How to Choose the Right ERP System for Your Organization
When your business is selecting an enterprise resource planning (ERP) system, you should follow a structured seven-step approach that encompasses picking an internal team that knows your business needs, determining timelines and costs, compiling a thorough RFP for vendors and partners, and making the final selection based on your criteria.
This comprehensive guide shares proven strategies from Associated Bank's partnership with Crowe LLP's tech advisory team, which were also covered in our recent webinar on the subject. You'll learn how to build the right selection team, effectively gather your requirements and choose an ERP solution that delivers real business value.
Why selecting the right ERP system matters more than ever
Data drives modern business success. Organizations that work with experienced consultants and follow best practices achieve an 85% success rate.⁴
The stakes are high. Budget approximately 3-5% of annual revenue for your total five-year ERP investment.⁵ For a $50 million company, that means a $1.5-2.5 million decision.
With 78.6% of new implementations now choosing cloud solutions⁶ and AI integration becoming critical for 65% of organizations,⁷ the selection landscape has evolved rapidly. Getting it right requires a systematic approach.
Step 1: Build your ERP selection team
Form a team from different departments
Create a team of five to eight people from different functional groups across your business. You’ll want to include strong communicators who understand processes in their area.
Your core team should represent the following:
- Executive sponsor (decision-making authority)
- Finance department (budget and ROI analysis)
- IT department (technical requirements and integration)
- Operations (day-to-day process requirements)
- HR (user adoption and training needs)
- End users from key departments
Establish clear rules
Also set up a steering committee with senior leaders from finance, operations, IT and affected business units. They’ll hold final decision-making authority and remove roadblocks during the selection process.
Define roles clearly. Designate who makes final decisions, who provides input and who executes tasks. Strong alignment from company leaders drives success from the top down.
Plan for project disruption
Selecting and implementing an ERP system requires significant time commitment. Expect to have daily meetings until deployment has been completed. Prepare your team for this intensity by ensuring adequate resources are available.
Step 2: Gather and prioritize your requirements
Map your current business processes
Start by documenting your organization’s daily workflows. Identify inefficiencies, bottlenecks, and pain points that your new ERP should address. Use workshops and leadership interviews to clarify organizational objectives and desired outcomes. This groundwork prevents scope-creep later in the process.
Create a structured requirements framework
Segment your needs into three tiers:
Must-haves
- Critical business functions that can’t be compromised
- Regulatory and compliance needs
- Essential integrations with existing systems
Nice-to-haves
- Process improvements that add value but aren't critical
- Advanced reporting capabilities
- Workflow automation opportunities
Future-state considerations
- Scalability for business growth
- Emerging technology compatibility
- Long-term strategic initiatives
Assess integration needs
Document your existing technology stack and current integrations. Include future technology plans in your requirements. Preparing a vendor packet with this information helps you get more accurate responses from potential providers.
Step 3: Create Your ERP Selection Timeline
Plan an adequate selection timeline
Gathering your requirements and evaluating vendors is complex. Allow enough time to produce high-quality proposals and conduct thorough evaluations.
Break your timeline into phases:
Weeks 1-4: Team formation and requirements gathering
- Assemble the selection team.
- Complete business process mapping.
- Finalize requirements documentation.
Weeks 5-10: Vendor research and RFP process
- Identify potential vendors and partners.
- Distribute RFPs and allow adequate response time.
- Begin initial vendor conversations.
Weeks 11-16: Demo and evaluation phase
- Conduct vendor demonstrations.
- Score and compare solutions.
- Check references and validate claims.
Weeks 17-20: Final selection and contract negotiation
- Make a final decision using quantitative and qualitative criteria.
- Negotiate contracts and the implementation timeline.
- Plan implementation kickoff.
Step 4: Master the ERP RFP and demo process
Create an effective RFP
Move beyond traditional technical checklists. Include a comprehensive vendor packet with these key details:
- Organization background and current challenges
- Existing technology stack and integrations
- Future technology roadmap
- Specific business goals and success metrics
Push for detailed responses rather than simple yes/no answers, especially for critical requirements. Well-meaning providers often over-promise during proposals to win business.
Conduct effective ERP demos
Request demos that mirror your key business processes. Your team needs to envision how they'll use the ERP after implementation.
Avoid pre-recorded demonstrations that show ideal out-of-the-box functionality. Insist on seeing how the system interacts with your current architecture and handles your specific workflows.
Save these detailed interactions for your short list of two to four top candidates. Too many demos can result in information overload and decision paralysis.
Use structured evaluation scorecards
Give your evaluation team standardized scorecards for rating key features. This allows numerical comparison of systems after all demos are completed.
