ERP Vendor Evaluation & Selection Guide

A successful ERP evaluation starts with assembling the right internal team, defining clear goals, and documenting requirements. You then research and shortlist 4-8 vendors, run structured demos, vet each vendor's financial stability and implementation partner, and negotiate the contract. The full process typically takes 3-6 months and should be driven by business needs, not IT alone. Updated July 2026.

Evaluating and selecting ERP solutions is a tricky business with so many solutions available on the market, so in this guide we'll walk through the evaluation criteria and best practices for choosing an enterprise resource planning system and making your ERP project a success.

The global ERP software market has continued its rapid expansion and now exceeds $50 billion in annual spend, as more organizations replace ageing systems and consolidate onto modern platforms. That growth means more choice — and a harder evaluation.

Selecting a new enterprise resource planning solution for your business can be a long and difficult process, and the stakes are high. Historically, according to CIO.com, only 58% of companies surveyed considered their ERP implementation and vendor selection a success — a reminder that a disciplined evaluation process matters more than any single feature.

In this article, we explore the industry best practices and criteria for running a flawless ERP selection process, based on hundreds of client engagements across multiple industries in the United States and worldwide. For a weighted, MoSCoW-based scoring rubric to grade each shortlisted vendor, pair this guide with our ERP selection criteria framework.

For our prebuilt ERP evaluation & selection criteria checklist template, click here.

For our prebuilt ERP requirements gathering template, click here.

Who Should Be on Your ERP Evaluation Team?

Choosing the right team is crucial during an ERP selection process. Your team needs to understand where the flaws are in your current system and must also be subject matter experts in different areas of your business. You also need to consider your internal approval process and overall project sponsorship. Someone needs to be able to sign off on the project and fight your corner during board meetings.

ERP projects also aren't easy - your team needs to have the motivation and passion for improving things or you'll be pulling them through the selection and implementation of your new solution.

At the same time, be conscious that if your team is too big, you may start to suffer from decision paralysis and your stakeholders may begin to dwell on unnecessary details that have little return on investment.

As a minimum, we recommend building the following team before you start your ERP selection process:

• ERP Project Sponsor: ideally your Chief Financial Officer, VP Finance or Board Member. Your ERP Project sponsor's role is ultimately to be the voice for change within your organization, communicating to Board Members or Owners the ambitions and benefits of the new solution, but also to reign in the rest of your team and organization at critical moments.
• Project Manager/Lead: some organizations find one internally, others hire an experienced one externally. This person's role is to drive the day-to-day activities and pull your team and other stakeholders together to ensure deliverables are met throughout the process.
• Subject Matter Experts: you need SMEs from within your business that understand the day-to-day operations within specific areas such as finance, procurement, supply chain, manufacturing, project management, and beyond. These people are critical in building the correct set of requirements, selecting the right solutions in line with your business needs and then championing the new solutions during and after go-live. You may want to choose 1-2 from each area of the business.
• IT or Technology Experts: These days, ERP projects are driven less and less by IT professionals and more and more by the business itself - typically within finance or operations. Nevertheless, having members from your IT or technology team onboard with the process from Day 1 is critical. They can ensure your new system meets any information security, data or integration needs - plus vet the infrastructure whether you decide on a Cloud or On-Premise enterprise resource planning solution.
• External Consultants: for some businesses, using an external consultancy can be beneficial, especially if they can't dedicate a large headcount to the project or if they need to implement fast or avoid mistakes. External consultants can provide quick ports of call to help you plan your ERP project, get the latest information on finance, accounting & ERP systems, build your list of requirements and more.

How Do You Set ERP Project Goals?

Agreeing amongst your team on the objectives of your project is the next step in successfully choosing your ERP. You need to think about when you want your next ERP to go-live, how much you have to spend, the problems it needs to address and the ambitions it needs to fulfil.

