The Checklist to Selecting an ERP: 10 Steps to Get It Right

Choosing the right Enterprise Resource Planning (ERP) system is one of the most critical decisions a business can make. The right ERP can streamline operations, unify departments, provide real-time insights, and scale with your growth. The wrong one? It can drain budgets, frustrate teams, and stall innovation.

So, how do you get it right?

In this blog, we’ll walk you through the ultimate ERP selection checklist—a step-by-step guide to help you make a confident and future-ready decision. Whether you’re selecting your first ERP or replacing an outdated one, this checklist will help you align internal needs with market options and avoid costly mistakes.

Why Selecting the Right ERP Matters

Before we dive into the checklist, it’s important to understand why this decision deserves your time and focus:

• ERP is your digital backbone. It integrates core functions like finance, inventory, procurement, HR, CRM, and manufacturing.
• It’s a long-term investment. Businesses typically stick with an ERP system for 7–10 years or more.
• The stakes are high. ERP failures have led to disrupted supply chains, financial losses, and even lawsuits.

A structured approach is key, and that’s what this checklist to selecting an ERP delivers.

Step 1: Define Your Business Goals and Pain Points

Your ERP should be a solution to real business challenges—not just a new piece of software. Start by documenting:

• Key business objectives (e.g., improve cash flow, speed up fulfillment, reduce manual processes)
• Current pain points with existing systems (e.g., siloed data, lack of visibility, duplicate entries)
• Strategic goals for the next 3–5 years

Aligning ERP capabilities with your strategic direction will narrow your choices and ensure long-term ROI.

Pro tip: Involve leaders from operations, finance, IT, and sales early. ERP is cross-functional, and you’ll need buy-in across the board.

Step 2: Assemble Your ERP Selection Team

Don’t go it alone. Build a cross-functional selection committee that includes:

• Project sponsor (usually a CFO, COO, or CIO)
• Department heads from finance, operations, IT, HR, etc.
• End-users who will engage with the ERP daily
• Technical experts to assess infrastructure needs

This team should own the selection process, from vendor shortlisting to final sign-off. A diverse team ensures all requirements are captured and reduces the risk of adoption issues later.

Step 3: Map Your Core Requirements

Now it’s time to create a requirements matrix. Classify needs into:

• Must-haves: Critical for day-to-day operations (e.g., multi-currency support, regulatory compliance)
• Nice-to-haves: Adds value but not essential (e.g., mobile access, AI-powered analytics)
• Future needs: Scalable features that support growth (e.g., international expansion, advanced integrations)

Use this matrix to objectively compare ERP vendors during the demo and proposal phases.

Step 4: Decide on Cloud vs. On-Premise vs. Hybrid

ERP systems come in several deployment models:

Cloud-based ERP adoption is accelerating, especially among SMBs and mid-market enterprises due to lower IT overhead and easy remote access.

Step 5: Set a Realistic Budget (and Buffer It)

ERP projects often exceed initial budgets due to underestimated implementation, training, and customization needs. Include:

• Licensing/subscription fees
• Implementation partner costs
• Internal IT resource allocation
• Training and change management
• Integration with third-party tools
• Ongoing support and upgrades

Add a 10–20% contingency buffer for unexpected costs.

Step 6: Shortlist Vendors Based on Fit

Use your requirements matrix to build a shortlist of 3–5 vendors. Consider:

• Industry specialization (e.g., manufacturing ERP vs. retail ERP)
• Customer references in similar-sized businesses
• Market reputation (check G2, Gartner, Capterra reviews)
• Product roadmap and vendor stability

Avoid being dazzled by feature overload. Focus on vendors that solve your core problems without unnecessary complexity.

Step 7: Evaluate Integration Capabilities

Modern ERPs are rarely standalone. They must integrate seamlessly with:

• CRM tools (e.g., Salesforce, HubSpot)
• Finance platforms (e.g., payment gateways, reconciliation tools like Kolleno)
• HR systems (e.g., payroll, performance)
• E-commerce or POS platforms
• BI tools and dashboards

APIs, data connectors, and plug-ins should be available or at least customizable to ensure a unified digital ecosystem.

Step 8: Request Demos and Proof of Concept

Invite your top vendors to deliver customized demos tailored to your workflows. Pay attention to:

• User experience: Is it intuitive for finance and non-finance users?
• Realistic scenarios: Can they replicate your quote-to-cash or procure-to-pay processes?
• Performance under pressure: How does the system handle large data sets or peak traffic?

If feasible, request a Proof of Concept (PoC) before committing. It’s better to discover limitations now than mid-rollout.

Step 9: Assess Implementation Support and Timeline

Even the best ERP will fail without the right implementation plan. Ask vendors:

• Do they offer in-house or partner-led implementation?
• How long is the typical rollout for companies your size?
• What’s the training and onboarding process?
• Is post-go-live support included?

A phased implementation reduces disruption and allows for faster wins. Don’t underestimate the change management component.

Step 10: Evaluate ROI and Scalability

The final piece of your checklist to selecting an ERP: Can this ERP grow with your business and does it deliver measurable returns?

Consider:

• Time savings on reconciliations, reporting, and compliance
• Reduction in manual data entry and error rates
• Visibility across cash flow and working capital
• Faster month-end close
• Improved decision-making with real-time data

Use financial modeling to estimate payback period and total cost of ownership (TCO) over 3–5 years.

Consider the Ecosystem Beyond ERP

Your ERP is the central nervous system but the tools around it are just as important.

Many finance teams now pair ERPs with best-of-breed solutions for:

• Accounts receivable automation
• Cash application and reconciliation
• Dispute management
• Collections workflows

This modular approach gives you flexibility and speed without waiting on ERP upgrades.

Final Thoughts: A Checklist That Reduces Risk

Selecting the right ERP isn’t just about features—it’s about fit, future-readiness, and financial sense. By following this checklist to selecting an ERP, you reduce the risk of misalignment, overspend, and implementation failure.

Remember: ERP is not just a tech decision. It’s a business transformation.

Power Your ERP with Kolleno

Already using or selecting an ERP? One critical module often overlooked is Accounts Receivable and Payments Reconciliation.

That’s where Kolleno comes in.

Kolleno integrates seamlessly with leading ERPs and CRMs to automate:

• Cash application using AI-driven matching
• Collections workflows with smart prioritization
• Dispute tracking and resolution management
• Payment reconciliation across multiple gateways

With Kolleno, finance teams eliminate manual errors, accelerate cash flow, and gain full visibility over receivables.