Include this criteria in your scoring:
- Functional fit with requirements
- Ease of use and user experience
- Integration capabilities
- Vendor/partner responsiveness
- Implementation approach
- Total cost of ownership
Step 5: Understand the difference between vendors and implementation partners
|
Characteristic |
ERP Vendors |
Implementation Partners |
|---|---|---|
|
Primary Role |
Creates ERP software and technology |
Installs and configures systems |
|
Relationship Type |
Transaction-focused (license sale) |
Ongoing support throughout the project |
|
Implementation Approach |
May outsource to partners |
Specialized implementation methodology |
|
Local Presence |
Limited regional resources |
Often local availability |
|
Success Rate Impact |
55-75% (varies) |
85% with experienced partners |
|
Best For |
Evaluating software capabilities |
Ensuring implementation success |
Choose your implementation partner first
A skilled implementation partner often matters more than the specific ERP technology. Consider choosing your ideal partner first, then evaluate their recommended solutions.
Look for partners with these qualifications:
- Deep experience in your industry
- Proven implementation methodology
- Strong project management capabilities
- Local presence and ongoing support
- Cultural fit with your organization
Organizations working with experienced consultants achieve 85% implementation success rates;⁴ success rates are lower for self-implementations.
Step 6: Calculate total cost of ownership for your ERP
Look beyond initial license costs
Proposal scopes vary widely between vendors. Provider A might offer 50 user licenses with equal access plus lump-sum implementation fees. Provider B could propose 100 licenses with tiered access plus hourly implementation rates.
Calculate apples-to-apples comparisons by extrapolating these total five-year costs:
- Software licenses and subscription fees
- Implementation and configuration services
- Data migration and integration work
- Training and change management
- Ongoing support and maintenance
- Hardware or cloud infrastructure
- Internal staff time and resources
Budget for ERP Cost Overruns
Set a clear budget, including 20-25% contingency funds for unexpected requirements. Research shows budget overruns typically stem from underestimating project staffing (38%), expanding initial scope (35%) and technical issues (34%).⁸
Among organizations that perform ROI analysis before implementation, 83% meet their ERP ROI expectations.⁹ Average ROI reaches 52%, delivering $1.52 return for every dollar invested.¹
Step 7: Make your final ERP selection
Use objective decision criteria from your in-house team
The diverse cross-functional evaluation team that you’ve selected to be part of this project should be watching and evaluating demos as objectively as possible. To ensure this, using the evaluation team scorecards as discussed in Step 3 helps them rate features important to their functions, so you can compare systems numerically after all the demos are completed.
Once you have your evaluation team’s scores and your cost estimates, you can apply further quantitative and qualitative criteria to fairly determine the best fit for your organization.
ERP Considerations for 2026
Cloud vs. on-premise ERP solutions
With 78.6% of new implementations choosing cloud solutions,⁶ on-premise systems are rapidly becoming legacy infrastructure. Cloud deployments offer faster implementation, lower upfront costs and automatic updates, as well as these benefits:
- Reduced IT infrastructure requirements
- Scalability and flexibility benefits
- Faster deployment timelines
- Predictable subscription pricing models
AI-powered ERP systems
More than 65% of organizations now consider AI critical to their ERP systems.⁷ AI-enabled implementations can reduce delivery times by 25% and cut operational costs by 15%.¹¹ They also offer AI-enhanced features for more efficient day-to-day processes:
- Automated data entry and processing
- Predictive analytics and forecasting
- Intelligent workflow automation
- Enhanced reporting and business intelligence
Common ERP Selection Mistakes to Avoid
Poorly defined requirements
Inadequately defined scope can lead to expensive change orders during implementation. Invest time upfront by thoroughly gathering your requirements and aligning stakeholder needs.
Underestimating data migration complexity
Data quality problems multiply development and testing efforts. Assess your current data quality and ask potential ERP providers how they address cleanup and migration strategies when developing solutions for their clients.
Excessive customization
Over-customization increases costs, extends timelines and complicates future upgrades. Prioritize configuring standard functionality over custom development when possible.
Inadequate change management
Technology success depends on user adoption. Plan comprehensive training and change management from the beginning of your selection process.
Remember that new ERP systems aren't silver bullets for deeper operational issues. Address managerial and process problems first when possible. 33% of organizations identify managing organizational change as their biggest challenge in putting new systems in place,¹⁰ so be sure to factor this into your selection criteria.
Your next steps for ERP selection
You’ve assembled your selection team, established clear rules about decision-making, carefully vetted potential ERP partners and made your decision. But while the right ERP system can transform business operations, a successful implementation—putting it in place in your organization—requires systematic planning and execution of its own. Keep in mind that implementation should also be factored into the selection process.
When you’re getting closer to putting your ERP system into action, this article and accompanying webinar, “Implementing your ERP with success,” has tips for doing it successfully.
