Best ERP Selection Process and Criteria

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How To Select the Right ERP: A Guide for C-Suite Executives and IT Leaders

Selecting the right ERP software can significantly transform your business, providing a comprehensive solution to manage all operational aspects. With a multitude of ERP solutions available, the challenge lies in identifying the one that best aligns with your organization's needs. The right ERP selection process requires a meticulous approach and well-defined criteria for vendor selection.

erp selection process

If you're new to the ERP selection process, don't fret! This guide will walk you through the selection criteria, a nine-step Lean Selection Methodology, and considerations around pricing. You can also use this guide as a checklist for your ERP software requirements.

Table of Contents:

  1. Selection Criteria
  2. Functionality and User-Friendliness
  3. Vendor Stability
  4. Technological Capabilities
  5. Cost
  6. Support and Training
  7. Industry Expertise
  8. Implementation
  9. Risk Management
  10. Scalability
  11. Existing Clients
  12. Post-Implementation Support
  13. Lean Selection Methodology
  14. Purchase Considerations
  15. Next Steps

ERP Selection Process

Evaluating potential software like Dynamics 365 and vendors requires a set of fundamental selection criteria. These 11 requirements will guide you through all selection stages to determine if a solution is the right fit for your organization.

Functionality and User-Friendliness

The initial questions to ponder in ERP selection process are: What functionalities does the system offer and how user-friendly is it? What functionalities and level of user-friendliness does your organization require?
Answering these questions will help you assess if the product is fundamentally suitable for your business. This evaluation may be time-consuming as it involves a detailed assessment of your company and the ERP product, but it's crucial for successful implementation.

To better understand ERP software, gather your requirements or compare systems, consider the following actions:

  • Requirements Gathering: Identify the current challenges your organization faces that could be addressed or mitigated with an ERP system. Then, evaluate which system functionalities would achieve this.
  • Consider Business Process Automation: Identify routine business processes at your organization that could be automated and evaluate if the solution has the tools to do that.
  • Examine End-Users: Assess the technical proficiency of your end users, their ability to navigate complex software features, and their previous experience with an ERP system. This will help you determine if the product's user-friendliness aligns with your requirements.
  • Plan for Centralization: Consider the systems you currently use that will need to be integrated with your ERP system and inquire about integration possibilities. For instance, how does the CRM interface with the overall ERP?

Dynamics Partner Stability

Before investing in a solution, it's crucial to evaluate Dynamics 365 Partner reputation and long-term viability. Even if a product has the right functionality, it should be ruled out if the company isn't reliable and stable.
Beyond company credibility, you should review the product's scalability to determine if this can be a long-term investment.

Analyzing vendor stability ensures a robust system and a reliable partner for your business. Consider the following factors when comparing ERP systems and the vendors that provide them:

  • Company Credibility: Investigate the vendor's organizational changes in recent years and inquire about the future direction of their business. Also, consider the age and financial health of the company.
  • Product Viability: Determine how long the ERP product has been on the market and seek customer references. Ask the vendor about their plans for the product's future development and updates.
  • Scalability: Evaluating product scalability requires you to look internally and into the future of your business. Will you need to add users in the future or expand functionality? Does your organization have the potential to expand into new markets? Consider if the system's features can support and enhance your business strategy.

Technological Capabilities

ERP systems are embedded with a wide range of technologies, including business intelligence, reporting, and customization capabilities. You should ask yourself: What technologies does the solution offer, and what technologies do we need?

  • Customization: Assess whether the solution is turnkey or customizable to your organization and unique business processes. If the solution needs to be customized to function, ensure the vendor can fulfill the request.
  • Requirements: Consider whether the solution can meet the technical needs of your organization. For example, can it generate visual, real-time sales reports for presentations?
  • Value: Evaluate whether the ERP leverages the most recent, cutting-edge technological trends and if the vendor plans to update the system consistently. This ensures you aren't investing time and money to implement a system that will soon become outdated.


