11 steps to conducting an effective ERP vendor due diligence

Reference checking is essential when choosing a vendor for an ERP system. With ERP systems having a greater than 85 percent failure rate, with the number one reason being poor initial software selection, it is vital that you get your reference checking right on your preferred application. When choosing a software vendor, there is a high risk of wasting many millions of dollars on a poorly implemented system, and it would be a tragedy if this loss simply came down to lazy due diligence.

Reference checking is so important because the relationship with a software vendor is not a short one (at least it shouldn't be). The analogy is like a marriage: you better get on in good times and in bad. If you have conducted your due diligence properly, you will have a good feeling about whether you can work with this company over the long term. This is why it is critical to check them out thoroughly.

Conducting due diligence doesn't always mean you need to follow exactly what the reference sites did, but you can learn a lot from inquiring about their general process. There is a virtual gold mine of information to be gained from asking the right questions. Go into this process with the mind-set that you will learn a great deal, and this attitude has the potential to save you hundreds of thousands of dollars on your implementation.

There are 11 steps that you can take which, if handled correctly, will set you up for success in this vital task of system replacement.

1. Identify current clients of the software partner. This information can be gleaned from numerous sources. The most obvious one is your preferred vendor. Ask them for a list of clients you can ...