Partner with Associated Bank for your ERP journey
Associated Bank’s Treasury Management team specializes in helping our clients explore business transformation initiatives, including implementing ERPs into an integrated financial data environment, and using this technology to support business transformation goals.
Email Treasury@AssociatedBank.com for more information or to connect with our technology advisory partners at Crowe LLP. Together, we'll help you select and implement an ERP solution that drives measurable business results.
Key Takeaways
- ERP selection determines business efficiency gains of up to 52% ROI, but 55-75% of projects fail without proper planning.
- Build a team of five to eight people from different departments. Set clear rules about who decides what and get support from company leaders.
- Write down your current business processes. Sort your requirements into must-haves, nice-to-haves and future needs.
- Plan to take four to five months for the selection process. Include gathering your requirements, vendor evaluations and contract negotiation.
- Request demos that show your specific workflows—not generic, out-of-the-box functionality with prerecorded presentations.
- Implementation partners often matter more than ERP software. Consider choosing your partner first, then evaluating their solutions.
- Calculate total five-year costs, including licenses, implementation, training and maintenance, not just software pricing.
Frequently Asked Questions
How long does the ERP selection process take?
A thorough ERP selection process should break down into four stages:
- Months 1-2 focus on figuring out what you need.
- Months 2-3 involve researching vendors and asking for proposals.
- Months 3-4 include watching demos and scoring each vendor.
- Months 4-5 cover making your final choice and negotiating contracts.
Larger organizations with complex requirements may extend this timeline to 6-8 months.
What does an ERP system cost for a mid-sized business?
A midsized company earning $50 million per year can expect to spend $1.5 million to $2.5 million over five years—about 3-5% of its total yearly income. This includes software licenses, implementation services, data migration, training and ongoing support, plus a 20-25% contingency for unexpected costs. Cloud-based solutions typically cost less upfront than on-premise systems but involve ongoing subscription fees.
What’s the difference between a cloud-based and on-premise ERP?
Cloud ERP lives on the vendor's computers; you access it online. On-premise ERP lives on your company's computers. Cloud systems offer faster implementation (3–6 months vs. 6–18 months), lower upfront costs, automatic updates and easy scalability. On-premise systems provide greater customization control but require significant IT infrastructure and internal support. About eight out of ten companies today choose cloud-based ERP systems.
How do I know if an ERP implementation will succeed?
Businesses that work with experienced implementation partners achieve an 85% success rate. Success factors include clear requirements definition, strong support from company leaders, realistic budget planning with contingency funds, comprehensive change management planning, and the selection of an experienced partner. All these factors should be researched and planned during the selection phase, not after go-live. Budget for 20-25% cost overruns and plan for user training from the beginning of your selection process.
Should I choose the ERP vendor or the implementation partner first?
Many organizations benefit from choosing their implementation partner first. Then they evaluate that partner's recommended ERP solutions. A good partner should have deep industry experience, proven methodologies, strong project management capabilities, a local presence and cultural alignment with your organization. Research shows that experienced implementation partners often matter more for success than the specific software chosen.4
What causes the most ERP implementation failures?
ERP projects can fail for four reasons. First, teams don't have clear goals about what they need. Second, moving old data can take longer than expected, causing delays. Third, teams can waste money by customizing too much software. Fourth, people aren't trained to use the new system, causing resistance. Planning for these challenges during the selection phase prevents costly problems during implementation.
How much do ERP systems actually improve business performance?
Companies that successfully implement ERP systems achieve average financial returns of 52%. This means they make $1.52 for every dollar they spend on the system. Companies that plan their finances carefully before starting a project have an 83% success rate9 in meeting their financial targets. The biggest improvements come from reducing manual data entry, eliminating duplicate systems, improving reporting accuracy and enabling better business decisions through real-time data integration.
- https://www.anchorgroup.tech/blog/cloud-based-erp-statistics
- https://www.statista.com/statistics/526423/worldwide-erp-implementation-projects-cost-overrun/
- https://www.randgroup.com/insights/services/solution-implementation/what-percentage-of-erp-implementations-fail/
- https://www.netsuite.com/portal/resource/articles/erp/erp-statistics.shtml
- https://zconsulto.com/erp-implementation-cost-breakdown-roi-examples/
- https://www.anchorgroup.tech/blog/cloud-based-erp-statistics
- https://www.netsuite.com/portal/resource/articles/erp/erp-statistics.shtml
- https://zconsulto.com/erp-implementation-cost-breakdown-roi-examples/
- https://kpcteam.com/kpposts/top-erp-statistics-trends
- https://scoop.market.us/erp-software-statistics/
- https://www.erpresearch.com/en-us/blog/erp-implementation-time
- https://www.anchorgroup.tech/blog/cloud-based-erp-statistics