The cost of an ERP system is a critical consideration, but it's not as straightforward as it seems. The true cost includes licensing fees, which depend on the number of users, the software itself or the modules you select, hosting or hardware, implementation, maintenance, training, and support.
It's advisable to estimate your ROI before signing any contract. Consider the following factors while evaluating the cost of an ERP:

  • Basic Pricing Information: Evaluate the cost of the platform and whether it is appropriate for the functionalities and technologies it offers. True
  • True Cost: Calculate the long-term total cost of ownership (TCO), incorporating all applicable costs.
  • ROI: Estimate whether the projected return on investment (ROI) will significantly outweigh the TCO.

Support and Training

Support and training are essential for the successful implementation and ongoing functionality of the system. The current ERP market offers a wide range of support and training options from vendors.
A comprehensive training plan typically includes access to training videos or documentation, an online knowledge base or user community, and options for in-person training.

Comprehensive support typically includes access to a call center and various online resources. Some vendors may not offer support or training or may outsource them.

While considering these points, it's crucial to examine: What kind of support and training will you receive? What type of support and training do we need? Review support and training offerings, ensure they'll work for your end-users, and establish a clear agreement with the vendor.

Industry Expertise

Industry expertise refers to a vendor's ability to cater to your specific needs. Depending on your requirements, you may find a solution designed specifically for your business type and size.
Working with a vendor that understands your business and allows for industry practices built into the system can provide significant advantages.

ERP Implementation

Implementation is critical to getting your new ERP system up and running. It's important to ask how the vendor will ensure a successful installation. This step will be crucial if you anticipate a complex implementation, such as migrating from a legacy system to a new ERP.
A successful installation plan requires:

  • Finding the Ideal Software: Find the right solution with Lean Selection or another methodology.
  • Planning: Assemble an implementation team and develop an installation plan. Also, assign and carry out project management duties.
  • Data Transfer: Conduct thorough data reviews to eliminate redundant information. Your company information is the foundation of any ERP system unless you start from scratch.
  • User Training: Access and distribute training materials to the designated end-users.
    System Tests and Launch: Conduct system tests to ensure the solution has a suitable interface and performs all your desired features effectively before and when you go live.
  • Post-launch Tasks: Analyze ROI, study employee performance, monitor client satisfaction, and measure other company KPIs to gauge the software's results over time.

Risk Management

Investing in ERP software carries inherent risks due to its high cost, complex functionality, and lengthy implementation process. However, establishing a reasonable budget, accounting for hidden fees, utilizing vendor training resources, and exercising patience can help mitigate these risks and ensure your operations run at maximum efficiency.


Companies often scale up and down. Most ERP systems offer scalability tools to help you manage more employees, manufacturing machinery, warehouses and facilities, and other resources.

Consider your company's growth or downsizing plans for the next 10 years. If you foresee expansion, ask vendors about scalability.

Existing Clients

Ask potential vendors if you can speak with their current clients for additional insights. Other end users can inform you about the system's pros and cons, as well as vendor resources and customer support tools.

Post-Implementation Support

Finally, inquire about the resources and services vendors provide after you go live with their software. Is their support team reliable? Do they offer tiered support packages?

Vendors should not only be proficient in implementation and data migration but also be available for post-installation support in case unexpected issues arise or you have questions about functionality.

Lean Selection Methodology

To provide some additional introductory information, we'll walk you through our Lean Selection Methodology, helping you make the ideal ERP selection for any industry and company size.

This easy-to-follow, nine-stage process helps you determine your business needs, evaluate and compare solutions, validate your technical requirements, and negotiate a significant contract. You can perform this methodology with or without Dynamics Square's help.

Purchasing Considerations

Conducting an ERP software selection process is like buying a new car. It’s a worthwhile investment when you know what you’re looking for to align with your company’s best interests.

Some factors that affect a solution’s TCO include company size, deployment options, department needs, and more.

Next Step:

Conducting an ERP selection is a challenging task. However, when you break down the selection criteria, ERP software selection methodology, and purchasing considerations into manageable parts, it's not so daunting.

Ready to get started? Take a look at our in-depth ERP requirements template to find the modules that align with your company’s practices.

What was your ERP selection process like? Let us know in the comments!

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