WHITE PAPER

SOFTWARE SELECTION
FOR ENTERPRISE
RESOURCE PLANNING
September, 2015

By Martin Gunnarsson
Director, Product Strategies & IFS Labs, IFS

HIGHLIGHTS
P2
an ERP system needs to be
built and implemented to offer
the flexibility to capitalize on
change over time. It shouldnt
stop you or slow you down when
going into new markets, acquiring
and merging with new business
partners and processes, or
expanding into untried geographical regions.

P3
Perhaps more importantly, you
need a software vendor with
deep industry knowledge that
works closely with the market
and its customers to ensure that
future releases of the product
will enable you to stay ahead of
the market, rather than reacting
after the fact.

P4
Top among
Fuga.
Nequithe
cum
millennial
fugia aut
alibusam
traits
is placing
estiumqui
a high
nam,
unditis dollest,
priority
on purpose
quidinealife.
elluptae.
Organizations
that value this
need for meaning and help
provide purposeful work
have taken the essential
steps toward employee
engagement.

CONTENT
COMMON BUSINESS CHALLENGES............................................................................... 2
HOW DOES THE RIGHT SOFTWARE ADDRESS THESE CHALLENGES?............................... 5
10 KEY SOFTWARE SELECTION FACTORS ..................................................................... 6
Is the software appealing for todays generation of workers?..........................................6
Is the software easy and cost efficient to modify and maintain?.....................................6
Does the software enable stepwise implementation?......................................................6
Can the software be implemented as a global, single-instance application?...................6
Is there a non-disruptive upgrade capability available?...................................................7
Can the software be extended as business demands change?........................................7
Does the software provide different deployment options?...............................................7
Can you as the customer influence product development?.............................................7
Does the vendors R&D organization include a workspace to drive
disruptive innovation?.....................................................................................................8
Are you offered references to customers using the evaluated software package?...........8
CONSIDER INDEPENDENT THIRD PARTY ASSESSMENT.................................................. 8
ARC ADVISORY GROUP................................................................................................. 9
ABOUT IFS................................................................................................................. 10

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

SOFTWARE SELECTION FOR ENTERPRISE

RESOURCE PLANNING
In todays dynamic and constantly morphing business competition, companies need
to understand that change is the most pervasive and critical element of the
commercial landscape. Its an ongoing challenge that must be met with agility if a
business is to keep its feet and stay on course while the world shifts in often
unexpected ways. If you do not change direction, you might end up where you are
heading, Lao Tzu once observed; this truth can be seen nearly 3,000 years later,
where 70 percent of the companies that were on the Fortune 1000 list have
vanished in a decade.

70%

of companies on the
fortune 1000 list 10 years
ago have now vanished.

In our digital, data-driven, constantly accelerating modern business environment, the use of enterprise resource planning (ERP) software is one of the
principal tools companies use to manage and leverage change to maintain or
improve competitive standing. For most companies, it is the most important
technology they will implement to run their business.
According to industry analyst Gartner, ERP systems are one of the core
business applications used by almost all companies above a minimum complexity.
The basic concepts and functionalities have been developed and implemented
for more than 30 years, but the term ERP was coined by Gartner in 1990.
In the original definition originating from manufacturing resource planning
(MRP II), ERP systems functionality normally covers finance and accounting
(general ledger, accounts payable, and accounts receivable), purchasing, HR
management, sales or customer order management, and operations management. Gartner now defines ERP in a broader sense as a technology strategy
that integrates a set of business functions, such as finance, HR, and purchasing,
with operational aspects, such as manufacturing or distribution, through tight
linkages from operational business transactions to financial records.1
This paper addresses how companies can best approach the selection of
ERP systems. The biggest mistake a company can make when selecting an ERP
system is to see it as a one-off selection and implementation project that has a
start and an end; when they have reached the end of their implementation,
they dont touch the software anymore. The reasonor even worse, the
experiencemight be that changing the software to adapt to new processes,
risks, or opportunities is too expensive, too difficult, or takes too much time.
Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies, November 26 2014
http://www.gartner.com/technology/reprints.do?id=1-25FCRSP&ct=141202&st=sg
1

