ERP Requirements Gathering Template: Checklist and Best Practices

This enterprise resource planning (ERP) requirements checklist helps you choose the system that will benefit your business the most.

The right ERP system can bring order to chaos by integrating and automating disparate business processes, providing benefits such as greater efficiency and better business responsiveness. But because you’ll rely on the ERP system to manage so much of the business, it’s crucial to carefully map out your requirements in advance in order to find the right solution. Don’t skimp on due diligence, because choosing the wrong ERP system can be a costly mistake.

What Is ERP and How Does It Work?

Enterprise Resource Planning (ERP) software brings together the core business functions of an organisation. ERP uses a shared database to support and connect multiple business activities, with functionality for accounting, inventory management, order processing and human resources, among others.

 

This gives organisations a single source of accurate information and can help to automate many processes. ERP systems usually include dashboards and other reporting tools that provide digestible, real-time views of information from across the organisation as well.

 

Benefits of ERP Implementation

Beyond being a central database for your entire company and yielding valuable reporting capabilities, ERP implementations come with a number of notable advantages:

• Increased productivity. ERPs automate many of the repetitive manual tasks that otherwise occupy employees, and freeing them to pursue other projects often brings more value to the organisation. Additionally, it reduces the amount of time needed for a variety of tasks by bringing the information needed to complete them to the forefront.
• Improved data security. Having data centralised, rather than spread across multiple systems with myriad security levels, inherently increases the level of protection. Instead of residing in numerous spreadsheets and documents, cloud ERP distributes the information across multiple remote servers to establish redundancies and protect against a single point of failure.
• Compliance is simpler. Updated records and customisable reporting tools make it easier to track compliance and adjust when needed. This also makes the audit process easier, as any information an auditor may need is easy to access.
• Mobility. Because users access cloud systems over the internet, they can pull any reports and dashboards they need on mobile browsers. This is especially important for businesses with many workers in the field or traveling, giving them and up-to-date view of the business from mobile devices.

What Are the ERP Deployment Options?

There are two main types of ERP software: cloud-based and on-premises:

Cloud-based ERP solutions have a lower upfront cost because organisations don’t need to install hardware to use them. Users access cloud-based ERP through the internet on a browser and these solutions are generally provided on a subscription basis, an approach known as Software-as-a-Service (SaaS). Cloud-based ERP implementations also tend to be quicker and easier than on-premises implementations. With cloud ERP, the provider also automatically updates the software with new releases.

With an on-premises ERP system, companies take on all the responsibility for maintaining and upgrading the system. Companies that choose on-premises software usually pay a large licensing fee at the time of purchase along with ongoing maintenance fees rather than a subscription. This type of ERP implementation may be attractive to companies with significant IT resources and that are determined to keep their data on-site.

Some companies develop “homegrown” solutions to manage the business. However, this approach has become far less popular over time as an increasing number of vendors release affordable systems that can adapt to the needs of different types and sizes of businesses.

ERP Purchasing Considerations

In addition to considering how the ERP system will support specific business functions, it’s also important to focus on other broad requirements, such as:

• Industry expertise: Does the vendor understand the nuances of your industry and does it have customers that are similar to your business? Can they provide references?
• Integration: How easily does the ERP system integrate with other applications or hardware you use to run your business, such as scanners in warehouses? Does it have open application programming interfaces (APIs) that facilitate those integrations with commercial or homegrown solutions?
• Deployment: Which type of ERP implementation makes the most sense for your business, given your IT resources, budget and desired go-live date, cloud-based or on-premises? Will you need to bring in outside assistance and how hard is it to find people with skills implementing that particular vendor’s software?
• Support: How much support does the system require, and will it be vendor-supplied, contracted to an external party or hired in-house? How do the costs differ between those options? Is there a self-serve knowledge base and how robust is it? At what times are support staff available?
• Training: What training, essential for user adoption and realising ROI, is available with this system? Is one solution more user-friendly than another, and how does that affect how quickly the business sees these benefits?
• Platform and customisation: How easy is it to work with the platform the system was developed on? Will it take specialised skills to customise the system to your unique needs?
• Ecosystem: Does the vendor have a robust ecosystem of partners that provide both implementation and consulting expertise as well as complementary solutions, either by industry or department, such as electronic data interchange (EDI) or field service automation?

ERP Requirements Gathering Best Practices

To help navigate the critical process of selecting the right ERP for your business, keep in mind these three Ps: people, processes and priorities.

People: First and foremost, you need to include the right people while gathering requirements. It’s important that this team represents each of the departments that your ERP system will serve. Typically, this means having staff from sales and marketing, finance, manufacturing, supply chain, IT and customer service.  

Although it’s important to have an executive liaison for each department, including end users in this group can be particularly valuable. End users have detailed, practical knowledge that helps make for a smoother implementation, and involving them when defining requirements can help meet business needs and gain widespread buy-in to the new system when it’s deployed. It’s best to select staff who are innovative, have a positive attitude and can balance their individual needs with the company’s goals. Some companies also include people from outside their organisation on this team, such as ERP consultants, contractors, compliance specialists or investors.

