Importance of ERP Implementation in M&A Transactions
When a company is sold in an M&A transaction, often there can be significant demands not only requiring the implementation of a new ERP but also requiring that the ERP solutions are implemented expeditiously. These demands can often take the form of time constraints normally driven by a transition services agreement (TSA).
Considerations for PE Firms in Selecting ERP Solutions
If you are a Private Equity (PE) firm looking for a new and improved ERP business solution driven by business need, and/or to consolidate business units, be mindful of a critical factor; in terms of ERP solutions, there is one best fit for every portfolio. And, the ERP selection needs to be executed judiciously. There are many selection factors to consider that contribute to success. A portfolio needs an applicable, methodical, and disciplined approach and scorecard prior to making an ERP decision. And, the selection must be an organizational decision. Not just an IT decision, nor just an executive team decision, nor just subject matter expert decision. There are tangible and intangible factors to consider, among them are business model fit, industry fit, ERP functionality, technical requirements, cost, scalability, software R&D spend, etc., etc.
Research Insights on ERP Critical Success Factors
There’s been some sound research in this area across many different industries since the beginning of the study of ERP critical success factors back to the mid to late 1990’s. Although there are several critical success factors, an organization does need to start with the right foundation (i.e. ERP system). Lee, Chen, and Kang (2019) describe that one major reason for the failure of ERP assimilation is that the selected solution is not a good fit for a firm.
Importance of Diligent ERP Selection
A proper and diligent selection phase of your ERP implementation plan is critical as it allows further investigation of all the possible implications within, and upon, the business. Both practice and research demonstrates that organizations can perform inadequate ERP selection learning and evaluation in terms of time and money (Neves, Fenn, & Sulcas, 2004). As organizations and fellow ERP practitioners, we absolutely benefit from learning from our colleagues and friends, both “boots on the ground” as well as researchers: Don’t shortcut the selection process. Learn more: “Knowledgeable and Objective ERP Selection: A Private Equity Competitive Advantage“.
Nestell & Associates, The ERP Selections Experts.