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

an ERP system needs to

be built and implemented
to offer the flexibility to
capitalize on change over
time. It shouldnt stop you
or slow you down when
going into new markets,
acquiring and merging with
new business partners and
processes, or expanding
into untried geographical
regions

Instead, an ERP system needs to be built and implemented to offer the flexibility
to capitalize on change over time. It shouldnt stop you or slow you down
when going into new markets, acquiring and merging with new business
partners and processes, or expanding into untried geographical regions.
Change happens all the time, continuously presenting new business risks,
opportunities, and challenges. Successful businesses will see change coming
and turn it into an advantage; other businesses will merely cope. As noted in
the Fortune statistics above, many will not survive.
The main reason businesses fail is because they were unable to change.
Only those companies that spot opportunities early and evolve ahead of the
market will thrive. Those that master this process empower their personnel to
work closely with the business through quick, at-a-glance visibility of what is
happening at any moment in time, to turn vision into operational reality.
For a company to leverage its ERP to capitalize on change, it must closely
evaluate the important criteria the business software delivers, including:
B
usiness visibility to give users a consolidated view and empower them by
delivering the tasks and information they need to see, when they need it.
C
ollaboration in any context to allow users to interact when they are out
of the office or on the moveaway from their desks.
P
rocess and screen configurability to adapt the user experience to users
needs and to the environment in which it is used.
D
eployment alternatives that suit the organization not only today, but
also enable benefit from deployment choices in the future.
I mplementation and support models that allow the organization to put
into use only what it needs, thereby avoiding lengthy, expensive, and disruptive implementations.
E
asy process upgrades to quickly access the latest releases, minimizing
business disruptions while providing access to innovations in the core
product.
Disruptive innovation management that allows the company to become an
early adopter of new technologies to realize significant and tangible benefits.

COMMON BUSINESS CHALLENGES

While the business drivers or challenges of selecting and implementing an ERP
system differ depending on the industry the company is engaged in, this paper
outlines a number of generic concerns encountered when selecting, implementing, and managing an ERP system.

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

When we as an ERP vendor receive a request for information (RFI), we often

see that the requirements are based on todays business challenges, to support
the current processes used to run the business. The challenge is to predict and
present future business requirements such as new business regulations,
changed business models, etc. However, meeting this challenge is next to
impossible. Instead, you need to secure a software investment that can manage
todays concerns while being configurable and adaptable to meet future
business requirements. Perhaps more importantly, you need a software vendor
with deep industry knowledge that works closely with the market and its
customers to ensure that future releases of the product will enable you to stay
ahead of the market, rather than reacting after the fact. Finally, you need an
upgrade process that allows the company to cost-efficientlyand with lowest
possible riskupgrade the software to the latest version. Together, these three
characteristics will ensure a lower total cost of ownership (TCO) of your ERP
software investment, helping you stay ahead of competition.
Among the key business challenges most companies face today are globalization, employee engagement, and innovation management.
Globalization. Most enterprises want to grow their business by following
their customers wherever they set up a new business. Therefore, the majority
of todays companies are on their way to becoming truly global. Typically, its
a cumulative journey, one that started in a single territory that later grew into
a multi-national business in different countries, with various independent
business units.
The next step is to become truly international, i.e. managing the business
across several countries while interacting with business units in yet other
countries, and sharing resources across all the different territories. Only a truly
global business manages to remove regional boundaries to act as one company
worldwide.
The challenge for companies as they become global is to efficiently run
processes worldwide using a business software architecture that supports a
worldwide, single-instance strategy. This will allow the companies to more
seamlessly merge acquired businesses into their organizations and product
portfolios. Moreover, it will enable them to launch new products and implement new business models and processes on a global scale.
This kind of development includes dealing with a multi-everything
challenge: multi-site, multi-language, multi-currency, multi-division, multimode, and the like. This multi-nature puts high demands on your software so
you can remain competitive over time.

