Businesses of all sizes and industries will inevitably be faced during their lifetime with the challenges of selecting a new system. Be it CRM, ERP, HRMS, BI, SCM, EPM or any of the many applications used within the business, the selection challenges are the same.
There is an inherent complexity to the process that is born out of the fact that many factors are at play during the selection as well as there being multiple criterias to consider.
Factors that influence the system selection process
The size of the business will have a direct and indirect influence on the selection process because larger business by their very nature will have a higher budget than smaller ones.
Larger businesses tend to make decisions slower than their smaller counterparts because of the greater numbers of decision makes and stakeholders.
Because larger businesses would typically have more than one or two systems and would have been around longer than smaller businesses, they therefore would have been through the process more times than smaller businesses. This is not to say that this confers an advantage in any shape or form.
The stage at which the business is in its life cycle plays a huge part in the selection process. As is with the size of the business it’s stage in its life cycle typically has a direct proportionality to the available budget.
An early stage business or start up can make do and will generally make do with the closest affordable system that functions, it may not be optimal but at the early stage most businesses don’t care, they will deal with being optimal at the next stage of their life cycle which is growth.
At the growth stage business will generally be looking at selecting a system that is scalable, they do not want to be bogged down with another selection process in the next year or two as the focus is on growth unconstrained.
At the established stage of a businesses life they will be looking at a system to provide a competitive advantage as well as enable the business to optimize its processes so that it can eek out every little of profit from the available resource.
A cute example of this would be a hotel using an EPM solution such as PBCS or Anaplan to decide whether to make 30 rooms available to business agents or online brokers the week before labour day.
The budget, as indicated in the previous paragraphs budget can and invariably will be a determining factor in the selection process. The interesting thing to note that this determination can be just as restrictive upstream as it is downstream, in that a smaller business will not even entertain an enterprise solution such as SAP or Oracle because of budget constraints.
At the same time larger businesses may not even consider a smaller application that meets the requirements if there is a comparable enterprise solution available even if it’s pricing is significantly higher.
When budget is considered most businesses are usually aware of the obvious and direct costs e.g licences, hardware (if any in this age of SaaS), training, support, however there are hidden costs that very rarely taken into account for example ramp up time, the time it takes the workforce to get used to the new application which inevitably takes away from business as usual activities.
The route cause of a system change will also have an impact on the selection process. Business normally undergo a system change or selection for different reason.
1. The current system is out of date: If the businesses core CRM or ERP application is not able to connect via API with external applications, then it’s time for a change.
This decision can either be self realised by the business proactively, or reactively to competitors or auditors calling out the fact.
2. Divestment: The business has just been spun off and will therefore no longer have access to the ex parent business systems, in some instances where this is offered on a continuous basis the business usually has to pay for it usually pro rata by number of licences.
Most business are normally against this as the cost is normally to expensive, due to the fact that the ex parent business would have been using a larger application which would be overkill for the business.
Most small to medium sized business can have a tendency to always try to select and implement a solution within a 12 month period, taking into account whenever the businesses year end is can lead to added pressure to make a selection quickly.
Divestment is another scenario where the business has either a real deadline or a self imposed deadline to find another solution quickly.
Businesses do not hold biases in favour of one or another CRM or ERP application, but people do. Individuals within businesses will bring to the table experiences from previous employers good or bad, individuals are highly susceptible to marketing and advertising.
In line with the theme of life cycles, depending on the stage of career that an individuals is in, especially decision makers objectivity may be thrown out of the window completely and quietly.
Vendors and implementation partners are critically important factors in the selection process, they can positively or negatively impact the process for many reasons, below are some examples.
1. The application is right but the vendor presentation is wrong, in this scenario for whatever reason the vendor is not presenting the application in its best light. perhaps the requirements were not properly understood, or perhaps there was focus on the wrong features, either way this could be a lost opportunity for both business and vendor.
2. The application is not right and the vendor presentation was misleading. Be it deliberate or not, an over zealous sales person or an incorrect understanding of certain terms for example fully integration being conflated with real time integration can lead to an erroneous selection.
There are many other factors that affect system selection e.g. selection methodology which will have an impact on the overall process that haven’t been covered here but they all play a part in the process.
The true complexity in the process arises with all these factors having a an impact on each other. We will follow up this post with a second post focusing purely on selection methodology with exact steps to take.
Please let us know what your thoughts are in the comments section below.