Here are some of the goal criteria we recommend you decide on before making your ERP choice:

• ERP Go-Live date: when does your system need to go-live by? Does it need to coincide with a business event such as an expansion, IPO, M&A activity or diversification? Does this give you enough time to select, implement and adopt a solution? Have you considered a big bang or phased system implementation approach? In a survey on ERP implementation, midsize companies with $100 million to $250 million in revenue had the fastest implementations at 6.6 months. Very large companies, over $25 billion in revenue, took the longest at 12.35 months.

• KPI Improvements: what are the specific KPIs you are trying to improve by upgrading your ERP? Are you ultimately trying to improve customer satisfaction, productivity, overheads, resource utilization? What are the truly essential outcomes that any new system must be able to deliver?

• Business Case & Budget: what financial metrics are you working towards improving? Have you estimated the potential return on investment? How will this be attained? Most ERP users budget an expected ERP spend of less than 2% of annual income.

• Prioritize: no solution will offer everything you need - at some point you will have to make sacrifices. Decide upon which ERP functions and features are essential and which are nice to have based on your agreed project goals.

• Reality: are your goals realistic? Have other companies in your industry or of a similar size been able to do this? Have you done thorough research or consulted with a specialist?

Define your ERP Requirements

Choosing an ERP solution has to be centered around a common, agreed upon set of requirements that meet the needs of your business and the goals of the ERP project. Defining your requirements can take time and you need to pull in members of your core ERP project team to make sure all necessary information is captured. This helps you to run a smooth and well-considered ERP purchasing process.

Let's look at the steps you need to go through to build a well-researched ERP functional requirements list:

1. Decide on your ERP scope.

What functions of the business will your enterprise resource planning system touch? As a minimum it will need to address financial management - but will it just take care of general ledger or stretch out to accounts payable, accounts receivable, bank reconciliation, financial planning and analysis? What other modules will the ERP tool need to bring?

Consider your needs around procurement and other modules dependent on your business industry. Modern ERP systems integrate business functions including finance, billing, procurement, supply chain, manufacturing, professional services, project management, asset management, plant maintenance, customer relationship management, service management, business intelligence and more.

Expansion of the initial project scope is the primary reason companies go over budget during implementation.

You should start this process by building an ERP requirements template, available for free, below:

2. ERP Integration

Businesses almost never rely on just one system and almost always have a series of solutions from multiple vendors that cover different areas of their business operations. ERP is just one of these solutions. What other systems do you run internally and where will you need to create integrations or manual hand-offs into other solutions? For example, many organizations run ERP to cover only finance and procurement, but may use a separate system for inventory management, project management or timesheets.

If you can consolidate multiple systems into one, then all the better for support and integration worries - but if you need to keep multiple systems, building an idea of your integration points is key.

3. Cloud or On-Premise ERP?

Many organizations still run On-Premise ERP tools & systems, hosting their application using their own servers and IT support team. However more and more, Cloud based ERP software is becoming the dominant choice during ERP selection processes.

Whereas On-Premise solutions bring greater flexibility and control, many Cloud ERP vendors argue that the Cloud brings a lower total cost of ownership, faster innovation and regulatory updates plus a modern application architecture. According to G2, most organizations now select Cloud ERP over on-premise software. That said, for many organizations, deploying a Cloud solution doesn't meet their functional requirements and specific business processes or they may need to host and control their own data if they are heavily regulated.

It's also worth mentioning that Cloud ERP solutions bring a variety of flavours, and you need to understand the differences between Software-as-a-Service, Private Cloud and Managed Hosted before choosing.

Ultimately, each organization has different needs that will determine whether Cloud or On-Premise is right for them. Check out our Cloud ERP buyers guide to help you decide.

4. ERP Roadmap and AI Capabilities

Whilst not completely essential, you need to understand the future strategy of your business in order to effectively select a futureproof ERP solution. Many organizations are blindsided 2-3 years after implementing a new enterprise resource planning solution by new requirements coming from the business. Perhaps when you bought your ERP system, finance and procurement drove the selection process and you based your purchasing criteria on these areas - but once these topics have been addressed, what comes next?