Perhaps more importantly,

you need a software
vendor with deep industry
knowledge that works
closely with the market
and its customers to
ensure that future releases
of the product will enable
you to stay ahead of the
market, rather than
reacting after the fact.

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

Top among the millennial

traits is placing a high
priority on purpose in life.
Organizations that value
this need for meaning and
help provide purposeful
work have taken the
essential steps toward
employee engagement.

Employee engagement. Having a pool table in the cafeteria or a games room

may no longer satisfy the needs of an increasingly younger and more diverse
workforce. Rather, personal growth and making a difference make employees
work hard to overcome challenges and go the extra mile in their efforts to
boost productivity.
An increasing number of millennials comprise todays workforce, and this
demographic shift has just begun. The millennial generation was born roughly
between 1977 and 1998. They are 75 million strong and typically were raised
by helicopter parents who doted on them, giving them an ample supply of
attention and affirmation. Because they were heralded with high expectations,
millennials tend to display an abundance of self-confidence and believe they
are highly valuable to any organization from day one. They are extremely
focused on developing themselves and thrive on learning new job skills, always
setting new challenges to achieve. Top among the millennial traits is placing a
high priority on purpose in life. Organizations that value this need for meaning and help provide purposeful work have taken the essential steps toward
employee engagement.
In this context, how does ERP software come into play? New work patterns put different demands on the way talent expects to interact with your
business systems. Being mobile and able to access systems through unlimited
types of devices is taken for granted by this generationthey work wherever
they are and whenever they want to. They like to work closely with their
firms, which means a more intimate understanding of what is happening in the
business in real time. Whats more, this group is used to instantaneous and collaborative communications in their personal life (think social media); they
expect the same in their professional role, including the systems they work
with.
Innovation management. The pace of change in todays market is frighteningly fast. Innovation is not seen as the exclusive domain of a companys
R&D department, but rather as something accessible to all workers, at every
level, who see themselves as contributing to the firms product and business
development.
A companys strategy for innovation management presents the challenge of
more quickly categorizing, selecting, managing, and governing applications to
support business change. Innovation management allows an organization to
respond to external and internal opportunities, and to use its creativity to
introduce new ideas, processes, and products.
The payoff for an idea will only happen as it is implemented and deployed
in the organization. Implementation of a new idea, whether it is software,
product, or process, needs an incremental approach to effectively manage risks
and opportunities.

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

Consequently, a modern software solution must allow capitalization on

business opportunities with a new degree of flexibility and speed. In practice it
can mean launching a new software component for the extended global supply
chain, deploying a new IT architecture for the Internet of Things, or just
implementing a few new fields in a screen to capture or visualize critical
business information.

HOW DOES THE RIGHT SOFTWARE ADDRESS THESE

CHALLENGES?

According to the Aberdeen

study, best-in-class
organizations are 83
percent more likely to have
a solution that can be
quickly tailored to reflect
business change.

Enterprise software should drive your business forward, not hold it back.
This idea is reflected in recent research from Aberdeen Group, which notes
the top reasons that companies replaced their old ERP solution:
O
bsolete technology foundation or infrastructure of ERP systems
(32 percent)
Lack of features (29 percent)
Cost of maintenance and support (18 percent)
I nability to tailor ERP solution to integrate changes to the business
(13 percent)
Three of the top four reasons concern solutions that are no longer able to
support the business. Regardless of the reason, what is the point of paying
maintenance on an ERP solution that can no longer support the business?
Selecting and deploying the right business software is an important and
strategic decision for a company. According to the Aberdeen study, best-inclass organizations are 83 percent more likely to have a solution that can be
quickly tailored to reflect business change. This often requires templates and
self-service solutions to ensure that new workflows and business rules and
regulations can be supported.
To implement a new ERP system, an organization must ask itself and the
ERP vendor the following question: Whats the price for the flexibility to
capitalize on change? The price doesnt only mean the price tag for making a
modification in the system; it includes all aspects of change in the software:
Lead time from request to deployed solution
Do-it-yourself tailoring or new development by the vendor or its partners
The software upgrade path to move to the latest release
Global support capabilities

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

The payoff for an idea will

only happen as it is
implemented and deployed
in the organization.
Implementation of a new
idea, whether it is software,
product, or process, needs
an incremental approach
to effectively manage risks
and opportunities.

