ERP Selection: A Step-by-Step Process

Choosing an ERP is one of the most consequential software decisions a growing business makes. The system will shape how orders, stock, purchasing and finance work for years, and switching later is expensive. Yet many selections are decided by a polished demonstration, a familiar brand or a price that looked good before the implementation estimate arrived. A structured ERP selection process replaces impressions with evidence: clear requirements, scripted demonstrations based on your own scenarios, weighted scoring and reference checks. This guide walks through the process step by step, explains how to compare packaged and custom options fairly and shows how to score candidates, with a worked example.

The ERP selection process at a glance

StagePurposeOutput1. Define goalsAgree what the business needs the ERP to achieveGoals and success measures2. Map processesDocument how work flows today and how it should flowProcess maps and pain points3. Write requirementsTurn processes into prioritised requirementsRequirements list with must, should and could4. Long listIdentify candidate products and approachesEight to twelve options5. Short listRemove poor fits using must-have requirements and budgetThree or four candidates6. Scripted demosVendors show your scenarios, not their standard pitchScored demonstrations7. Due diligenceReferences, implementation partner review, contract termsRisk assessment8. DecisionWeighted scoring plus total cost of ownershipRecommendation and business case

Each stage narrows the field with evidence. Skipping the early stages is the most common reason selections go wrong.

Goals and processes before products

Start by agreeing why you need an ERP and how you will judge success: faster month-end close, accurate stock, fewer manual steps between sales and operations, support for new sites or entities. Then map the core processes, such as order to cash, procure to pay, plan to produce and record to report. Process maps reveal requirements nobody would think to write down, like partial deliveries, consignment stock or project-based billing.

Note where today's process is a workaround for a current system limitation rather than a genuine business need, so you do not carry the workaround into the new ERP. Involve the people who do the work. Warehouse staff, accounts payable clerks and planners know the exceptions that break systems.

Writing requirements that discriminate

A long list of generic requirements, such as "must have reporting", fails to separate candidates, because every vendor says yes. Write requirements that describe your specific situations:

• "Allocate incoming stock to back orders by customer priority, then order date"
• "Bill one project in milestones, time and materials, and recurring support on one invoice"
• "Consolidate three entities in two currencies at month end"

Prioritise each as must, should or could. Keep must-haves genuinely essential; if everything is a must, nothing is.

Packaged, industry-specific or custom?

OptionStrengthsTrade-offsGeneral packaged ERPBroad functionality, established vendors, many implementation partnersYour processes adapt to the software; customisation adds costIndustry-specific ERPBuilt-in features for your sectorSmaller vendors; less flexible outside the nicheCustom-built ERPFits your processes exactly; you own itHigher build effort; you maintain itHybridPackaged core for finance, custom modules for unique operationsIntegration between components

Evaluate custom and hybrid options against the same requirements and scenarios as packaged products, including a three-year total cost of ownership.

Running scripted demonstrations

Give each short-listed vendor the same scenarios, based on your real processes and sample data, and ask them to demonstrate them live. A good script contains five to eight scenarios, covering your most important and most awkward processes. Score each scenario during the demo using a simple scale, with several evaluators scoring independently. Ask vendors to show what is standard and what requires configuration or customisation.

Worked example: scoring three ERP candidates

Suppose a distributor with 80 staff short-lists two packaged products and a hybrid option, a packaged finance core with custom warehouse modules. It weights evaluation criteria and scores each from 1 to 5 after scripted demos and reference checks. The scores are hypothetical, to show the method.

CriterionWeightProduct AProduct BHybrid CFit with must-have scenarios30%435Fit with should-have scenarios15%344Ease of use in demos10%434Integration with CRM and e-commerce15%344Implementation partner quality10%433Three-year total cost of ownership15%343Vendor or supplier viability5%543Weighted score100%3.603.504.00

Product A's weighted score is 0.30 × 4 + 0.15 × 3 + 0.10 × 4 + 0.15 × 3 + 0.10 × 4 + 0.15 × 3 + 0.05 × 5 = 3.60, and the others are calculated the same way. The hybrid option leads because the distributor's warehouse processes are unusual and the custom modules fit them best, though it scores lower on supplier viability and cost. The selection team does not treat the score as the decision. It records the main risks for the leading option, such as reliance on one development partner, and agrees mitigations, such as documentation and code ownership terms in the contract, before recommending it.

Due diligence before signing

• Speak to at least two reference customers of similar size and industry, without the vendor present
• Review the implementation partner's team, method and recent projects, not just the software
• Check contract terms: licence model, price increases, data ownership and export, exit terms
• Ask for a detailed implementation estimate tied to your scenarios
• Confirm how the system will integrate with your CRM and other key tools

Common mistakes

• Choosing from demonstrations of the vendor's standard script
• Writing generic requirements that every product meets
• Ignoring implementation partner quality and total cost
• Excluding the people who will use the system daily
• Treating the weighted score as a substitute for judgement
• Signing before understanding how to get your data out

An independent adviser can run or review this process; our guide to choosing an ERP consultant explains how to find one. If you are still deciding whether you need an ERP at all, start with our guide to the signs you need an ERP.

Frequently Asked Questions

What are the steps in an ERP selection process?

Define goals, map processes, write prioritised requirements, build a long list, short-list using must-haves, run scripted demonstrations, complete due diligence and decide using weighted scoring and total cost.

How many ERP vendors should we short-list?

Three or four is usually enough to compare meaningfully without overwhelming the team with demonstrations.

What is a scripted ERP demo?

A demonstration in which vendors show your own scenarios, using your sample data, so candidates can be compared on the same real processes.

Should we consider a custom ERP during selection?

Yes, if your processes are unusual or packaged products need heavy customisation. Evaluate custom and hybrid options against the same scenarios and total cost.

Choose your ERP with confidence

We help businesses run structured ERP selections and build custom or hybrid systems when packaged products do not fit. See our custom app development services, or talk to us about your ERP selection.

About the Author

Manav Sharma is the founder of Insyrge and a CRM solutions architect. He works across Zoho, Salesforce, HubSpot, Odoo and more, designing the CRM setups, integrations and automations that keep sales and operations teams working from the same data.