In 2026, a vendor's product roadmap and embedded AI capabilities have moved from optional to essential evaluation criteria. Ask each vendor how AI and automation are surfaced in the modules you actually use — invoice matching, demand forecasting, anomaly detection, natural-language reporting — and how often the platform ships new releases. A vendor investing heavily in R&D is a strong signal you won't outgrow the system.

Too often, we find that companies make quick, short-term decisions and shortly after, start exhibiting the same symptoms of having a poorly optimised ERP system such as turning towards spreadsheets, paper or disjointed solutions. If this happens, it's not the end of the world — many ERP solutions come with prebuilt integrations into different systems that can expand their core functionality — but in an ideal world, consider what else your ERP needs to be capable of to make a futureproof decision.

How Do You Research ERP Solutions?

Researching potential ERP solutions early in the process is a great way to educate yourself on the functionality and benefits available in today's ERP market. This can help you to understand where there are efficiency gaps in your business and also it can inform your budget, go-live date and help you to build a business case for change.

Starting this process early can also help you to shortlist vendors which streamlines your selection process later on, rather than sit through hours of qualification calls, product demonstrations and scoping sessions later on. It typically takes 1-2 hours to get a basic understanding of each potential solution and 4-6 hours to get a more educated view.

There are literally hundreds of ERP solutions available on the market from Tier 1, 2 and industry niche vendors plus open source solutions. It can be difficult to trust some of the claims of ERP vendors and understand which solution truly meets your company size, budget, industry and specific functional needs. This means you can spend weeks researching potential solutions, only to find out later in the process it can't meet some of your basic asks.

We recommend understanding the following criteria and asking these questions when assessing each ERP solution, in conjunction with your defined requirements:

• Which of your peers are using the solution?
• How much of the offered functionality is from the vendor and what is third party?
• Does the vendor offer Cloud, On-Premise or Hybrid deployments? Where is your data stored if Cloud?
• Does the solution offer mobile apps or access?
• What is the licensing model?
• What isn't included?
• Does the technology have a robust roadmap and is the vendor actively investing in it?
• What is the support model?
• How long did other ERP projects for this solution of a similar company profile take?
• Does the market offer a large base of consultants proficient in the solution?

At ERP Research, we collate and provide functionality, implementation, peer and budget insights on all Tier 1 & Tier 2 vendors based on one 30 minute discovery call.

Alternatively, check out our independent vendor and ERP software review pages for Netsuite, SAP Business One, Sage Intacct, Oracle, Microsoft or use our comparison engine to find the perfect solution for your business.

Most implementations cost three to four times what was initially budgeted - we can help you avoid this.

How Do You Evaluate an ERP Vendor's Financial Stability?

Evaluate an ERP vendor's financial stability by reviewing its revenue growth, profitability, recurring-revenue mix, customer retention, R&D investment, ownership structure and analyst standing. Because a modern ERP is a 7-10 year commitment, a financially healthy vendor is far more likely to still be supporting, patching and investing in your platform for the full lifespan of your system.

An ERP that is abandoned, acquired-and-sunset, or starved of investment can quietly become a liability years after go-live. Build the following due-diligence checks into your evaluation before you sign:

• Revenue and growth trajectory: Is the vendor growing, flat or shrinking? For public vendors, read the latest annual report and quarterly filings. For private vendors, ask directly for revenue range and year-over-year growth, and cross-check against headcount trends on LinkedIn.
• Recurring revenue and retention: Cloud ERP vendors live or die on renewals. Ask about net revenue retention and gross churn. Consistently high retention (above 90%) signals customers stay and expand; high churn is a red flag about product quality or support.
• Profitability and cash position: A vendor burning cash with a short runway may cut R&D, support headcount or raise prices sharply to survive. Ask whether the business is profitable or, if venture-backed, how long its funding runway is.
• Customer concentration and installed base: How many live customers of your size and in your industry run the product today? A large, diverse installed base spreads risk; a vendor dependent on a handful of large accounts is more fragile.
• R&D and product investment: What share of revenue goes back into the product, and how frequent are releases? Steady investment is the best predictor that the roadmap you're shown will actually ship.
• Ownership and funding structure: Is the vendor founder-owned, public, or private-equity backed? PE ownership isn't inherently bad, but it can change pricing, support and roadmap priorities — ask how the current owners think about the product's future.
• Analyst and third-party validation: Independent coverage (Gartner Magic Quadrant, Forrester Wave, IDC) and verified customer reviews on G2 or Gartner Peer Insights add an outside check on the vendor's viability and momentum.

