firm
will learn your business and help you become more efficient and more productive
through their software package. Not taking advantage of this knowledge bank is a
waste of your own money, as well as your time.

Spend money on training.

Youve spent money on the new software package; now spend the money to train your
employees to use it to its fullest capacity. If you dont educate the front line users, you
will never gain the full breadth of the package and its offering. ROI is compromised,
employees are frustrated, and business operations do not improve at the rate they
should.

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Train at the onset of the implementation, during the implementation, and after the
implementation. The few thousands of dollars spent on extra training will be repaid in
full time and time again.

Limit customizations and the projects scope. Use the 80/20 rule.
Another reason companies tend to encounter problems with ERP implementations is
due to an excessive level of modifications performed. Although almost all companies
customize their newly purchased software, it is important that over customization does
not occur. Performing unnecessary customizations tend to make projects run late and
over budget.
The old 80/20 rule holds true with this part of the software implementation. In short,
20% of the standard software package should accommodate 80% of the companys
required functionality. If an out of the box version of the software doesnt cover at least
80% of the core functionality needed, you are looking at the wrong package.

Identify customizations at the right time, which is after training and

initial testing.
Many times the project team is so focused on meeting their anticipated go live date;
they rush into identifying required modifications in the software. Although this may
seem harmless, it is a primary factor for organizations missing their go live date and
running over budget.
If the team focuses heavily on how they currently perform a specific process and in turn
attempt to structure the system to work exactly as they currently operate, they will be
missing potential operational advantages the new system offers. This is simply
because they will be focusing on rewriting the software to do business in a status quo
type of mode, instead of reviewing possible alternative ways of running their operations.
That being said, there is a time and place for modifications. That time and place is after
training, when the users fully know how the system operates.

Clean your data prior to migration.

What goes in must come out. Bad data in will equal bad data out. In the world of highly
integrated ERP systems, poor data migration quickly snowballs into a mound of
operational errors and a literal nightmare for employees and customers. The time spent
cleaning up existing data prior to migration will not only yield a much smoother
implementation, it will make the entire process much smoother for your customer base.

Perform a system pilot, regardless of time constraints.

Regardless of what your timing plan tells you, you do have time for a system pilot.
Regardless of what you CEO tells you, you do have time for a system pilot.
Customers deserve to receive your products and services on time. They deserve to
receive what theyve ordered. Failure to adequately test the system will produce a
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ripple affect of errors after go live.
retaining your valuable customers.

A week of two of piloting the system is worth

Expect a temporary reduction in employee efficiencies.

No matter how good the new software operates and how knowledgeable your
employees are, the staffs operational efficiencies will be hampered shortly after go live.
The organization needs time to adapt to the new software and get used to the new
business processes. Understanding this and preparing for it, will invaluable.

Understand the project is not over at the systems go live date.

No implementation, however smooth it has gone, is fully complete at go live. Allow the
team and users time to adjust to the new system, invite the supplier back for additional
training, and tweak your processes a bit more. This is continuous improvement and is
the basis for world class organizations.

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Conclusion
Hopefully at this point, you feel a bit more confident about the endeavor you are
undertaking. As a member of the selection team you are researching your project prior
to fully engaging and you will be rewarded for your efforts.
As stated previously, TGI offers a number of documents and templates in the Software
Selection Tool Kit. We encourage you to utilize this free resource in your selection
process.

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