ERP selection

Our approach to a targeted ERP selection

For many companies, the selection of a (new) enterprise resource planning (ERP) system is a decision that will determine the essential technical and infrastructural conditions for their operational business processes for years to come. Due to the prevailing pressure for transformation, many companies are currently confronted with this fundamental decision, although the individual reasons may vary, e.g:
  • the systems currently in use are getting outdated and run the risk of being taken out of maintenance by the providers soon (e.g. SAP R/3, Navision, etc.)
  • the current system landscape (which has often grown very heterogeneously) no longer meets the increased or changed requirements, e.g. due to strong growth, new business model, etc. or can only continue to be operated with great effort and complexity
  • the existing systems must be "abandoned" due to a planned transaction or restructuring (e.g. carve-out) or a future-proof IT infrastructure is required due to a planned exit (e.g. IPO)
  • the increased internal and external requirements ought to be used as an opportunity to fundamentally reorganize the existing (financial) processes
In order to validate this groundbreaking and crucial decision, it is generally recommendable to carry out a selection process aimed at finding the best solution for the individual requirements based on objectively assessable criteria. In a dynamic market environment, such a process also helps to take current developments into account when making such an important decision.

We support our customers in structuring this decision-making process to ensure that they receive the best possible system for their needs. Based on the “big picture”, we accompany our customers through a holistic view of the systems, create comparability between individual providers and thus also ensure the best possible ROI for such a far-reaching decision.

Our Approach

Our approach can basically be divided into three phases with a total of five steps. However, with the aim of ensuring a lean selection process, this approach can also be adapted or expanded to suit individual requirements.
In order to derive the right steps for the selection of the ERP system, a common understanding of the key factors for ERP selection should first be created:

The initial workshops focus on the individual business model and the associated value creation process that is to be represented in the (new) system. Additional relevant factors and concepts for this initial development of the strategic guidelines include the basic steering model, the reporting requirements and the company's overarching vision.

This will allow to identify and ensure the specific needs and challenges of the company that are decisive for the selection. By defining a roadmap, the timeline and steps for implementing the selection project are also specified and determined.
Once the basic requirements have been defined, suitable software providers can be selected to be considered in the further process (long list). The initial recommendation of suitable candidates is usually based on our market expertise or our assessment of a potential fit, based on the findings from the scoping process. For industry or business process-specific solutions, additional market studies and analyses may also be used to identify further potential candidates. If necessary, however, certain candidates can also be specifically excluded based on defined (knock-out) criteria.

We generally recommend a joint selection of software provider and implementation partner. With some providers, the implementation partner is suggested by the provider itself; in other cases, they can be approached directly.

From our experience, a lean but structured approach for the actual selection process has proven itself. This includes the centralized coordination of supplier inquiries and responses, the definition of internal key contacts, the creation of a Q&A list and the definition of the overall timeline for the selection process (deadline for queries, deadline for acceptance of participation in the selection process, etc.). A standardized tender document such as an RfI (Request for Information) or RfP (Request for Proposal) is also usually still part of such a process. However, in the context of cloud ERP systems with standardized functional scope, the use of extensive lists of requirements can usually be omitted. In our opinion, it is much more important to explain the defined overarching critical requirements of the business model in the tender document to give the individual providers an understanding of the conceptual framework conditions. In addition, a basic initial assessment of the implementation effort and license costs for the scenario outlined in the tender document is usually requested.

After the deadline for participation in the selection process, an initial evaluation of the documents received and, if necessary, a further exclusion of potential candidates (short-listing) is usually carried out.
The remaining candidates on the shortlist (usually software providers and implementation partners) are now invited to present their solutions and demonstrate how they can meet the company's specific requirements. This includes general look-and-feel demonstrations, presentations of the main standard processes, but also specific functional solutions for the company's individual requirements. In addition, the intended implementation approach should generally be discussed. If necessary, further deep dives can be carried out to shed more light on specific issues and key requirements.
The evaluation of the individual providers, both software and implementation partners, is based on the criteria defined in advance. In addition to the functional coverage of the individual critical requirements, these can be, for example, the industry or project experience of the providers, the quality or scope of the consulting services offered, the costs for implementation and licenses or the flexibility for individual adaptations. These criteria should be used to compare and evaluate the various providers as objectively as possible. This usually results in a further reduction of the possible candidates to two or three remaining providers (or provider combinations of software and implementation partners).

For the remaining scenarios, it is usually recommended to calculate a corresponding value case analysis to include the return on investment (ROI) of the new ERP software in the decision. However, the scope of the business case calculation can vary greatly depending on the requirements and available data.

For the final management decision, the results of the evaluation and calculations are summarized, including a recommendation (from the joint project team) for the upcoming selection. If necessary, the presentation(s) for the decision-making body can also be accompanied.
Even after a decision has been made in favor of a new system, we usually continue to support the following steps. Particularly in the subsequent contract negotiations, an independent outside view may be required to ensure that the company's interests are adequately reflected. A review of the statement of work (SOW) ensures that a realistic project scope is agreed that meets the requirements (e.g. number of interfaces to be implemented, functional coverage, agreed hypercare services, etc.).

The project or rollout plan should be defined and agreed on in close cooperation with the providers. This involves defining milestones, allocating resources, and setting schedules. In our opinion, it is particularly important to set realistic and predictable milestones (especially the go-live date) and to consider individual resource bottlenecks (e.g. year-end closing or budgeting phase of the accounting and controlling teams).

Setting up an efficient project organization is also crucial to the success of the implementation project. We support our customers in creating a project organization chart, defining project roles and committees, and putting together the customer's project team. Furthermore, in this phase, the required project infrastructure should already be set up or prepared to ensure the actual start of the implementation project to be as smooth and focused as possible. This includes, for example, selecting suitable project management tools, setting up the corresponding test infrastructures and creating a project manual or guide.

In addition, it is advisable to set the course for successful change management as early as possible, for example by conducting a change impact analysis and defining a holistic change concept for the entire implementation project.
Clear deliverables are derived within the individual phases or steps, each of which represents the prerequisite for the subsequent step and complements each other in a modular approach:


In order to validate the groundbreaking and crucial decision to select a (new) ERP system, it is advisable to carry out a structured selection process. The aim is to find the best solution for individual requirements in a dynamic market environment based on objectively assessable criteria. In addition, the course for a later implementation project can already be set during the selection process and the organization can be prepared for the upcoming transformation project in the best possible way.

Thanks to our many years of experience in ERP selection and transformation projects and our combined functional and technical expertise, PAS Financial Advisory AG is the perfect partner for the structured and targeted selection of your future ERP system. 
If you have any questions, please contact our specialists at any time!
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Frieder Welte
Senior Manager