If a vendor is reluctant to answer any of these questions, treat the silence itself as a data point in your evaluation.

How Many ERP Vendors Should You Shortlist?

Once you have built your team, decided on your requirements and completed your initial research, it's time to decide on a shortlist of vendors to engage with. We recommend selecting anywhere from 4-8 vendors initially, before shortlisting again down to 2-3. A shortlist of 4-8 is wide enough to surface genuinely different approaches without overwhelming your team with demos and scoping calls.

Many organizations take different approaches to this, depending on their own knowledge of the market and how much data they can gather on the vendors in light of their requirements. Generally speaking, it takes a lot longer than initially planned to get to this point for most organizations as they juggle different workloads and unplanned disturbances.

You may want to run a thorough process, beginning with an RFI before moving to an RFP then final two vendors to slowly but surely whittle down vendors. If speed and flexibility is key, other organizations choose to communicate requirements over conference calls, iterating on their needs as they go. To keep the comparison objective, score every shortlisted vendor against the same weighted rubric — our ERP selection criteria framework gives you a MoSCoW-based scoring model you can apply consistently across all vendors.

Using an external consultancy such as ERP Research can help you to streamline this process and make more informed decisions to select your next ERP faster and with less risk. Speak to our team to help you shortlist the best ERP solutions for your industry and company needs.

ERP Demonstrations

At some point, you will need to see product demonstrations. It's important to be clear on your expectations from vendors during this part of the process to avoid disappointment and ensure all vendors get a good shot at demonstrating what your organization is looking for. At the same time, we recommend watching carefully and asking key questions during the demonstration - such as:

• Is this functionality included in your commercial estimate?
• Is this functionality standard or was it custom built?
• Which of your clients use this functionality?

There can be a lot of smoke and mirrors during software product demonstrations, so it's always best to take them with a pinch of salt. Nevertheless, this is one of the most important criteria in selecting an ERP solution.

How Do You Select the Best ERP Implementation Partner?

As well as defining the criteria for evaluating the best ERP technology, you need to define how you will choose the best partner to implement the solution. The partner you pick often has more impact on project success than the software itself.

Should You Implement ERP Yourself or Use a Partner?

Some organizations choose to use their own internal teams to implement ERP software, or put ERP implementation consultants on their own payroll rather than outsourcing to a dedicated consultancy. The benefits of implementing an ERP solution yourself include having more control over the project and consultants and potentially decreasing costs, as you won't have to pay a profit margin to a consultancy.

While this can sound like an attractive option, we wouldn't recommend implementing an ERP solution yourself unless you're 100% confident in your ability to do so. ERP implementation projects can be complex, requiring subject matter experts across multiple areas, and without previous experience any money saved could easily be lost by a poor implementation and the cost of turning it around or doing it again. Most companies engage the vendor directly or a specialist systems integrator — which makes evaluating that partner every bit as important as evaluating the software.

What Criteria Matter When Choosing an ERP Partner?

Once you've decided to work with an implementation partner, weigh them against these criteria:

• Cost: For many companies, the most important criteria is the cost of the partner's services — the lower the implementation cost, the higher the ROI, assuming it's successful. But cheaper isn't always better: dig into each partner's project plan and the time dedicated to each phase before comparing estimates, because a low quote often hides gaps you'll pay for later.
• Customer references: A partner's credibility rests on experience with companies similar to yours. Ask which of their customers match you in industry, geography and size. If they've made similar companies successful, they're far more likely to do the same for you.
• Size & reach: If you're a small business, you'll often work best with a similarly sized partner. If you're a multinational implementing across thousands of employees in 15 countries, demand a partner with genuine global delivery capability.
• Experience: Experience can save weeks or months on an ERP implementation. Try to ascertain which specific consultants will be staffed to your project before selecting a systems integrator, so you know it will be led by people who have handled your scenario before.

