• Evaluating Too Many ERP Software Vendors

Here’s a common mistake I see people make when searching for new inventory and accounting ERP software: evaluating too many vendors.  Although it is important to spend time researching different ERP systems and vendors, when you begin actively engaging with vendors – discussing requirements and viewing demos – only a handful of vendors should make the short list; ideally between two and four.   Trying to evaluate any more can result in wasted resources, overwhelmed employees, and ultimately the wrong decision or (more usually) no decision at all.  When it comes to making a decision, quantity does not trump quality – it is better to have more in-depth discussions with a few vendors than to skim the surface with a whole bunch. “Overall, choice overload reduces engagement, decision quality, and satisfaction” says Columbia Business School Professor Sheena Iyengar in her study done on choice.

When you evaluate too many ERP vendors . . .

It becomes difficult to distinguish between vendors and their products.

Although each vendor will offer specific functionality and unique components, the differences between each will become less and less clear the more demos and discussions you have.  Since ERP software inherently has similar base functionality such as inventory management, accounting, and contact management, remembering which system had the better interface, more advanced reporting capabilities and additional features will be almost impossible when looking at, say, 6 or 7 vendors. ERP software is designed to streamline all business processes, which means demos can take up hours (each) without even covering all areas of the software.  A better approach is to keep the number of demos low, with each one spread out over a few days so that there is ample time between each one to discuss and record notes with key employees.

It wears down resources and employees involved in the search process.

Unfortunately many businesses wait too long to begin the process of searching for a new ERP system and so are already stretching their resources by the time they begin the search.  Trying to coordinate and schedule demos with key decision makers and employees is difficult enough when looking at only a few vendors (and it takes employees away from their everyday tasks).   Sitting through multiple demos can lead to employee fatigue and information overload – making the final decision more difficult.

It almost always significantly delays the decision-making process.

According to Dr. Iyengar, having too many choices actually leads people to stall and avoid choosing.  “We choose not to choose even when it goes against our best self interests,” Dr. Iyengar says.  Too many choices can lead to information overload where our brains can’t make a decision because there are too many options.  The decision becomes overwhelming for businesses so they end up making no decision at all.  These feelings can be magnified for businesses with no ERP software experience, coming off smaller, introductory systems.   Dr. Iyengar explains that making complex decisions is made easier when the complexity is gradually increased.  This means that if the first decision you have to make has fewer categories and options (such as choosing a select few ERP vendors to evaluate) than you will be more likely to participate in on-going decisions with each vendor than disengage.

It can lead to the wrong decision based on poor initial research. 

If you are wanting to evaluate more than a couple of vendors it is important to ask yourself why – do you have a good enough understanding of your requirements? Have you set a realistic budget? Do you have an immediate need? Once you have your requirements defined, the first 2-4 vendors that strongly appear to meet your criteria should be all that is necessary to find a great solution for your business.  Certain systems will be eliminated based on your requirements, the industry you’re in, and  your budgetary constraints.  Determining which level of ERP software is best for your business will help narrow down the options as well, and help to ensure you make the right decision without getting lost in the search.

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