8 Tips For Building The Best ERP RFP Document

PostedOn: 2016-05-09 11:55:14

If your company needs a new ERP (Enterprise Resource Planning) solution, there is no better place to start than to create an RFP (Request for Proposal). This document can help you narrow a long list of potential vendors down to a select few in a relatively short period of time. Rather than expenditure the time viewing each vendor and dealing with many different sales representatives, you can utilize an RFP document to look internally and get a better understanding of your company’s wants and needs.

From there, documenting them for the purposes of matching the best ERP solutions is essentially what the RFP’s goal is. In the process, you might even find something to improve on in the company’s processes. If there is any confusion or debate, you can put it in the RFP as a question or open-ended statement you would like the vendors to elaborate on, to get some outside input. Here are eight key tips to keep in mind that will assist you in building the best ERP RFP document for your company.

1. Start With Your Company’s Background

Begin by introducing details regarding your company, including size, revenue, locations, etc. if you are comfortable enough to do so. It can come into play later when you look for references of similar type to you; it also gives the ERP vendors an sympathetic of the numbers to help determine if they want to pursue the opportunity or not.
The key here is to state what you do, how you do, what you want to do, how you’d like to do it, or what you want and need to improve on. Give specifics and details to help create a better picture in the mind of the companies you are sending it out to. Mention if there are any future plans in particular, as well as finding an ERP you can grow with is just as important as finding one that fits right now.

2. Establish Clear Timelines

First, set a date by which you want to receive the responses back. Giving a week or two should be more than enough. If a vendor needs more time, sends it late, or gives excuses as to why they cannot fill it out (such as it is not detailed enough or too detailed), it may be wise to reconsider doing business with them.
Second, determine a timeline for the evaluation process. From the initial selection from the RFP, to the next round of demos, to the final round or final decision. These do not have to be set in stone, but making an educated guess will suffice.
Finally, set a plan for post-purchase to include an ideal time for implementation and training, though this will likely change. This is done so that high level descriptions and longer time gaps won’t come back to hurt you if not accurate. The key is to have something to go off of for future reference.

3. Set A Clear Budget

There are generally three costs for ERP software. The first is the initial cost for each license, next would be the cost for initial implementation of the software, and lastly, there is usually an annual cost for maintenance of the system. Typically, companies will set a budget of X amount for initial costs and let the ongoing be open to a later date.
It wouldn’t hurt to take a look at the company’s cash flow and see what the max is, and budget for slightly under to try and cap it at a comfortable price. With ERP purchases, costs tend to go up, not down. Also, be wary of any ERP with ongoing costs that are outrageously higher than their competitors.

4. List Accurate Criteria for Final Selection

Although you still have a few stages to get through, stating the top priorities at the beginning will be key for the ERP providers, as well as yourself. If an ERP vendor is a fit for most of your wants, but not for the key criteria, they will probably drop out knowing this and not wanting to waste their time.
If it ever comes down to a toss-up, making the final decision based on what is most important would be a good decision. People tend to get caught up in bells and whistles, but keeping these criteria in mind will help you make the best selection.

5. Keep It Short

There is a tendency once you begin the process to put as much information as possible. This is a common error that can be a time intense task that makes little difference. Vendors that are experienced know based on the basics whether or not they will be a fit and can elaborate on their product based on the important pieces. Also, one that is too detailed could defer ERP providers from filling it out, as they have other things to do for their work.

The RFP is meant to be a high level document to review, not a detailed description of the company and its processes. The demo stage is where you get into the lengthy conversations; this is only meant to help narrow the field down, not prep the final candidates. Keep that in mind throughout and it will save you time and resources better spent at later stages of the evaluation.

6. Focus On Needs, Not Wants

Building off of tip #5, this is a good way to keep it short. Before sending off the RFP, check to ensure that it includes both needs and wants. Tailoring it to the needs is critical in narrowing it down to the best fitting ERP solutions. It is better to have it match the needs 50% and the wants 50% rather than the wants 100% and the needs 25%.

Many times, the wants are the flashy, new functions a vendor will add. They may promote or even push it on you as a huge differentiator, which it may be. However, sacrificing the fit of their accounting, production, HR, etc. is rarely a decision that pays off later on. Focus on the core first, then the outliers.

The hard part with the need vs want is determining what constitutes a need and a want. There may be arguments or debates internally, but a conclusion needs to be reached. If it cannot, concede to the highest ranking employee (President, VP, etc.)

7. Do As Much As You Can Without A Consultant

No one knows your company and your processes better than you. Consultants, as much as they may say they are objective and unbiased, rarely are. They get significant money from selling certain solutions by upping the price tag and pocketing the difference. You will be the one to best represent your company’s wants, needs, strengths, and weaknesses in the RFP, as well as the demos and final selection.

Although a consultant’s input can be valuable, use it more as a guide to open your eyes to new ideas and revelations on what you may not realize internally. A fresh perspective can certainly be a good thing, especially if you have been involved for a long period of time; just keep in mind any ulterior motives that might be in the consultant’s mind.

8. Ask For A Similar Company’s Success Stories

This is where tip #1 becomes a major factor. After giving information regarding your company and its background, you can ask for specific examples of customers they have from each. The vendor may want to give names at this point, or they may not. As long as they can give a detailed description, that should be enough. You can get references and other details later in the evaluation process.

In addition, you can ask for success stories of similar companies based on size, final product, revenues, or any combination of data based on what you share. This will also help you see what companies may be geared towards and if your company falls within that range. Or, they may realize that they are not a fit and save you the time of evaluating their RFP.