An Analyst’s Guide to Evaluating Enterprise Software

Whatever kind of enterprise software you might be considering, run vendors through these key filters to shorten your list.

Mark Davidson, Principal Analyst, LNS Research
Mark Davidson, Principal Analyst, LNS Research

 

An enterprise software implementation is nothing to take lightly. Just ask anyone who’s gone through a failed one. Not only are reputations and future budgets at risk, but, most importantly, these investments can actually enable or limit long-term improvements to business performance. Plain and simple, there’s a lot on the line and you’ve got to get it right the first time. Fortunately, well before even seeing a software demo, properly researching software providers can mitigate a majority of risk factors and position your investments for success.

Whether you’re considering enterprise resource planning (ERP), enterprise quality management software (EQMS), manufacturing operations management (MOM) or another enterprise-level software solution, the following are six key filters to run prospective vendors through that will either validate or eliminate their spot on your shortlist. It’s the same criteria that we use at LNS Research to analyze and compare software vendors.

Industry experience. If you’ve been searching for a solution, you know by now that it’s common for each vendor to list all of the industries it covers. And when broken down by subvertical, the number can reach 10, 20 or more. At a high level, this seems validating, but it can also be concerning. Though a software provider could have extensive functional expertise and experience serving process manufacturers, it might be less capable for discrete manufacturers and offer only the most basic of functionality for life sciences companies. Keep in mind that software companies often start by specializing in one area, and then branch out from there. It’s important to really understand the expertise of the company’s people and its software in solving issues of your particular industry and application.

Geographic experience. Just because a vendor has one customer in Australia, that doesn’t mean it has extensive resources and partnerships across the APAC region. The problem is that in the selection process you’re typically on a need-to-know basis, which makes your research all the more important. Putting aside some of the biggest players in enterprise software, it’s likely that most of the less mature vendors have resource and partnership depth in one or two specific regions. Be mindful that global strength comes with time, M&A activities and partnerships. If your company’s business is regionally based, this is less of an issue. But if you have a multi-regional business or are looking to expand geographically, make sure you have the support needed from your manufacturing software suppliers.

Company sizes served. Having the word “enterprise” in a solution offering doesn’t necessarily mean that a vendor has proven software capabilities or experience in serving large enterprises. This should be approached similarly to the geographic experience variable in your solution selection process. Make sure the vendors you’re considering are satisfying customers of the same company size, but don’t automatically disregard providers that are moving up or down market. If you’re in a large organization, an evolving but smaller ERP, MOM or EQMS solution provider might just have the flexibility and level of innovative technologies you need to gain a leg up in the market. The ability to serve a given enterprise size isn’t one-dimensional. It’s a consideration of technology scalability, performance and cultural match.

Functionalities offered. Most enterprise software comes stacked with a preconfigured set of functionality that spans across industries. ERP software will have financials. Manufacturing software will have electronic work instructions. EQMS will have corrective and preventive actions (CAPA). But looking at what comes in the box will only get you so far. Since an enterprise solution is actually used by the “enterprise,” it requires that you organize a cross-functional team to nail down your functional requirements. This will give you a better sense of the scope required for your ideal solution so you can analyze potential vendors more effectively. Plus, a cross-functional approach will get you thinking about how to use this technology to enable better communication and collaboration across different departments.

Technology platform. If your entire IT architecture has been built on the Microsoft .NET or Java/J2EE development platforms, the past would say it makes sense to continue on that path. However, because of the rising importance of cross-functional and closed-loop processes, most enterprise software vendors today can interoperate across a variety of technology platforms. Consider the ease of interoperability using standard interfaces to your existing enterprise systems, as well as the investment required to make that happen in your solution selection process. You’ll also want to keep in mind the delivery models offered, which could range from on-premise to cloud-based software as a service (SaaS) and hybrid models. Consider the lifecycle costs. Do you want to use capital investments with a higher upfront cost and limited future expenses, or would using expense budgets to fund a fixed ongoing fee-based model better suit your needs?

Time to value. Most enterprise software vendors offer some type of preconfigured application templates to speed the configuration of software for more rapid implementations. However, because each organization’s existing enterprise IT and industrial automation architecture is different, there’s still generally a lot of back-end customization required. Look at the upfront cost to implement, but also consider how long it’s going to take for you to continue to roll out subsequent instances of the same or additional functionality. And at the end of the day, how quickly can you realize an ROI? Can you “pay as you go?” Can you pay for the next steps in implementation from the savings you generate in the early steps? The question of whether to approach a cloud/SaaS or on-premise solution comes into play here. In contrast to a more traditional implementation, your needs might warrant a modular approach, deploying the solution in one location and then expanding. Consider only vendors that can support your rollout strategy and your ongoing requirements.

Other considerations

Products and processes are only becoming more complex and you should be considering a supporting IT architecture that evolves accordingly. You need to not only look at vendors that can support your current requirements within your price point, but also those that can support where you want to be in the future.

Make sure to ask where enterprise software providers are making investments. Do you want to be collecting data via mobile devices, mining Big Data for new insights, or collaborating over the cloud? Invest in a software provider that understands the importance of continually driving new technology horizons for efficiency, productivity and team collaboration.

Those are the high-level variables you should be considering in your selection process, but in reality you’re going to want to get more specific. It’s highly advisable to take each of these considerations and request additional resources, reference customers, independent analyst report, and case studies when needed. Protect yourself and your company by doing your research.

The criteria listed above are based on LNS Research’s recently published Manufacturing Operations Management Solution Selection Guide and EQMS Solution Selection Guide.

>> Mark Davidson is principal analyst at LNS Research. He previously served in various leadership roles for Invensys.

 

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