10 KEY SOFTWARE SELECTION FACTORS

To see whether software under consideration is meeting the needs of todays
evolving ERP environment, the following questions are key:

Is the software appealing for todays generation of workers?

People, supported by the intelligence collected and visualized in your enterprise software, make business decisions. To ensure users have access to, and
can benefit from, this intelligence, you need a user experience that is attractive,
intuitive, and efficient for any type of user within the enterprise ecosystem.
An appealing user experience means that data can be fetched or consumed
from devices with different form factors and capabilities. Being on the move or
sitting at their desk, employees may prefer a range of devices, from smartphones to tablets to laptops. The technology behind the ERP system should
not set the boundaries.

Is the software easy and cost efficient to modify and maintain?

Modern business software is built on best practices gathered from a great number of customers in different industries. Each company has its unique strategy
and vision, but surprisingly often, the business challenges across industries
appear to be quite similar. Standard software offers the optimal total cost of
ownership, so many customers will share the investment. However, the software must enable customers to tailor it to fit their special needs over time in a
way that doesnt impede upgrading to the latest release to benefit from new
innovations available in the core product.

Does the software enable stepwise implementation?

Implementing an ERP system can be expensive and disruptive to the business,
as well as carry a lot of risk. To avoid this risk, companies should choose software built on components that allow them to choose only the ones they need,
and add new ones as they progress. This approach will speed up implementation and give much quicker return on your investment.

Can the software be implemented as a global, single-instance

application?
When an organization becomes global, it gets a great deal of benefit from running its business on a single application, preferably in the same global single
instance of that application. A global, single-instance strategy allows companies to reduce complexity and cost while providing insights and analysis at
much faster speed. It also enables them to manage employees around the
world, regardless of location or reporting structure.

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

Is there a non-disruptive upgrade capability available?

The Aberdeen Group study shows that best-in-class companies are 61 percent
more likely to be on the latest release, as well as doing necessary tailoring
themselves. An ERP system must not been seen as a one-off implementation
but rather a platform for business innovation over time. Following the upgrade
path ensures that companies will benefit more from their existing investment
as new product features are continuously developed and made available
through the product maintenance fee.

Can the software be extended as business demands change?

The vendor should have an

agile development
approach where product
requirements are collected
and prioritized in close
collaboration with industry
specialists in the customer
base.

As your business evolves (e.g., a manufacturer that wants to add aftermarket

services), you should easily be able to add these components without affecting
any of the other ones that you are using. This approach enables business development without business disruption. A modern system should offer a layered
application architecture that facilitates the development and management of
different types of code changes such as localizations, customizations, and configurations. Depending on the level of modification complexity, you should be
able to decide whether you would like to make the change yourself or with
help from the vendor or its partners.

Does the software provide different deployment options?

Single instance, on-premise enterprise systems are rapidly being transformed
into hybrid modelsand cloud deployments are on the rise. While most of
those hybrids are a combination of cloud and on-premise solutions from
multiple vendors, enterprises will increasingly use cloud-based solutions as a
part of their infrastructure. Companies should consider their need for a software solution that enables full-suite deployment or deployment as either the
backbone or point solution for key processes in a two-tier application strategy.

Can you as the customer influence product development?

Enterprise software is one the most important asset investments made by a
business. It needs to be state-of-the-art when delivered, but also cost effective
and able to generate return on investment throughout its lifecycle. How can
you influence product development to secure future versions of the software
that will help you retain your competitive edge? The vendor should have an
agile development approach where product requirements are collected and
prioritized in close collaboration with industry specialists in the customer
base.

