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Before buying, carefully evaluate the ERP system you're considering. Here are some important factors:

• Functional fit with the company's business processes. The closer the ERP software models your business processes, the smoother the integration will be and the sooner you will reap the benefits. Fewer changes in your business processes will ease the transition and will result in increased productivity sooner rather than later.

• Flexibility and scalability. A system that does not scale to support all your customers is a disaster waiting to happen. Explore back-end scalability also. How well does the system perform when hundreds of thousands of orders exist in it?

• Complexity and user friendliness. A system that requires hundreds of hours per employee in training and is difficult to use can push productivity down the tubes.

• Quick implementation. The faster you finish, the faster you can train end users and reap the benefits.

• Ability to support multisite planning and control. Most companies in need of industrial-strength ERP systems use multiple sites, and many have offices around the world. Your ERP solution should be able to manage and control multiple sites.

• Necessity of regular upgrades. Most ERP vendors provide regular updates and patches of their software throughout the year, and they offer at least one major release of the software (including all updates and patches) once a year. This is important, but it also can be deadly. Often, vendor updates can wreak havoc with a highly customized system, requiring time and effort to reintroduce customizations.

• Amount of customization required. The less customization required, the better off you are -- both from an implementation standpoint and from a maintenance one. Baan and SAP both provide excellent industry-specific solutions that can reduce the amount of customization required for an implementation.

• Local support infrastructure. If you run into trouble, whom can you call? More important, how long will it take to get a response?

• Availability of reference sites. Discuss and visit, if possible, other companies that have implemented your chosen ERP solution. A great deal of insight can be garnered from those who have lived through an ERP implementation.

• Total costs. Include cost of license, training, implementation, maintenance, customization and hardware requirements.

An estimated 50 percent of today's ERP implementations create the need for significant network upgrades. Unlike legacy systems, the communication and messaging demands of client/server systems built today put a great deal of strain on a network. The increase in traffic often requires more powerful networks.

To determine whether you'll need to upgrade your network, you must translate the results of the business process re-engineering into bandwidth requirements. To do this, estimate:

• The number of users per business function who will have access to ERP functions. If the implementation will bring additional users online, get an estimate of how many additional users you'll need to support.

• The number of transactions per user by time of day/week/month/year.

• The degree of separation among database, applications and presentation layers in the architecture.

• Who needs access, and from which physical and logical network locations.

Don't underestimate the impact of printing services on your network. A change in the business's infrastructure and applications will lead to a change in the printing needs of your users. Determine if centralized or distributed printing services will best serve the user and put the least amount of strain on your network.

The Hidden Costs

Every company will find some unique budgeting issue during the implementation of an ERP system. Certain costs are commonly missed or underestimated.

Among the most overlooked cost of any project is "people" time. Whether they're for training IT staff and end users or for investing in retention policies, these expenses are often not included in the cost of an ERP system. While these are elusive items to budget, they are an integral part of a successful ERP implementation. Training users on an ERP system involves not only familiarizing them with a new software system but learning new business processes.

And don't overlook the cost of possible new retention policies. You'll suddenly have IT staff members being wooed by consulting firms because of their experience with your chosen ERP system. To keep these workers, you may need to change your retention policies and possibly your salary scales.

Consultants can cost you -- and often dearly. Initially, these hired guns can ease your project team over bumps in implementation, but their costs can skyrocket. Do not underestimate this expense or the initial benefit of having consultants on your newly formed project team.

Furthermore, the costs of integration and testing are generally overlooked during the budgeting for an ERP system (and most new software systems, for that matter). Since you may be modifying your core business processes to realize the benefits of an ERP system, you may need a more thorough test of integration and system functionality. You cannot simply move dummy data through the system and call your project a success. The "dummy data" method may ensure data integrity, but it does not test the business processes that will be used to move real data through the system. This means a longer and more involved integration and testing phase.

It's About the Data

When any new system is developed, a large effort goes into the conversion of data. An ERP implementation is no different. Clean data is required by the client/server setups used by popular ERP packages. Many companies will deny their data is dirty until they have to move it to the new system. As a result, the cost of conversion is often underestimated.

Data warehousing has become an important source of information in the enterprise. The data from an ERP system must be combined with data from external systems for analytical purposes. The information gleaned from data-mining initiatives is useful, so you'll need a plan to ensure continued success in this area. The cost of warehousing data from the new system needs to be included in your budget, too.

While there are many correlations between an ERP implementation and other software projects, one aspect of ERP is unlike other software projects you may have undertaken. Once the software is installed, you'll need to keep people on the ERP team rather than return them to their "regular" duties. Your staff members' knowledge of your new ERP system is invaluable, and new work is created after implementation that requires their acquired expertise. You'll need to account for new staff to fill the holes your ERP team will create.

Many companies expect to see value returned from an application as soon as it is installed. The project team expects a few days off and a "good job" nod from management. Neither of these expectations is realistic with an ERP implementation. An ERP's value can't be known until after the company has concentrated on making improvements in the business processes affected by the new system.

Once your implementation is complete, you need to allow time for the kinks to be worked out of the system and the business process. An initial drop in productivity may occur while people get comfortable with the new system and processes, depending on how many changes were made. Expect to hear groans; people need time to change their thinking, especially when their productivity is affected by changes to the software. Familiarity may breed contempt, but it definitely lends itself to a higher productivity rate. Give the employees a chance to master the new system and processes.