How Should You Approach ERP Contract Negotiation?

Successfully negotiating an ERP project with your chosen vendor or partner needs careful consideration. If you squeeze too much, then rather than receiving a greater discount, you may actually receive a sub-standard or skeleton service which puts more emphasis on your organization meeting certain deliverables. You may also strip out important elements such as onboarding, training and end user adoption or integration. If you manage to negotiate a 50% reduction on your ERP implementation or licensing - it's certainly worth considering how that was achieved and if you still have many of the core components you need left.

Here are some of the key considerations we'd recommend you bear in mind during the negotiation process:

• Licensing Contract Term: most software vendors will negotiate for longer contract terms as this increases their own company valuations and provides them greater long term revenue certainty. You can often exchange 3+ year license agreements for steeper annual discount or other freebies. On the flip side, ensure you have pricing protection in place after the initial contract term. Some vendors are notorious for hiking prices after the first 1-2 years of the contract, leaving you with a much higher annual cost than you initially anticipated.

• Economies of Scale: if you purchase more licensing up front, or weave more users or modules into your Cloud term, you can potentially reduce the per unit cost of each license by committing to more later in the contract.

• License Add-Ons: many ERP solutions come with core and additional licenses. As the names suggest, core functionality might give you a taste of inventory or project management, but to get the full experience you may need to purchase an additional license. This can lead to unpredictable licensing costs.

• Services: ensure your services partner has provided a list of assumptions and expectations from you as a customer. Many times, we see service partners provide extremely competitive quotes, only for the customer to later realise that their partner expected them to do 60% of the heavy lifting.

• Legals: aside from pricing protection, ensure that your contract provides you full use of the software, now and in the future. In the event your business is acquired, or if you sell off a division, some software providers will charge a penalty or transition fee.

Frequently Asked Questions

What are ERP evaluation criteria?

ERP evaluation criteria are the standards you use to compare and score ERP systems — typically functional fit against your requirements, total cost of ownership, deployment model (cloud vs on-premise), integration capability, vendor financial stability, implementation partner strength, product roadmap and AI capabilities, and references from similar companies. The best evaluations weight these criteria by importance and score every shortlisted vendor against the same list.

How long does the ERP evaluation and selection process take?

For most mid-market organizations, the ERP evaluation and selection process takes 3-6 months from assembling the team to signing a contract. Simpler, single-module selections can move faster, while large or multinational programs with formal RFI/RFP stages often run longer. The research and requirements-gathering phases are usually where timelines slip, so starting them early is the single best way to stay on schedule.

What is the difference between ERP evaluation and ERP selection criteria?

ERP evaluation is the end-to-end process — building a team, setting goals, gathering requirements, researching the market, shortlisting, running demos, and choosing a partner. ERP selection criteria are the specific, weighted standards you score vendors against within that process. In short, evaluation is the journey and selection criteria are the scorecard. Use this guide for the process, and our ERP selection criteria framework for the weighted scoring rubric.

What should an ERP evaluation checklist include?

A strong ERP evaluation checklist covers requirements and scope, functional fit by module, technical and integration needs, deployment model, total cost of ownership, vendor viability and financial stability, implementation partner criteria, references, and contract terms. You can download our ready-made ERP vendor selection criteria checklist template as a starting point.

How many vendors should be on an ERP evaluation shortlist?

Start with an initial shortlist of 4-8 vendors, then narrow to 2-3 finalists for detailed demos, references and commercial discussions. Fewer than four risks missing better-fit options; more than eight overwhelms your team with demos and dilutes the comparison. Score each one against the same weighted criteria to keep the decision objective.

Need more information?

If you have specific questions surrounding your project and ERP criteria, or you just want to get the latest information on solutions which could fit your needs, then schedule a call with our team - or check out more of our articles here.