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

Does the vendors R&D organization include a workspace to drive

disruptive innovation?
In most R&D software organizations, the bulk of investments is focused on
products prioritized and requested based on actual customer needs today or in
the near future. The result is an incremental approach to software development. Thinking and investing outside the box to look beyond todays expectations requires a different setup. Conceptual products and prototypes will not
always result in a launched product for various reasons, and thats the purpose
of prototyping. Ask the software vendor how they work with the innovation
selection and development process.

Are you offered references to customers using the evaluated software

package?
Dont take the vendors word only for the capabilities of the enterprise software you are evaluating. Ask for customer reference calls and site visits to
learn from customers experiences of implementing and using the software.
Also verify the customers experiences of collaborating with the vendors
implementation staff, product development department, and partners.

CONSIDER INDEPENDENT THIRD PARTY ASSESSMENT

Finally, companies are well served by looking to respected analysts who assess
the status of software providers. Of those who study enterprise software and
systems, the best known and perhaps most highly respected is Gartner, a technology analyst firm based in Stamford, Connecticut, USA.
Gartners Magic Quadrant for Single-Instance ERP for Product-Centric
Midmarket Companies, published November 26, 2014 focuses on ERP
systems that support a single-instance strategy for multi-entity midmarket and
upper-midmarket companies. Companies are evaluated on multiple aspects of
two parameters (ability to execute and completeness of vision), then mapped
in an X-Y grid to create a quadrant: niche players, challengers, visionaries, and
leaders. Of the 10 companies recognized in the 2014 report, two were in the
Leaders quadrant. IFS Applications is one of the leaders*.

*NOTE: Gartner does not endorse any vendor, product or service depicted in its research publications, and
does not advise technology users to select only those vendors with the highest ratings or other designation.
Gartner research publications consist of the opinions of Gartners research organization and should not be
construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this
research, including any warranties of merchantability or fitness for a particular purpose.

You may download a complimentary copy of the full report at:

http://www4.ifsworld.com/l/5332/2015-02-05/xvd87

SOFTWARE SELECTION FOR ENTERPRISE RESOURCE PLANNING

IFS is known for:

Broad & scalable ERP system
SOA architecture enables modular approach and easy modernization
Strong partnerships
User friendly UI
Focused approach on key industries

ARC ADVISORY GROUP

ARC Advisory Group is a leading technology research and advisory firm for
industry and infrastructure. Their expertise extends from business systems to
product and asset lifecycle management, supply chain management, operations
management, and more.
Ralph Rio of ARC Advisory recently noted in a blog post, ERP systems
encompass many functions and business processes in the extended enterprise.
This can result in a daunting user experience with multiple applications and
screens. IFS Lobby helps solve that problem with a user interface matching the
persons rolewhether it be operations, maintenance, or an executive. ARC
believes that this represents a clear market differentiation for IFS Applications
9, one that could provide the company with a competitive advantage.
Rio recognized, Suppliers in the ERP space must achieve a delicate balance
between allocated resources for new client acquisition and for services to help
assure successful on-boardingparticularly for global, multi-site clients. The
recent partner additions for IFS represent a big step for additional resources to
assure success for larger clients.2

ARC Advisory Group, Blog, IFS Announces Significant Ease of Use Enhancements at IFS World Conference 2015,
Ralph Rio, Research Director, May 2015
www.arcweb.com/Blog/Post/557/IFS-Announces-Significant-Ease-of-Use-Enhancements-at-IFS-World-Conference-2015
2

ABOUT IFS
IFS is a globally recognized leader in developing and delivering
enterprise software for enterprise resource planning (ERP), enterprise
asset management (EAM) and enterprise service management (ESM).
IFS brings customers in targeted sectors closer to their business,
helps them be more agile and enables them to profit from change.
IFS is a public company (XSTO: IFS) that was founded in 1983 and
currently has over 2,700 employees. IFS supports more than 2,400
customers worldwide from local offices and through a growing ecosystem
of partners.
For more information about IFS, visit www.IFSWORLD.com

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COPYRIGHT 2015 INDUSTRIAL AND FINANCIAL SYSTEMS, IFS AB (PUBL). IFS AND ALL IFS PRODUCTS AND SERVICES
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