Processes: One of the primary goals of every ERP implementation is to make business processes simpler and more efficient. That’s why it’s a best practice to map existing processes and identify use cases. By doing so, you’ll avoid recreating those same issues in the new system. This also helps decision-makers understand whether certain solutions can meet all their needs. You may find that an ERP vendor has built-in industry best practices based on working with other customers that are more efficient than existing, internal processes.

Priorities: Once the team has developed a thorough understanding of its current state, the company can build a clear picture of its desired future state based on business goals. The organisation can then use these business goals to set ERP priorities, as long as they are specific, measurable, attainable, reasonable and timely — often referred to as SMART. For example, SMART goals for an ERP system may include decreasing the average time for item picking and packing in warehouses.

It’s equally important to prioritise which modules and features of the ERP system you need right away. Most businesses start with financials and accounting because the transactional record is the core of the ERP system. Other areas like HR or inventory management may be implemented alongside financials, or businesses may take a phased approach, adding features and functionality as they are able, depending on business need and available resources. prioritising specific features within those modules helps you stay focused on your business goals and avoid getting distracted by flashy features that may be nice to have, but are not essential, often referred to as “scope creep”.

ERP Functional Requirements Checklist

Using a requirements checklist can help you determine which ERP modules and features your business needs. This checklist includes some of the most common business functions and processes that ERP systems need to support:

Accounting and Financials:

This module includes all core accounting and compliance systems, such as financial reporting, the general ledger, accounts receivable (AR), accounts payable (AP), billing, revenue recognition and budgeting.

Human Resources/Human Capital Management:

The HCM module handles all employee data and other human resources information for managers, HR staff and employees. It manages tasks such as onboarding, benefits, payroll, productivity, taxes, timecard tracking and time off requests.

Manufacturing and Distribution:

This application helps organisations run all facets of their manufacturing operations, providing end-to-end visibility and analysis of all those steps and processes. Common features include production control, distribution scheduling, quality analysis and warehouse management.

Materials Management:

A materials management module can help optimise the supply chain processes involved in ensuring an organisation has enough materials for planned production. Specific features of materials resource planning (MRP) software may include automated procurement, inventory management and logistics management.

Inventory and Order Management:

An inventory management application offers the functionality needed to manage inventory, ensuring there is sufficient inventory to meet demand, while reducing the risk of stockouts and keeping stock up to date. It typically supports inventory tracking and warehousing, pricing management, ecommerce, order entry and customer returns.

Supply Chain Management (SCM):

An SCM module automates and organises all the steps from placing an order with a vendor to getting finished goods to a customer. Features include demand forecasting; purchase order, work order and transfer order automation; shipping management; and warranty management.

Customer Relationship Management:

A CRM module tracks and manages all contacts and communication with customers. It can capture customer order history, coordinate and automate marketing campaigns, manage leads and generate sales quotes.

Data Analysis:

Data analysis functionality helps businesses spot and execute on revenue-generating opportunities by helping them identify solutions, mitigate problems, and report on results. The centralised nature of ERP datasets allows organisations to make decisions based on the same data points in near real-time.

Business Intelligence and Reporting:

This module adds a layer of cross-functional reporting tools that provide dashboards and analytics. These provide valuable insights on the performance of the overall business and specific departments, helping to shape priorities and inform key decisions.

Marketing:

Marketing automation modules help businesses manage omnichannel campaigns across all digital channels. These modules typically include email automation and customer segmentation features and provide detailed reports on campaign performance, boost customer loyalty, and sales.

Automation:

The integrated nature of ERP modules — across HR, CRM, financials, inventory, etc. — helps remove processes from silos and automate workflows. For example, inputting a new order from sales may automatically prompt actions from inventory, finance, and shipping teams. Beyond limiting the amount of manual processes involved, this also limits opportunities for manual errors and redundancies.

Why Are ERP Requirements Important?

• Choosing the wrong ERP solution for your organisation can be a costly mistake — both in terms of dollars and the opportunity cost of missing out on the benefits of the right solution.
• Gathering and prioritising ERP requirements in advance helps you make a better choice and dramatically reduces the chances of a failed project. Mapping business processes and corresponding requirements will ensure you choose an ERP system that not only fits your company’s objectives today but can also evolve to meet your future business goals.

Purchasing and implementing an ERP is a big decision, requiring resources and time to make sure the new platform is a success and delivers a significant return. Mapping this process out and determining critical requirements will help you find the perfect ERP system for your company, one that supports your needs now and is scalable enough to grow with your business, with modules and features that drive savings and help you capitalise on opportunities.

Never before has this software been within reach for more organisations, and leaders need to take advantage of that. An ERP has become table stakes for any company that wants the visibility and insights to compete and win.